Biden’s great energy and climate contradiction

A liquefied natural gas (LNG) transport ship docks in Cameron Parish, La.


Photo:

Kevin Clancy/Associated Press

The good news is that on Friday the US finally agreed to help Europe replace Russia as its main natural gas supplier. The bad news is that President Biden is still telling US gas producers he wants to put them out of business.

It sounds crazy, but listen to Mr. Biden’s remarks on Friday. “We have to make sure that the families in Europe get through this winter and next,” he said when announcing the contract to provide 15 billion cubic meters of gas this year, although not all from the US

But he added, “at the same time, this crisis also represents an opportunity” that will “drive the investments we need to double our clean energy goals and accelerate progress toward our zero-emission future.”

The White House underscored the contradiction by saying the US “will maintain its regulatory environment.” More US LNG exports will only be allowed to the extent that they reduce emissions — for example, by running on “clean energy.”

This is magical thinking. LPG requires long-term investments and reliable energy. Plants can’t run on intermittent renewable energy, and companies won’t invest billions of dollars if they think regulators will kill them once a crisis is over.

The reality today is that the US does not have enough LNG export capacity to replace the roughly 170 billion cubic meters that Russia sends to Europe every year. Much of the 124 billion cubic meters of exports that the US can technically deliver are tied to long-term contracts with Asia.

But EQT CEO Toby Rice said this month he believes US gas exports could “easily” replace Russian supplies in a few years, and the US has the potential to quadruple its gas production by 2030. EQT is the largest US natural gas producer.

A major obstacle is the lack of pipeline capacity. Several major pipelines and LNG export projects have been scrapped in recent years amid opposition from progressive states and green groups. It can take four to five years to get federal approval for a pipeline that can be built in six to nine months. The Trump administration expedited approval, but Biden regulators have been slow to push approvals.

Two applications to increase LNG exports have been pending with the Department of Energy for more than two years. They were finally approved two weeks ago as the government scrambles to bring more gas to Europe. But that was too late to help this winter.

Europe has long resisted signing long-term deals for US LNG because Russia was supplying cheap gas. This hampered US investment in LNG export facilities and is one of the reasons there are 13 approved terminals that could ship 258 billion cubic meters each year that are not yet under construction. Most were approved in the Trump years.

Now Europe is finally agreeing to long-term deals, but the government says it opposes long-term US gas investments. Listen to none other than Gina McCarthy, the White House national climate adviser, this week. US climate policy “is no longer a fight for coal. It’s a challenge with natural gas and infrastructure investments because we don’t want to invest in things that are temporary. Because we’re limited in time,” she said at a forum hosted by the American Council on Renewable Energy.

What sane CEO is going to invest when Ms. McCarthy holds the “time limit” sword over his head? There’s a reason the Department of Energy’s LNG export permits are good through 2050. It can take decades for the investment to pay for itself.

At least Europe is finally counting on its climate and energy delusions. The European Commission this week committed to streamlining rules to speed up LNG import projects. Germany plans to extend the life of its coal-fired power plants and Britain is beginning oil and gas exploration in the North Sea.

Too bad the Biden administration is still in la-la land.

Journal Editor’s Report: Instead of helping local producers, he’s courting Venezuela and Iran. Images: AFP/Getty Images Composite: Mark Kelly

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Appeared in the March 26, 2022 print edition as “Biden’s Great Energy Contradiction.”

https://www.wsj.com/articles/joe-bidens-energy-contradiction-lng-europe-gas-companies-russia-ukraine-gina-mccarthy-11648244471 Biden’s great energy and climate contradiction

Ethan Gach

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