President Trump’s “Energy Week” address today is expected to express strong support for U.S. exports of natural gas, currently on the rise. For the Northeast, these exports exacerbate the risks of the region’s already-dangerous overreliance on a fossil fuel that has a history of volatile prices and will not allow the region to reach its commitments to reduce greenhouse gases.
With the arrival two weeks ago in Taiwan of a liquified natural gas (LNG) tanker ship loaded with American natural gas, June has been a month marked with milestones for the nascent export industry in the United States. Preceding this delivery by a few days were the first ever U.S. LNG shipments to Poland and the Netherlands. U.S. Energy Secretary Rick Perry deemed those events significant enough to warrant a statement from his office. These deliveries from a new LNG export facility in Louisiana signify a new era for the natural gas industry in this country, and residents of Northeastern states should be paying attention to these events.
This export plant, the Sabine Pass LNG Terminal, is the first of several such facilities planned to be constructed or converted from import use. When it is fully online, it will be able to liquify nearly 1,300 billion cubic feet (bcf) per year of natural gas. Five other facilities under construction in Hackberry, Louisiana, Freeport, Texas, Corpus Christie, Texas, Elba Island, Georgia, and Lusby, Maryland, will be able to liquify twice that volume. In total, these facilities will be able to liquify and export the equivalent of 15% of current U.S. natural gas consumption. Several additional projects have been approved but are not yet under construction.
Having this large a portion of U.S. natural gas consumption subject to world market prices will likely have an impact on markets at home. Such a rapid surge in demand will likely increase domestic natural gas prices. What does this mean for Northeastern states? They need to carefully scrutinize analyses of any projected benefits from natural gas conversions or new natural gas infrastructure projects in the region. The levels of promised savings may never materialize if rapidly increasing LNG exports drive up natural gas prices. The risk of these projects as proposed is almost always borne by ratepayers—the utilities or other project developers will earn their guaranteed return on investment, paid for eventually by electric or gas ratepayers, but the savings are not guaranteed.
Natural gas already stands as one of the main obstacles to reducing greenhouse gas emissions in the region, and concerns have been raised that subsidized pipelines could facilitate exports from facilities in Eastern Canada that—like Sabine Pass—were first built for imports. Tying domestic prices to volatile international markets layers on more risk.
The region’s policymakers should continue to proceed cautiously before committing their ratepayers to years of payments for large fossil fuel infrastructure projects whose tenuous savings can easily be wiped out by changing market conditions. All proposed projects should be evaluated against the possibility that other available resources can meet the Northeast’s energy needs without growing the region’s overreliance on natural gas. Northeast states need to consider energy efficiency, solar and wind generation, and conversion of fossil fuel heating and transportation systems to electric-powered alternatives. Acadia Center’s EnergyVision 2030 project shows the benefits of embracing energy sources that are indigenous to the Northeast region. With the expansion of U.S. natural gas in world markets, the economic benefits of local clean energy will likely only grow.
Jamie Howland leads Acadia’s Climate & Energy Analysis (CLEAN) Center and its Energy Efficiency and Demand Side Initiative. A Connecticut native, Jamie is based in the Hartford office and has extensive experience in energy efficiency and energy markets.