Leveraging America’s abundant supply of clean-burning natural gas to maximize its economic and environmental benefits should include increased exports of liquefied natural gas (LNG). What follows is a primer on how natural gas – including increased LNG development – can boost the economy, create jobs and protect the environment.
Step 1: Understanding the Law
Under the Natural Gas Act of 1938, importing or exporting natural gas requires authorization from the U.S. Department of Energy (DOE), which makes its determination based upon the public interest. Selling natural gas to countries with which the United States has a free trade agreement is automatically deemed to be in the public interest, assuming all applicable environmental standards are met. Selling to countries outside of existing free trade agreements undergoes further regulatory review. In addition to the DOE process, the Federal Energy Regulatory Commission (FERC) must also authorize the siting of each LNG facility. (Learn more about the current regulatory process by clicking here.)
Step 2: Maximize Economic Benefits
Here are a few examples of the economic benefits LNG projects can provide:
- According to ICF International, employment from LNG exports is expected to create or support between 73,100 and 452,300 jobs between 2016 and 2035. 7,800 to 76, 800 of those jobs will be in manufacturing, with 1,700 to 11,400 being specifically in the refining, petrochemicals and chemicals sectors.
- The expansion of LNG exports will support tens of thousands of jobs in a variety of service sectors including manufacturing, field services, pipeline construction, transportation and many other related industries throughout the country.
- Michael Levi, Director of the Energy Security and Climate Change program at the Council on Foreign Relations, projects that new natural gas production required for a portion of the proposed LNG facilities would support approximately 40,000 jobs.
- LNG exports are consistent with the President’s National Export Initiative, which has sought to support and protect U.S. export opportunities in order to create “sustainable economic growth” and “good high-paying jobs.”
Step 3: Minimize Environmental Impacts
Natural gas has roughly half the carbon emissions of coal when used to generate electricity, and has much fewer emissions of compounds linked to smog, acid rain and asthma. Emissions do not stop at the water’s edge, so this benefits the United States and other countries. The International Energy Agency (IEA) notes that increased natural gas use could reduce global CO2 emissions by 740 million metric tons by 2035 – more than is currently emitted each year by France, Brazil, the United Kingdom or Canada. The U.S. Energy Information Administration (EIA) found that in 2012, U.S. carbon dioxide emissions resulting from energy use were the lowest since 1992, due, in large part, to increased natural gas use.
Step 4: Protect Consumers
Some claim that increased LNG export capacity in the United States will precipitously increase domestic natural gas prices. But numerous economic studies have shown that the effect of expanded LNG exports on the domestic price of natural gas will be minimal. In fact, the macro-economic report commissioned by the Department of Energy found that “consumers, in aggregate, are better off as a result of LNG exports.”
Step 5: Enhance Security
Increasing natural gas supplies on the world market will promote the “long-term national interests of the United States,” according to the Baker Institute at Rice University, giving us greater control over our energy future. America also has an opportunity to help its friends and trading partners abroad access the energy they need. Dollars can flow back into the United States in exchange for LNG, benefitting our trade deficit, and our trading partners will receive a clean and affordable supply of energy.
Step 6: Increase Supply
The United States has an abundant supply of natural gas to meet current consumption levels for over a century. In fact, the U.S. has enough natural gas to meet both domestic needs and exports. Instead of limiting markets for natural gas, our focus should be on the abundance of what we have and on promoting the development of natural gas supplies.
By recognizing the importance of natural gas exports, the United States will ensure the continued utilization of our domestic natural gas supplies in ways that create U.S. jobs on an extraordinary scale and grow the economy while also enhancing national security and expanding U.S. trade. According to the most recent projections from the U.S. Energy Information Administration (EIA), domestic natural gas production will rise 56 percent from 2012 – 2040, while domestic natural gas consumption would rise only 23 percent during the same period. Taken together, the projections prompted EIA Administrator Adam Sieminski to conclude that, “Advanced technologies for crude oil and natural gas production are continuing to increase domestic supply and reshape the U.S. energy economy as well as expand the potential for U.S. natural gas exports.”
Due to its economic and environmental benefits, natural gas has rightly been dubbed a “game changer” for the United States. Increasing utilization of this important resource will be a major source of new jobs and new economic activity for the foreseeable future. CLNG recommends adopting the following principles as a strategy that best leverages America’s abundant supply of natural gas to create jobs, increase economic growth, and expand the U.S. benefits from international trade:
- Increase development of domestic natural gas supplies to create U.S. jobs and grow the U.S. economy – including in electricity generation, transportation, industry and LNG exports.
- Resist shortsighted calls to limit natural gas exports, as exports are a major source of domestic job creation.
- Recognize that increased natural gas development can create jobs in manufacturing sectors that provide the materials and equipment that support natural gas development and LNG export facilities as well as in sectors that use natural gas as a feedstock or fuel.
- Enhance American economic growth by committing to policies that will expand U.S. trade. This includes helping important overseas allies meet their energy needs.
- Promote domestic energy development to create jobs and keep consumer prices affordable.