By Lisa Friedman and Coral Davenport
If the United States were to continue exporting liquefied natural gas in the way that has made it the world’s biggest gas supplier, it would drive up costs for American consumers and businesses, pollute struggling communities and increase global greenhouse gas emissions, according to a letter written by Energy Secretary Jennifer Granholm that was obtained by The New York Times.
The letter is expected to accompany a study of the economic, national security and climate effects of approving new natural gas export terminals to be issued within days by the Energy Department. President Joe Biden ordered the analysis in January, when he paused the process of issuing permits for more than a dozen new gas export facilities, including what would be the largest terminal ever built in the United States. The pause was praised by environmentalists but triggered outrage from the oil and gas industry.
In the letter, Granholm said the analysis showed that the continued pace of gas exports was “neither sustainable nor advisable.”
However, the report does not provide grounds for the federal government to issue blanket denials of the final permits for future natural gas terminals, said three senior administration officials familiar with the report, who spoke on the condition of anonymity because they were not authorized to discuss its findings. Under federal law, two agencies are responsible for approving LNG projects. The Federal Energy Regulatory Commission approves location and construction, while the Energy Department must determine if exports are “in the public interest.” To date, the Energy Department has never denied any company seeking such a permit.
The conclusions of the report could provide a legal argument for those seeking to sue to stop permits for export terminals in the future, the senior administration officials said.
In her letter, Granholm wrote that future administrations must scrutinize each proposed project and consider the economic and environmental issues raised by the analyses. The report may compel companies seeking permits to more thoroughly demonstrate that they have mitigated the greenhouse pollution associated with extracting and transporting the gas, and also force future administrations to show how they have reconciled decisions to approve new terminals with the report’s findings.
Granholm noted that U.S. exports of natural gas had tripled over the past five years, are expected to double by 2030 and could double again based only on new terminals that have been approved and planned.
While she said that selling LNG overseas generates “wealth for the owners of export facilities” and jobs across the supply chain, Granholm wrote that “unfettered exports” would mean less gas available at home, causing domestic wholesale prices to increase about 30%. That, in turn, would increase costs for the average American household by more than $100 a year by 2050 and quite likely also cause electricity prices to rise. For heavy industry, costs could go up by $125 billion, she said, citing the report. That in turn could lead to higher prices on goods for consumers, she wrote.
When it comes to climate change, Granholm said new export facilities should face rigorous questions “especially in a world that needs to quickly reduce greenhouse gas emissions.”
Under a scenario in which more than the current level of gas was exported, the report found that the direct emissions would be 1.5 gigatons per year by 2050. That’s about a quarter of annual emissions generated by the United States, the world’s second-biggest polluter. That figure does not take into account that additional gas might displace dirtier fuels like coal.
The gas industry frequently claims that U.S. exports of natural gas help the climate by displacing coal, which produces more carbon dioxide when burned. But Granholm noted that the study found increased LNG exports would displace more wind, solar and other renewable energy than coal. The study modeled five scenarios and in every one, global greenhouse gases were projected to rise, even when researchers assumed aggressive use of technologies to capture and store carbon emissions.
Since Russia invaded Ukraine in 2022, U.S. LNG “has proven critical for our allies in Europe as they wean themselves off Russian gas,” Granholm wrote. But she said the report found that European demand had flattened, peaked in Japan and was expected to flatten soon in South Korea. Most of the new demand will be in China, she wrote.
The White House did not respond to a request for comment.
Ending the pause on new export terminals has been a top aim of the oil and gas industry, which donated heavily to help return President-elect Donald Trump to the White House. Trump has promised to expand the drilling and burning of fossil fuels, the main driver of climate change. He has suggested he would approve some permits as soon as he takes office. On Dec. 10, he wrote on the social media site X, “Any person or company investing ONE BILLION DOLLARS, OR MORE, in the United States of America, will receive fully expedited approvals and permits, including, but in no way limited to, all Environmental approvals. GET READY TO ROCK!!!”
The pause in new permits became a lightning rod during this year’s presidential race.
It followed a campaign by climate activists, who threatened to “punish” the Biden-Harris administration if it approved the largest of the terminals, known as Calcasieu Pass 2. But the pause galvanized the oil and gas industry against the administration, whipping up support and $75 million in donations for Trump’s campaign.
Over the summer, a judge ordered the Biden administration to resume issuing permits, and it did then approve at least one export permit. But Republicans and the oil and gas industry have accused the administration of effectively continuing the pause, by deliberately continuing to stall new approvals.
Climate activists and oil lobbyists both say that the pause did slow plans for new export terminals, though it does not appear to have caused the cancellation of any individual projects.