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The House, under Republican control and backed by a handful of Democrats, gave its nod to a bill on Thursday that proposes significant restraints on President Joe Biden’s power in authorizing new liquified natural gas (LNG) initiatives. This motion, named the Unlocking Domestic LNG Potential Act, received a 224-200 vote approval in the House, with a nonpartisan stand of nine Democrats merging with 215 Republicans favoring the bill. The legislation was conceived and presented by Rep. August Pfluger, R-Texas, chair of the House Energy Action Team, early on in February.
The proposed legislation seeks to counter recent actions by President Biden that led to temporary halts on permits for emerging LNG export operations. Pfluger, explaining the rationale behind the Act, pointed out how the President had earlier spoken of the United States fulfilling European LNG needs to diminish their reliance on Russian supplies. Interestingly, he noted, these commitments seem to wane as the election year approaches, possibly due to the pressure from the more environment-focused supporters.
According to Pfluger, the world’s natural gas supplies are chiefly dominated by four nations, namely, Russia, Iran, the U.S., and Qatar. He expressed concern that the U.S. choosing to limit its LNG export activities could potentially benefit adversarial powers like Putin’s Russia and Iran. The very countries, he emphasized, have recently instigated violence resulting in the loss of three service members via the Houthis due to their weapon proliferation.
Launched studies on key issues in the run-up to the 2024 elections indicate a significant drop in the ‘climate change’ concerns among the electorate. Top contexts include economic uncertainties, turbulent situations playing out at the U.S.-Mexico border, and inflation. In such a scenario, Pfluger makes a strong case advocating the cleaner U.S. natural gas, which he states is 40% less polluting compared to its Russian counterpart.
Biden’s recent moratorium on LNG exports earns sharp criticism from Pfluger, who labels it a ‘grossly misjudged approach to environmental conservation’ considering the cleaner profile of U.S. natural gas. Pfluger’s bill, in its final form, sets out to modify the Natural Gas Act of 1938. With this amendment in effect, the Federal Energy Regulatory Commission (FERC), an independent body, will exclusively gain the reins to approve, decline or direct matters related to LNG export project siting, construction, expansion, or operation.
The revised bill also guides FERC to consider the export or import of natural gas as compliant with public interest in its permit deliberations. ‘The President seems keener on satisfying the environment-focused factions within his party than safeguarding the interests of hardworking Americans. We, the House Republicans, refuse to look the other way as the Green New Deal proposed by the Biden administration undermines American jobs, stifles our energy prospects, and favors our adversaries,’ opined House Majority Whip Tom Emmer, R-Minn.
Currently, FERC indulges in an exhaustive review of the economic and environmental implications of LNG export projects before proceeding. After this, it is up to the Department of Energy (DOE) to judge if these endeavors align with national interest prior to extending the final nod; especially when exporting LNG to non-free trade treaty nations. However, in a surprising turn of events, Biden asked the DOE to put a brake on in-process permits for LNG export infrastructure in the last month.
The pause is aimed at enabling a thorough environmental impact assessment as part of the DOE’s national interest review, notably focusing on the carbon emission footprints of such projects. The entire process might span more than a year before the thorough study is accomplished. This move by the administration has been under critical review by energy associations, Republicans, and ex-federal officials arguing that LNG exports are integral to maintaining affordable energy tariffs within the U.S.
In addition, they argued that these exports substantially aid our allies in reducing their dependency on Russian gas while simultaneously lowering global CO2 emissions. In support of their views, they quoted the example of the U.S. LNG exports in December, more than 87% of which were destined for Europe, the U.K., or Asian markets; places traditionally reliant on Russian gas supply.
According to Marty Durbin, the president of the U.S. Chamber of Commerce’s Global Energy Institute, various worldwide allies and trade partners rely on ‘clean, reliable, and affordable U.S. natural gas for sustaining their energy and economic security, as well as to bring about considerable environmental advancements through emission reductions.’ Furthermore, Durbin, whose organization supports Pfluger’s legislation, emphasized on the crucial role of U.S. LNG exports.
Critics among the Democrats, objecting the bill, advanced the theory that the legislation would primarily benefit China, a claim that failed to find substantiation in relevant data. Indeed, federal database shows only a minimal 6.7% of U.S. LNG exports find their way to China. The major recipients of U.S. LNG exports comprise Europe, depending on U.S. supplies to replace Russian resources amidst the ongoing Ukraine crisis, and other Asian nations including Japan and South Korea.
Heading into an election year, the way forward for U.S. energy policy is a hotly debated topic. Matters like balancing economic growth with climate concerns, managing our international relations in energy trading, and delivering on domestic and international commitments are all up for discussion.
The legislative scope and national strategic implications of the Unlocking Domestic LNG Potential Act are bound to trigger insightful conversations and potential transformations in our energy policies. As nations grapple with geopolitical trends and environmental challenges, the development and implications of such legislation become all the more crucial.
All eyes now turn towards the journey this legislation will take in the Senate, its reception there, and potential modifications it may undergo. As always, the interplay of national interest, international alliances, environmental concerns, and economic considerations will be compelling to watch in this stage of the legislative process.
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