Originally published on Fuel Fix —
The ongoing crisis in Ukraine is a flashpoint for European and American leaders to reinforce energy security in Europe and redouble efforts to decrease Europe’s dependence on Russian natural gas. Russia provides nearly one-third of Europe’s annual natural gas demand which totaled 18.7 trillion cubic feet (Tcf) in 2013. Ukraine is also the major conduit for natural gas to Western Europe as 50% percent of Russia’s natural gas exports transits pipelines which traverse Ukraine.
Thanks to new technologies such as hydraulic fracturing, the United States has become the largest natural gas producer in the world, with more than it needs for the foreseeable future. The United States is therefore in a prime position to assist Europe to diversify its energy supply. The White House recently acknowledged this point in a joint EU-US statement on March 26th. Several U.S. energy producers are also lined up to export domestically produced liquefied natural gas (LNG).
While the White House has publicly stated its intention to assist Europe achieve diversity of supply, significant hurdles to exporting LNG to Europe remain. The biggest hurdle is bureaucratic. Specifically, the industry has been critical of the Department of Energy (DOE), with complaints it is slow-walking LNG export permits to allow U.S. producers to ship natural gas abroad. The DOE has the authority to approve ‘without delay’ natural gas exports to countries with which the United States has a free trade agreement (FTA) but continues to hold up exports to non-FTA countries. As a result, over 20 LNG export applications are awaiting a public interest determination at the Department of Energy. Some have been in the queue for over two years. As Europe does not have an FTA signed with the United States, it cannot readily receive U.S. LNG exports. The New York Times, The Washington Post, and The Wall Street Journal have all recently published editorials calling on the U.S. government to expedite LNG exports.
Congress continues to be vocal about allowing for the export of liquefied natural gas (LNG) to non-FTA countries including those in Europe, a concept the Obama administration appears to support. One bill worth mention is H.R. 6, the “Domestic Prosperity and Global Freedom Act”, introduced by Rep. Corey Gardner (R-CO) earlier this month. This legislation calls for the expedited approval of U.S. natural gas exports to all World Trade Organization countries – 159 nations in all. Democratic Senator Mark Udall has also introduced legislation calling for the U.S. to strengthen strategic partnerships abroad through expedited approval of natural gas export licenses.
Increased LNG exports to Europe will be a boon to both the United States and to Europe. On this side of the Atlantic, LNG exports could add over 450,000 new jobs by 2025 and reduce America’s trade deficit. A new analysis conducted by the economic consulting firm NERA also found U.S. economic welfare would increase the most when LNG exports are unconstrained. On the other side of the Atlantic, ensuring Europe has options in its energy sourcing would definitely curtail its dependence on Russian energy. As uncertainty concerning U.S. LNG exports remains, exports would diversify European energy supplies. Amid the ongoing Ukrainian crisis, it is important to carefully consider and weigh energy’s role in promoting and protecting American foreign policy interests.