Trump Praises LNG Exports in Louisiana as His Trade War with China Threatens the Industry

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Today President Donald Trump appeared at Louisiana’sย $10 billion Cameron Liquefied Natural Gas (LNG) export facilityย to promote LNG exportsย and American โ€œenergyย independence.โ€

Trumpโ€™s visit to theย Cameron Parish terminal comes the day after his escalating trade war, which he called โ€œa little squabble with China,โ€ย led China to raiseย tariffs on U.S. LNG from 10 to 25 percent โ€” a major blow to the U.S.ย industry, which could slow America’sย massive plans toย expand LNG export facilities.

Last year China was the fourth largest importer of U.S. LNG. This year, however,ย with the 10 percent tariffs, only two ships have delivered U.S. LNG to China, and industry experts expect the 25 percentย tariffs to likely end Chinaโ€™s purchases from the U.S.

โ€œI expect they will have a hard time landing a tanker carrying U.S. LNG in China if they impose a 25 percent tariff on it,โ€ Jack Weixel, senior director at industry analysts IHS Markit toldย Reuters.

While Trump is touting the LNG industry’s job creation inย Louisiana, his tariffs have not been well received by the gasย industry.

Charlie Riedl, the executive director of the Center for Liquefied Natural Gas, expressed his displeasure with the tariffs,ย saying, โ€œWe are deeply troubled by the ratcheting up of Chinaโ€™s tariff and would like to see the two countries reach a resolution quickly, which is in the best interest of all parties.โ€ Riedl is joining Trump inย Louisiana.

And Stephen Comstock, a director at the oil and gas industry lobbying group the American Petroleum Institute, released a statement opposing the tariffs and noting that they were hurting American workers andย consumers.

โ€œThese retaliatory tariffs dampen the prospects for the growing U.S. LNG investment, hurt U.S. workers, and benefit Americaโ€™s foreign competitors,โ€ Comstock said. โ€œStudies show that the U.S.-China trade dispute is hurting [the] U.S. economy andย consumers.โ€

Cameron LNG plant
U.S. Coast Guard inspects Cameron LNG Facility in preparation for first LNG export.
Credit:ย U.S. Coast Guard/MSU Lake Charles, publicย domain

Tariffs Likely to Impact Planned LNG Exportย Facilities

The U.S. is awash in excess natural gas right now. This flood comesย from fracking for natural gas in shale formations like Pennsylvania and Texas, as well as from the โ€œassociated gasโ€ that accompanies oilย production.

Texas is producing so much gas alongside its boomingย oil production that companies are actually paying others to take the excess fossil fuel. Many choose to just burn the gas (known as โ€œflaringโ€) or vent it (and the powerful greenhouse gas methane)ย directly into the atmosphere.

Mexico has been one market for U.S. natural gas, which is easily exported via pipeline andย does not require the processing to super-cool the gas and convert it to LNG, but the industry has bet its future on massively increasing LNGย exports.

Louisiana governor John Bel Edwards recently trumpetedย theย more than 12 LNG projects in various stages of progress in Louisiana, all export facilitiesย poised to take advantage of U.S. natural gas glut and โ€œnew markets around the world.โ€ Gov. Edwards even created a special campaign ad for Trumpโ€™s visit, notingย the planned growth and claimingย Louisiana is โ€œmoving in the rightย direction.โ€

According to the U.S. Energy Information Administration, LNG export capacity in America is expected to double to almost 8 billion cubic feet per day (bcf/d) by the end of this year. Exports are expected to averageย around 5.2 bcf/d this year. However, those predictions were madeย before the new Chineseย tariffs.

U.S. Liquefied Natural Gas Export Capacity 2016-2021. Source: U.S. Energy Informationย Administration

The expansion of the U.S. LNG industry is based on expected Chinese demand. The 10 percent tariffs announced late last year were already affecting financing decisions for new U.S. LNG projects and the expectation is that the new 25 percentย tariffs will have a greater impact โ€” as the American Petroleum Institute noted. Financing for these massive projects normally requires agreements in place with the customer who is slated to buy the LNG. In many cases, that customer wasย China.

So, while the short-term impacts of the new Chinese tariffs are evident, the long-term impacts could mean new American LNG export facilities wonโ€™t be financed or the industry may riskย overbuildingย export capacity. A report from BloombergNEF published last week already predictedย that global LNG export capacity will significantly outstripย actual demand this year and that structural imbalance is expected to continue throughย 2022.

However, today Trump was joined at Cameron LNG byย European Commissioner for Energy Maros Sefcovic to push LNG exports to Europe, and the Senate is considering a bill to support European gas projects. Environmental groups criticized theย move.

โ€œAs our planet teeters on the brink of climate chaos, America should be leading the international drive for clean, renewable energy, not trying to hamper it by flooding the cross-Atlantic market with dirty fossil fuels,โ€ย Food & Water Watch Executive Director Wenonah Hauter saidย in a statement about theย visit.

Climate vs. the LNGย Industry

While many (including former Secretary of State John Kerry)ย stillย claim that natural gas is a โ€œbridge fuelโ€ to a renewable future,ย scientists have shown that gas can rivalย coal’s impacts on the climate. Late last year, the International Energy Agency warned that building new fossil fuel infrastructure is incompatible with internationalย climateย goals.ย 

While the new tariffs could slow the growth of the U.S. LNG industry, China will have no problem getting the LNG it needs from other suppliers, such as Australia, Qatar, orย Russia.

The current fracking boom in America โ€” often overseen by foreign-owned companies โ€” has turned the country intoย a major exporter of oil and natural gas. These exports alone are not compatible with international climate goals, but the planned increases will make any attempts to limit warming to 1.5ยฐC (2.7ยฐF)ย impossible.

Both the governor of Louisiana and President Trump talk about jobs and energy independence while saying that increasing LNG exports will move the country in the โ€œright direction.โ€ย Meanwhile, the realities of a rapidly changing climate are readily apparent in Louisiana, the rest of the U.S., and around the world.

The majority of mainstream media coverage of the LNG industry fails to even mention the potential impacts on the climate, beyond referring to LNG as a โ€œbridgeย fuel.โ€

Meanwhile,ย proponents of the Green New Dealย are blasting middle-of-the-ground climate plans, and Bill Nyeย neatly summarized the situation in his recent appearance on John Oliver’s Last Week Tonight.

Nye cuts to the chase:ย โ€œThe planet’s on fucking fire.โ€ And LNG is more fossil fuel for theย fire.

Main image: President Trump speaking at the Cameron LNG export facility on May 14, 2019. Credit:ย Phinizy Percy, withย permission

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Justin Mikulka is a research fellow at New Consensus. Prior to joining New Consensus in October 2021, Justin reported for DeSmog, where he began in 2014. Justin has a degree in Civil and Environmental Engineering from Cornell University.

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