Obama's climate plan silent on exports but pledges support for global gas markets

President Obama doubled down this week on using natural gas in place of dirtier fossil fuels like coal, alluding to natural gas exports in a discussion of how the U.S. can help address global greenhouse gas emissions, even as a study published yesterday said renewables are poised to surpass natural gas globally within three years.

Obama did not touch on the controversy in Washington over whether the administration should unlock U.S. exports of liquefied natural gas, an issue that has at times put energy-intensive manufacturing companies on the same side as environmental champions like the Sierra Club in calling for export limits (EnergyWire, Feb. 26).

Obama and top administration officials have consistently signaled their general support for trade in natural gas, including remarks by the president in May in which he said he would soon make a decision on exports (EnergyWire, May 7). Speaking in a major climate address at Georgetown University on Tuesday, Obama gave no indication of how soon his Energy Department might be expected to address the backlog of LNG export applications before it.

But in the president's speech and in a 21-page plan released by the White House, officials set natural gas on the positive side of the climate ledger and pledged to support global trade in the fuel. "Going forward, we will promote fuel-switching from coal to gas for electricity production and encourage the development of a global market for gas," the plan said.

LNG boosters pointed to that language as referring to exports. The global natural gas market currently relies primarily on pipeline transactions, which are limited by continental boundaries and historical sales patterns. A robust LNG trade promises to shake up that paradigm by allowing shipments to move more freely, though the market today remains constrained by a lack of supply and by the relatively small number of gasification and storage terminals to receive shipments.


The International Energy Agency, a Paris-based organization established in the 1970s to promote energy security, recently published a study that said buyers in Asia especially, where LNG is expensive and in high demand, would benefit from a more active and organized trading environment for the fuel.

Industry watchers say the U.S. shale gas boom already has had a dramatic impact on global markets by freeing up LNG slated for delivery to the United States and allowing it to be redirected to Europe and other delivery points. If U.S. exports begin as expected in 2015 or 2016, that impact would grow.

Exporting the whole industry

Potentially at odds with increased U.S. exports, though, is the administration's statement that it will ramp up support for the international exchange of clean energy expertise, including know-how needed to let other countries launch their own shale gas revolutions.

"To help more countries transitioning to cleaner sources of energy and to help them do it faster, we're going to partner with our private sector to apply private-sector technological know-how in countries that transition to natural gas," Obama said. "We've mobilized billions of dollars in private capital for clean energy projects around the world."

Administration officials highlighted the State Department's Unconventional Gas Technical Engagement Program, which works with foreign governments, companies and other stakeholders abroad to share best practices around shale gas development, as an example of the kind of collaboration needed for a global shift away from coal.

For elements of the U.S. natural gas industry that see themselves locked in a global race for LNG market share, a focus on spreading new technologies could mean that huge potential importers like China and India get help in unlocking their own shale gas resources, diminishing their need for American gas.

To the Sierra Club, a leading opponent of LNG exports that argues that they are inextricably linked with the controversial process of hydraulic fracturing, both domestic exports and expanded international production look like a loss.

"A presidential Climate Action Plan that doubles down on clean energy cannot also continue our reliance on natural gas. Deepening investments in natural gas will hamper, not assist, transforming our energy system and tackling the daunting climate task ahead," Deb Nardone, the director of Sierra Club's "Beyond Natural Gas" campaign, wrote in a blog post.

Sierra Club leadership generally welcomed the president's climate remarks this week, focusing primarily on his statement that the controversial Keystone XL oil sands pipeline would be evaluated based on its greenhouse gas impacts.

But Nardone described natural gas not as a bridge to cleaner future energy solutions, as the administration described it, but as "a gangplank to a much warmer planet."

"The export of liquefied natural gas (LNG) would pose even greater risk to our climate," Nardone said, arguing that if climate impacts are to be a yardstick for energy project approvals, the proposed U.S. terminals should be denied.

In his speech, Obama acknowledged the critics of natural gas. "Sometimes there are disputes about natural gas, but let me say this: We should strengthen our position as the top natural gas producer because, in the medium term at least, it not only can provide safe, cheap power, but it can also help reduce our carbon emissions," he said.

Renewables overlooked?

In a report released yesterday, the International Energy Agency suggested that the role to be played by renewables in this decade will be far greater than some observers have said.

In its annual "Medium-Term Renewable Energy Market Report," analysts predicted that electric generation from renewables like solar, wind and hydropower will continue to grow rapidly.

"As global renewable electricity generation expands in absolute terms, it is expected to surpass that from natural gas and double that from nuclear power by 2016, becoming the second most important global electricity source, after coal," the report said.

By 2018, renewable power will constitute 25 percent of all electric generation, the group predicts, up from 19 percent in 2011.

The report said global investments in renewable energy fell in 2012 in the face of poor economic conditions, policy uncertainty in traditionally supportive countries and industry turbulence, among other challenges. Nonetheless, it said, strong growth in less developed countries will continue to push renewables' expansion.

The report pointed to the rise in natural gas use in the U.S. as a competitive challenge for renewables and said policy uncertainty is among the greatest risks that threaten renewable energy projects.

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