Almost a year ago, Congress made history by lifting the ban on crude oil exports – an archaic provision in the law that stifled America’s ability to become global energy leader. Now, Congress has the opportunity to make history once more by refocusing on long overdue items in the final days before the end of the year, specifically on the much-needed Energy Policy Modernization Act (EPMA).
The Senate voted earlier this summer to conference with the House in an effort to hammer out final provisions between the two chambers’ competing energy bills. However, before conferees could complete their work, members became sidetracked by the elections and the negotiations stalled. As a result, legislative language to improve the time it takes to review applications for the export of liquefied natural gas (LNG) is in jeopardy.
Earlier this month, House Democrats sent a revised offer to the Senate that did not include the LNG export language, which would give the U.S. Department of Energy (DOE) 45 days to finish its review of a project – instead of the open-ended process currently in place – after environmental analysis has concluded.
This much needed change would make the DOE review process more efficient and ensure that projects don’t face unnecessary and costly delays. A more predicable process would also reduce uncertainty and restore the advantage for U.S. LNG projects to compete for a share of the global market. That share can translate into billions of dollars in new investments, and thousands of jobs.
The failure to include the LNG provision was disappointing. Some LNG export applications have been pending for years, tied up in the bureaucratic process somewhere between DOE and the Federal Energy Regulatory Commission (FERC), including an application for an export terminal in Georgia that was pending for more than 1,000 days before finally being approved.
The United States has an estimated 2,200 trillion cubic feet of economically recoverable natural gas – the equivalent of 84 years of domestic consumption at current rates. With an abundant supply of U.S.-produced, low-cost natural gas to meet domestic demand for decades, exporting LNG is the next obvious step on the path to increased economic prosperity and global energy leadership.
According to the International Energy Agency (IEA) and Goldman Sachs Group Inc., LNG was the world’s second-most traded commodity last year. Demand for LNG around the world is projected to continue to grow. Our allies in Europe are especially interested in buying U.S. LNG, which would provide a stable source of baseload energy that offers a cleaner alternative to other traditional fossil fuels. IEA and Goldman also pointed out that U.S. natural gas is an affordable alternative in many emerging markets where prices for locally produced energy have been high and supplies limited.
During the past year, both chambers of Congress have recognized the necessity of modernizing our national energy policies to reflect the recent energy renaissance, yet LNG export applications continue to languish. It is disappointing that the LNG language was stripped from the House’s counter to the original Senate bill, but there is still time to correct the error.
America has not seen a major energy policy bill since the Bush administration – an error that is threatening our energy security. U.S. LNG is already being exported in limited quantities, but the application process remains slow and cumbersome, resulting in lost opportunities for U.S. businesses as other global projects come online.
As the year comes to a close, the debate over LNG exports and modernizing out energy policy is at a tipping point. Before the 114th Congress comes to a close, we encourage lawmakers to reconcile differences and send a final energy bill to the president for signing that includes overdue reforms to the DOE review process for LNG export licenses.
Dr. Margo Thorning is Senior Economic Policy Advisor with the American Council for Capital Formation.