The Future of U.S. LNG Exports with Rep. Sean Casten (D-IL) and Rep. Garret Graves (R-LA)

The Future of U.S. LNG Exports with Rep. Sean Casten (D-IL) and Rep. Garret Graves (R-LA)

hey everyone welcome I’m going to speak
ever so briefly from the podium my name
is Joseph mikad I’m the director of the
energy security and climate change
program at the center for Street
strategic and International Studies I
want to welcome you today to our program
and those joining us online you’re
welcome as
well uh we have
um a really great conversation planned
at least I hope since January 26 when
the White House announced that there
would be a pause on uh the approval of
licenses for new export terminals for LG
from the United States this issue has
been one that is debated thoroughly in
Washington um the White House
announcement cited a lot of different
factors energy cost for us manufacturers
consumers the future of LG markets the
perilous effects of methane for our
planet um and I think that we sometimes
in Washington don’t take enough time to
actually try and figure out where are
the lines of agreement and disagreement
and how do we find through the small D
Democratic process a way forward and I
think with LNG and this conversation
today we’re going to try and do that a
little bit at least I hope so um I’ve
got two folks with me today who I am
really really pleased are joining us as
part of this conversation representative
Garrett Graves of Louisiana it’s the
former chair of the house Republican
energy climate and conservation task
force has been a real intellectual
leader in the past few years on energy
issues on his side of the aisle and
representative Sean Caston of Illinois
current co-chair of the house
sustainable energy and environment
Coalition uh is the same on his side of
the aisle and both were on the house
select committee on the climate crisis
in last Congress so they’re intimately
familiar with these issues and are both
really thoughtful members that I’m very
pleased are joining us today um I don’t
think you want to hear much more from me
we’re going to sit down uh Mr Graves is
going to start us off and then we can
have a conversation back and
forth all right um good afternoon and
thank youall very much for coming today
um I I want to start out by saying that
um I I strongly believe that the United
States needs to be a leader in energy
technology uh that the United States
needs to be a leader in reducing energy
emissions uh United States needs to be a
leader in ensuring that the strategies
that we profer the ideas that we come up
with are solutions that are exportable
to other countries as well
and I want to run through a little bit
as to as to why um and and and before I
do that I I I I believe that Congressman
Casten would agree with with what I said
um so not coming at this from a
perspective of differing goals I think
that we actually have very very similar
goals I do believe as we’ll discuss
today uh that we have different
different ideas on actual tactics and
terms of strategies to get there and and
that’s what we look forward to
discussing today so in order for us to
plot a course forward that ensures that
we’re moving in a direction that
provides Americans and folks around the
world with energy that’s affordable
energy that’s reliable energy that’s
clean exportable Technologies and a
secure supply chain I think one of the
things we have to do is not come out of
the gates and say we’re going to ban
this we’re going to stop that we’re only
going to use these tools but rather use
every tool in the toolbox in a way that
achieves your over overall objectives
and I’m going to say those five things
again it’s about reliability it’s about
affordability it’s about the cleanliness
of energy it’s about exportable
Technologies and it’s about security of
supply chain so if we look back we look
back and we say okay what has worked I
want to remind you I believe it was in
2019 I may be off by a year or so the
head of the International Energy agency
said that what the United States has
done in the previous 10 years 10year
period let’s be clear straddling
Republican and Democrat Administration
had been the lowest energy emissions
reductions in world history okay this
isn’t some right-wing person this isn’t
some this is the head of the
International Energy agency who said
that now another another little talking
point or factoid that I think we need to
look at you may recall that um that
President Obama had established what was
known as a clean power plan and under
the clean power plan President Obama
said that we need to reduce emissions by
32% off of a 2005 Baseline by 2030 all
right I’ll run through those numbers
again 2005 Baseline 32% reduction by
2030 and what ended up happening is
rather than that requirement staying in
place it was actually thrown out okay so
the requirement to hit that Target was
thrown out however do you know how we
actually fared in in those emissions we
actually exceeded we hit a 30 4%
reduction in emissions off of the 2005
Baseline not by 2030 as was said but by
2019 and we did it without the projected
increases in cost of electricity let me
translate that what that tells me is
that is that rather than having
government coming in and picking winners
and losers and determining which Energy
Technologies we’re going to use and
which Energy Technologies we’re not
going to use we’re better off letting
innovators innovate letting innovators
innovate look I’m from south Louisiana
our state has some of the most threat
some of the greatest threats or
vulnerability to seise in the United
States and some of the greatest in the
world we’ve lost over 2,000 square miles
of our coast and this is where the
majority of our population lives these
are the areas that we represent the last
thing in the world I would want to do is
come in and and and propose solutions
that are going to further put the folks
that we represent in Jeopardy which is
why I’m going to continue hammering
those five things that I think are so
important which is why I’m going to
continue saying that I think that our
best solution is looking at the
strategies that have worked and figuring
out how to double and triple down on
those very things that have not caused
Energy prices to Skyrocket now the
administration came out and this whole
conference today is about the LNG pause
the LNG pause and whether that was a
good idea or a bad idea well for one I
think looking at perhaps the motivation
we’ve seen secretary grol that just last
year was sitting there talking about how
the United States has an abundance of
natural gas and how we actually need to
use it to as a tool to help out our
allies to this year coming out and
saying we’re going to put a freeze or
ban in place but then saying up front
this is only going to last for a year
indicating to me that there appeared to
be some politics behind the decision
more importantly it’s contrary to the
very thing that I brought up earlier
which is using all the tools in the
toolbox when they make sense and let me
explain a scenario when using natural
gas specifically using LG exports
liquified natural gas exports as a
solution if we had simply taken one year
one year of Russian liqui excuse me
Russian gas that was provided to the
European
Union one year of Russian gas provided
to the European Union and supplanted it
supplanted it with us LNG that would
have resulted in approximately a
218 million ton reduction in emissions
not to mention what have knap Vladimir
Putin would have in helped to address
some of our trade deficit issues
increased our economic ties with our
allies and I’ll say it again reduce
emissions to the tune of approximately
218 million tons I’m I’m I’m out of
times I’m going to go and wrap there and
looking forward to to dialogue with my
friend Congressman Casten but I just
think it rather than letting this become
an emotional issue I think more
appropriate for us to make sure we’re
using math and science to inform our
decisions moving forward thank you uh so
much for the starting comments and and
the timeliness and uh Mr Casten open to
your thoughts as well thanks so much um
and just really happy to be here and
happy to be here not in a classified
setting as we usually are when we’re in
this room um the so let’s start with
like areas of violence agreement the
United States has unbelievable energy
technology to export to the world we
should be it should be our national
interest EXP support those and we have a
whether you want to call this a moral
obligation or an economic obligation to
make sure that people have cheap and
affordable energy first in our country
and then to our allies around the
world where I where I think I differ a
little bit is that I’m I’m very much an
amyy lovenite if you will that the
energy that matters is the energy that
makes your beer cold and your shower hot
we would we would never we would never
say that the the purpose of of the Auto
industry is to sustain our iron Miners
And yet we can flate inputs on the
energy side with outputs that what
really matters is do we have access to
cheap and affordable heat and light and
power and the it’s true the United
States has vastly exceeded where anybody
thought we could get to from a CO2
reduction and it’s also true and I’m
totally with Garrett on this that we
should do that in a way that uses
markets to innovate and not direct the
the deregulation of the power sector in
1992 and the F orders that followed for
the first time in our history created a
world where power plant owners could
make money by saving money that didn’t
exist prior to that point and so you had
within a 10-year period we built 200,000
megawatts of combined cycle about 20% of
the whole grid that roughly almost
doubled the efficiency of the US gas
grid our nuclear Fleet went from 60%
capacity factor to 90% capacity Factor
CU it was cheaper and now you could make
money operating it us CO2 emissions went
from 1300 lb per megawatt hour to where
we at now like 900 a little bit less I
think um largely because of that well
now look at what happened to the US
Energy System and here here I’ve just I
I just pulled up some numbers off eia
before I came here in the last 10 years
well the 10 years ending 2023 because I
can get that data easy US GDP is up
61% us coal use is down 40% because it
can’t compete oil use is basically flat
it bounces around but total us oil
consumption is flat and natural gas use
in the US is up about
24% so we have actually deosil our
economy we are now getting more with
less we have a higher standard of living
and we’re less dependent on fossil fuels
to get there which means that you don’t
have to spend money our homes are more
efficient our vehicles are more
efficient our power plants are more
efficient that’s wonderful well what do
you do if you’re a fossil fuel producer
and you cannot
compete because you can’t make that beer
cold you can’t make that shower water
hot as well as your competitors are and
the answer is it’s gone to exports
remember natural gas consumption is up
24% in the last 10 years natural gas
production is up uh
55% natural gas exports are up almost
400% in that period so whereas the gas
industry was almost entirely a domestic
play before now 20% of gas production is
for export in the United States
this then sails into the natural gas act
that says if we’re going to approve
these facilities is it in the National
interest for us to drill holes in the
United States run pipes in the United
States take Supply out of the United
States and send it overseas if the price
is right is that International interest
um I would argue and I did argue with
secretary granholm on several occasions
that I think the the Biden White House
was not asking that question as
rigorously as they should have before
but we do now have this dynamic in play
where
even before you get to the
pause the right now we export about 15
BCF a day of natural gas projects
currently in construction are going to
take that to 30 so this huge increase
we’re going to double that again
projects that are
permitted not affected by the pause
having yet started construction going to
take that to about 41 so we’re going to
be at almost three-fold
increase before we ever get to the pause
and the only question right now that the
doe has to ask is should we do more than
that and I think that question has to
take into account you know does it
matter that when there was the freep
port um export terminal explosion the
price of gas fell 30% because all of a
sudden we had a glut of domestic Supply
really good for us consumers not so good
for gas exporters there was that same
Freeport terminal was under under repair
a couple months ago and you saw Henry
Hub prices some some nodes in Texas dip
negative again having a glut of Supply
really good for us consumers not so good
for gas producers um the export capacity
that’s already permit and approved is
has basically filled Europe’s needs the
new capacity I think like 18% of the new
contracted gas is going to go to Europe
like 30% is going to Asia and the
balance is going to commodity Traders so
this is not about helping our friends in
Europe at this point this is about
largely helping commodity Traders and
then secondarily is it in the US
national interest to provide cheaper
energy to to Asia to make them more
competitive in the
world that’s a question we can ask right
um and then
finally we need to be really honest
about the the global warming impacts
here if you are sitting in a coal plant
and you have a burner tip with coal and
you have a separate burner tip with
natural gas it is objectively true that
gas is much cleaner if you have more
than about 3% leaks in the system up to
that point gas is worse because methane
is so much more potent to greenhouse gas
on a 20-year period and given as we are
basically already over 1.5 degrees I
would suggest you should be looking at a
10-year global warming potential which
is like an 80 times worse pollutant and
we simply don’t have the ability to
track much less to force that the whole
distribution system is going to be leak
free once it leaves our Shores and so if
you have anything more than about 1%
leak rate of that gas after it leaves
here you are worse than coal from a
climate perspective we may not like that
but that’s just sort of the truth of
where we have to sit and so what is the
heuristic that Doe is going to use to
ask this question now that the natural
gas industry is primarily an exporter
okay it’s only 20% of production but on
but on the margin a marginal unit of new
gas production in the country right now
is going to export um and it’s going to
export because that’s where the money is
it’s going to export because you can
make more money selling it overseas than
you can at home and I think if we’re not
honest about the impacts on price
volatility the impact of hitching us
consumer prices to the rest of the
country the impact of reducing Supply
then I think we’re not at and the
environmental issues and I think we’re
not asking the last question the last
thing I just say on technology
is all those technologies that we
deployed in the United States that
helped us decouple growth from fossil
fuel use those are also exportable
Technologies right and and and and if we
think that we are worthy of those
Technologies then let’s also think about
that I’ll leave you with a conversation
we had with a a Ukrainian
parliamentarian who had come over about
6 months ago who was he had he had a job
overseeing rebuilding and construction
and he said what people need housing in
Ukraine because they just got bombed the
quickest thing to build is crappy Soviet
cinderblock housing but we don’t want to
depend on Russian gas we’d like to build
them efficient homes those are going to
take a little longer to build it’s going
to be a little bit more capital on the
front end it’s going to be we’re going
to have to figure out how to get it on
the back end that’s technology that we
should be thinking about exporting and
if all we think about is saying let’s
flood that market with gas then we’re
not only are we doing them a disservice
but we’re exposing ourselves to to more
volatility in the
future um thank you both a lot of
threads to draw on both sides um I think
I’d like to start with you Mr Casten
would talk a little bit about the the
climate considerations so so Mr grav
said that you know there’s a lot of
politics in this decision I think that’s
pretty evidently clear right there a
sort of activist Community got deeply
involved and a lot of the reporting has
been about um the young voters and all
that kind of stuff but I think there is
this sort of underlying issue which is
as you said we’re getting very close to
one and a half degrees of global warming
um this is long-lived infrastructure
there’s a fear um amongst many analysts
that like if you overcommit to this kind
of asset it’s going to be used for too
long um and and you you kind of you made
the comparison to coal and and the the
leak rate issue but I I’d love your
thoughts on um the long-term issue right
so if you kind of if you’re trying to
build a world where you’re in Net Zero
by 2050 should that be important or as
you say here we we even on the margins
it’s it’s like you’re suspicious that
there’s a climate benefit to be had in
in LG
export
um so so first off if you take like the
Ia forecast the Ia does forecast that
we’re in a decarbonizing world and they
forecast that we’re an even more
strongly decarbonizing world if
countries meet their Paris commitments
so I think when you look at what LNG is
doing on the margin you should look at
it relative to the world that the Ia
thinks we’re going into not relative to
the world that existed 15 years ago and
so and so in those forecasts you know
the Ia you know like our country is
assuming that like you
know look at us 10 years ago 50% of us
power came from coal we now make more
power from Renewables than coal that’s
not because of the IRA it’s because it’s
cheaper and you know if you build a coal
plant next to a wind farm there isn’t a
single wind developer it’s like oh man
I’m so nervous because they might out
compete me in spot markets the reverse
is very much true right so so I’m I’m
less concerned about if we build assets
that can’t compete against other future
Technologies as long as we deploy those
Technologies they’ll get out competed I
think I think the struggle is that um
you know I used to joke that anybody who
thinks that that uh energy markets
rationally allocate Capital has never
tried to get a capital project approved
in energy
markets these are these are hugely
Capital intensive projects where you
know there’s a finite number of of Banks
and entities who have the sophistication
to pull those deals together once
they’re built you have a very strong
vested interest in making sure that you
maintain the capacity factor to get your
return you become a very important
political player in your state in your
county in your country and you tend to
box out that competition and so you know
coal would have shut down a long time
ago but for the fact that they were so
good at keeping better Technologies out
of those markets um and and arguably
like there’s very few coal plants in
this country that were shut down before
their Capital was amortized it was just
that they had end of life and you had
all this other stuff coming up that’s
not because there wasn’t other
Technologies out there it’s because
politically it was hard to fight against
someone who employed you know was was
the primary source of property tax in
your community now you you made a
comment that I want to make sure I
understand well because I want actually
want to bring that one over to Mr Graves
you you you said 3% is the number of on
methane emissions that sort of makes
coal versus gas of wash right and that’s
a 20year global warming potential
correct and then you uh you you said
well and then if that means beyond our
Shores if a leak rate is above 1% we
need to be concerned because you’re kind
of seeing a low a lower one percentage
leak rate on this side yeah
so you all know this for I’ll be
pedantic here for the few people in the
room may not know this you put a you put
a piece of methane into the atmosphere
molecule methane it is a much more
potent greenhouse gas than CO2 over time
it bounces around the atmosphere runs
into an oxygen atom it becomes CO2 and
so
after a decade It all becomes CO2 but
during those that first decade it is way
more potent to greenhouse gas so you get
into this academic exercise of saying
what is the greenhouse gas equivalent of
a molecule of methane in the atmosphere
and it depends on how long you’re
looking if you look over 50 years maybe
it’s you know 10 15 times as potent if
you look over 20 years 20 30 times and
that’s what I think a lot of people say
so 20 30 okay roughly 3% right if you do
that math if you look look over 10 years
it’s 80 times as potent and that’s when
it sits in the atmosphere and so if you
sit there right now and you have you
know lots of people um darn near every
scientist who matter saying this this is
the decisive decade right then what’s
going to happen 50 years from now is not
relevant we know that sea levels on the
Gulf Coast are going to be 2 feet higher
by 2050 like we’ve already locked that
in so I would argue that you should be
looking at that 10year glob but but even
if you take the 3% you know leak rates
leak rates in the US are arguably maybe
3% we’re starting to tighten it up but
once we export overseas we don’t control
and remember we’re exporting this to
Asia right um or we’re sending it to a
commodity broker who’s going to put it
into you know some port in the Black Sea
we don’t control how good those
countries how good those Gas Utilities
are at at tightening up those leak rates
and know by the way we’re also using 14%
of the in the LG to compress it in the
first place so it’s even worse once you
factor that in um but we don’t have
control over that and if you don’t have
control over that then you can’t
honestly say this is better than
coal let me go over to Mr Graves then
with that with that question kind of in
two parts I mean one what do you think
that the opportunity associated with LG
exports is for domestic methane
abatement and the imperative there and
two how do you think about our
responsibility when we think about
National interest for emissions that
happen outside of our
Shores yeah um great great question and
and I and I think they’re you’re
beginning to dig into some of the real
sticking points on this so so first of
all um I think you have to keep in mind
that that you know I talked earlier
about how innovators have innovated and
so just throw out one statistic if you
were to take the largely the the
previous 10-year period or I guess I
think if I remember right it started
maybe 2012 to 2022 something like
that you saw energy producers reduce
emissions methane emissions by 66% so
let me let me say that again a 2third
reduction in in energy emiss and and
methane emissions associated with energy
I mean this is this is once again World
leading and and and I understand uh that
that Congressman Caston has his strong
concerns about about natural gas um but
but I do think it’s important that we do
look at numbers and he was talking about
eia projections and uh IA projections
and and I just want to dig in on that a
little bit because because I think this
is once again where we can’t let a
motion govern we’ve got to get math and
science to govern and so if you look at
the Biden administration’s Energy
Information agency they have found that
the increase in demand for natural gas
is going to be about 57% between now and
2050 all right let me say that again
Global demand for natural gas is going
to go up about
57% above current all right so
congressman kast is exactly right there
has been a surge in the export of
natural gas but number
one um the national energy technology
Labs which is a part of Department of
energy did a study um determining that
Russian gas has a 41% higher emissions
uh life cycle than us LG exported to
Europe and I think it’s 47% going into
Asia so let’s start putting some of
these things together number one if if
you have a a a projected increase in
natural gas demand let me say this again
this is the B Administration projecting
this 57% if we have a 41 to 47% lower
emissions profile or said another way
excuse me if Russian gas is a higher
emissions profile than than
uslg um and the statistic I gave earlier
about supplanting Russian gas going to
the European Union 218 million ton
reduction we need to be realistic and
and and we need to make sure that this
this demand for natural gas is actually
coming from the United States because
that results in global emissions
reductions and so we can sit here in our
utopian world and say well you know I
just think that fairy dust is going to
power the globe and and and we can say
that all day long but if if there’s no
math and science to prove that’s an
option then then we’re being really
dangerous and quite frankly
irresponsible in in blocking tools that
could help that could help to reduce uh
Global emissions which you know is is is
the question that you ask what is our
responsibility outside our Shores so
look one of the things that I think is
most important Congressman cast noted
the exportability of different Energy
Technologies one thing to keep in mind
over about a 17-year period from from
2005 forward the United States reduced
emissions more than every other
emissions reducing country but as we did
that leading the world in reducing
emissions here’s the kicker for every
one ton of emissions we reduced China
went up by I think it was six all right
so what are we doing for the global
environment what are we doing for the
global envir let me let me say it
another way um during that roughly that
same time period it was a 15 177e period
um when when the if you take all the
developing countries we actually
collectively developing countries
collectively reduced emissions about 15%
over that same period of time during
that same period developed developing de
let me try that again I’m going to start
alliv developed countries reduced
emissions over that period by about 15%
developing countries during the same
period of time increased emissions 68%
like we we’ve got to be cognizant about
what is happening globally just like
that one ton of reduction in the United
States increasing six in China we are
trashing the global environment we are
on the wrong trajectory and and we’ve
got to make sure that the solutions look
globally and ensure that we are on a
trajectory
to have the entire world reducing
emissions and so if we have 57% increase
in in natural gas demand why aren’t we
producing where we have the lowest
carbon intensity gas in the world which
happens to be off the coast of Louisiana
in the Gulf of Mexico and and I mean so
I just think we’ve got to put this data
together and I’m not at all saying that
we abandoned wind or solar or wave or
geothermal or nuclear we need absolutely
all of the above when they make sense um
thank you Mr gri and you know and kind
of now pivoting a little bit but but
this has already been part of the
conversation right the the growth in
this industry over the last 10 years has
just been enormous from from zero to now
the world’s leading exporter of us of
LNG and with as Mr Casten said enough
pipeline project that we’re looking at
probably close to doubling right
assuming that all that stuff runs at at
near full capacity there’s obvious
commercial um incentive here like and
and so I’d love to your thoughts on the
sort of you know what what economically
how are you thinking about this
economically both domestically and
internationally the role of the industry
and the potential impacts on domestic
prices versus versus um the sort of the
clear commercial case for exports which
I think probably are pretty helpful in
Louisiana all right I want I want to
make sure I understand your question I’m
I’m so like like so
strong commercial incentive to support
these kinds of things right like the doe
is stepping in counter market forces to
say the national interest needs to be
evaluated and declared Visa Energy
prices domestically so how do you think
about the national interest in that
regard and how do you compare that to
kind of sharing a valuable natural
resource yep great question okay so
number one um we have actually seen a
significant reduction in natural gas
prices over the last few decades um so
if you were to take the Consumer Price
Index or whatever um natural gas prices
have actually gone down I understand
they’ve folks have tried to use this red
herring of oh all we’re trying to do is
keep prices competitive when prices are
going down and they’re down below the
the the average when adjusted for CPI
I’m not sure what problem you’re trying
to solve number one number two um as we
all know and and probably as as
Congressman cast will note at some point
we have had an increase in production in
in natural gas and so you know that
whole Supply demand balance thing is
important but in this case um there
aren’t uh indications suggesting that
that the export is actually causing
domestic price issues um and so so
that’s a second one um I I I I just I
think that we’ve got to be very careful
about politicizing this issue and and
and let’s go back and look at some of
these examples we saw this
Administration come in and say that
we’re not going to allow the Keystone
pipe line they said Keystone Pipeline
cannot be built because it’s going to
result in increasing emissions at the
same time the administration was
actually facilitating effectively by
lifting sanctions the nordstream 2
pipeline that allowed for Russia to send
oil into the European Union those two
things can exist if you have rational
policies then months later Jen saki the
communications director for the White
House came out and said oh no no no that
energy production that was going to be
transported through the Keystone
Pipeline it’s already being it’s it’s
it’s being produced it’s being produced
it didn’t stop that production it’s just
being transported through other means
which means barge truck or rail all
three of which have a greater emissions
profile and higher chance of spilling
like just this is what
politicizing policies looks like and
it’s resulting in higher emissions it’s
resulting in higher is not because of
the exporting of LG but because the
uncertainty that’s being caused by the
pause it’s it’s it’s freezing investment
and because um for example you would
have to go back to the Jimmy cter
Administration to find any comparable
amount of oil and gas production in the
United States and just to put in
perspective the Jimmy cartter
administration at the same point in time
had opened up leasing to 100 times more
acres for energy production than under
the Biden Administration somebody may be
able to correct me but I don’t remember
anyone ever saying bring back that Jimmy
Carter energy policy so I I I I think
it’s a mistake what’s going on right now
we can’t allow this to be politicized by
either Republicans Or democrats Math and
Science needs to guide this policy
there’s a small collection of us on
Twitter who really like sweaters and you
know think that is there is a niche
sir um Mr kassen you know I’d love your
thoughts this too right kind of how to
think about the domestic price issues
your IDE American consumers in their
interests it it is also true that you
know very long-term demand can help
generate Supply we sit on apparently an
ocean of gas as the US continues its own
decarbonization we will see potentially
downward price pressure that may
interact with AI closely I’d love your
thoughts on kind of how we how we how
the doe should be thinking about that
question so first I just want to address
sort of some of the history of how gas
got so cheap um and maybe I just spent
too long in the energy industry um back
in
2008 um I was trying to finalize a deal
with Dupont where we were going to
convert their uh their gas boiler to
biomass and they were running the math
on the assumption that natural gas was
going to be $9 a million btu they were
debating whether to use 12 because that
was the Henry Hub price price at the
time and then the price came down in
their forecast and ultimately we didn’t
build and I remember I remember I said
you know what what caused this project
to tank and the guy said I work for a
Fortune 500 company we always make
long-term energy decisions based on
short-term Energy
prices I think that is the reality well
what was going on in the world in 2008
every electric utility in the country
was talking about death spirals they
weren’t seeing load growth and every gas
utility was saying there’s been this
flood of gas gas heating Gas Appliances
um the the old steam systems are being
shut down um and the gas industry was
was super bullish and oh by the way um
fracking wasn’t really a thing yet it
was you know this weird guy in Ohio um
who had some crazy ideas and seemed to
not be delivering consistently negative
cash Returns on
Equity that’s an AUB McLendon joke for
those of you who are into deep cuts um
and those LG
terminals were for import not for export
right and so the and so the idea was we
need these because we need to get gas
from Algeria that’s going to be
expensive and we’re going to have to
grow this out and so it was a really
forward forecast well the price of gas
came down because of the the amazing
fracking Revolution that brought just a
ton and and frankly a lot of people did
lose their shirt but you know such as
the way in the energy industry um the
third owners always make
money and the and now you have
electrification well now on a going
forward basis you’ve got this issue
where we are starting to decouple if you
go and talk to regulated gas utility
today they have a much less bullish view
on their future in the United States
than they did 15 years ago because
they’re seeing people are shifting away
from gas dependent for not for policy
reasons for for Market reasons they’re
cheaper the electric utilities are much
more bullish right so on a going forward
basis what do we like what what are we
going to deliver and I think it’s really
hard to argue that that you can sit in a
market that has more gas
Supply than demand and that the price
wouldn’t go down if you kept that Supply
in the United States I mean this is like
the first three pages of your economics
textbook this is not super complicated
and and that was what I said you’ve seen
when that freep Port Terminal went down
immediately Boom the price of gas fell
30% like that is really happening it’s
also true that 10 15 years ago the there
was very little um correlation between
the price of natural gas in the United
States and the price of natural gas in
Europe
well if if you’re a natural gas exporter
and you have a facility or better yet
one of those commodity players who’s
taken like 55% of all the new gas under
contract wouldn’t you love to have the
Arbitrage opportunity to say I can sell
this at Henry hub for 270 or I can sell
it in Rotterdam for nine which would you
like to have well fine they’re going to
be capitalists nothing wrong with that
but there’s no way that that doesn’t all
of a sudden put us buyers in a position
where you’re saying well geez if I want
to compete here I’m going to have to to
now to now pay that higher price or more
specifically we are going to we’re going
to start globalizing gas markets in the
way that we’ve already globalized oil
markets the the last comment that I’d
make on that is that I think and I think
this really gets to the nub of the
problem of a conversation that and
Garrett and I have had this conversation
many
times I think we have to ask ourself is
the purpose of US Energy policy to
benefit energy consumers or energy
producers and
when we conflate Upstream Supply with
Downstream use we tie those things
together but we need to be honest about
it and as a sign of how dishonest we are
show of hands how many of you remember
in April of 2020 how sad you were when
the price of gasoline was so low do you
remember that pain that you felt in your
heart nobody’s remembering the
pain
because well because at the time uh
Senator Cassidy introduced a bill that
said we should direct we should tell the
Saudis we are going to take troops out
of Saudi Arabia unless they cut down on
oil production so that we can raise the
price of oil to help out us refiners who
are really hurting right now Donald
Trump followed up Google it it was April
Fool’s Day 2020 followed up he called
the Saudis said I am going to pull the
troops out unless you clamp down
production the Saudis dutifully
responded they pulled down production
the price of oil went up Trump was
praised as a hero on Bloomberg TV that
all really
happened did did anybody outside of me
and Tom malinoski by the way bring
legislation forward when the price of
gas went up that said we should call the
Saudis and tell the Saudis that we are
going to pull troops out of Saudi Arabia
unless you ramp up
production now when Tom malanoski and I
introduced that bill Senator Cassidy
said these guys don’t understand how
energy markets
work what is the purpose of US Energy
policy is it to benefit us consumers or
us producers cuz I get it if if I was
selling widgets and one market was
paying n and the other was paying $250
I’m selling the $9 Market all day
long not so good for widget consumers
but it’s pretty good for the widget
producers and and I think this tension
as we decarbonize as we decouple our
economy from fossil fuel use should we
see our our the fossil fuel resources we
have as as a nice rainy day fund you
know for when we need it or should we
see it as something to strip mine out
and sell it to the top bidder for
whoever owns the
well um I actually like that concept so
much Mr Graves I’d love your response on
this question of uh consumers producers
or or you know is that the right
dichotomy to draw I I I don’t think it’s
I mean obviously if those are my only
two choices I’m choosing consumers all
day long which is why I’ll refer you
back that the day that President Biden
took office the lowest gasoline prices
in my home state was a $1.74 a
gallon again this Administration gas
prices were $1.74 a gallon when when
President Biden was sworn in um you
can’t find anything even remotely close
to that um Congress M cast I also want
to remind you of of of things uh that
that that that go in your weird category
um I have a letter that um let see if I
remember this right I think it was
Senator Mary um Senator Menendez um oh
gosh um oh Senator Schumer um and I I
think there were one or two others
actually sent to president Trump asking
him to have the Saudis increase their
oil production um
so I I don’t know sometimes what planet
we live on but but I have a copy of that
letter if anybody would like to see it
where I’ll say it again Schumer can’t
well I think it was Schumer can’t well
Menendez and Mary sent to president
Trump saying please have the Saudis
increase oil production um but but let
me go back and answer the question that
was what Tom Letter said too what’s that
that was what Tom and letter said too
that was that was what Tom Mosin said
too that if we ask them to curtail to
low to raise the price then is shouldn’t
we also do the reverse yeah so so so so
just going back so let me say it again I
don’t think that’s really the right the
right the two right answers I don’t
think it’s either consumers or producers
I think I think it it’s really Americans
r large because the reality is the the
the considerations go beyond just how
much people are paying at the pump if if
that’s the only metric that we’re
looking at then this administ rtion has
been an abysmal failure we’ve seen
Energy prices Skyrocket in terms of
utility cost in terms of gasoline prices
even emissions have gone up gas is okay
though what’s that gas prices are do
natural gas prices are are are yes they
have remained stable now but but let me
go back and say that I think we need to
be looking collectively at Americans and
let me give you just two examples that
are that are right now front and center
so as a result let me let me see how
many of y’all remember when uh there was
a negotiation on hostage releases with
Iran and that and that the all these
people came out and said would you you
know the Biden Administration has
released $6 billion and freed Revenue I
think South Korea had freed Revenue
under under this negotiation and all
these people were up in arms and said oh
they’re just going to give it to
terrorist do you know how much Iran’s
profited from our flawed energy policies
their their Imports excuse me their
exports have skyrocketed it’s somewhere
around
65 billion dollar so we’ve enriched Iran
with flawed energy policies
which has allowed them to further fund
Hezbollah Hamas Islamic Jihad houthis
pick your pick your terrorist and now we
just provided tens of billions of
dollars to fund the other side of the
war what are we doing and then in Russia
same thing we actually increased under
this Administration our Imports of
Russian oil in the United States we’ve
watched as prices have gone up so Russia
is now profiting more and I don’t know
I’m not sure the numbers those have been
a little more difficult to calculate but
I think it’s probably around1 billion in
additional profits so Russia’s Now using
that to fund the invasion of Ukraine
that we just funded the other side of it
again
they so let me say again I don’t think
it’s producers or
consumers what is in the best interest
of America what is in the best interest
of our American citizens collectively
and I think that those are just some
examples is where we’re not looking
properly at the at the overall
consideration use the right metrics can
I can I jump in because I think actually
the the last place I want to touch on Mr
gra um take a glass of water for a sec
because the question is to you um is the
geopolitical right so you got the
American Producers you got the American
consumers but it’s also now the fact
that we are the largest exporter of LG
in the world the geopolitical benefits
of that I think we’re still trying to
understand from the European experience
of the last couple years and um it then
and then the same theme or doubts to
sort of you know who you want getting
the the economic benefits or the sort of
revenues associated with energy exports
is it American shareholders or is it you
know uh dictatorial regimes abroad so
I’d love your thoughts on the sort of
geopolitical aspects which when with
respect to the PA are not material to
the doe but are very important for the
US and its relationships around the
world sure and I think I think you’re
you’re exactly right that that you know
look uh in off office we call them
Freedom molecules um and and you know
we’re we’re export you like that you you
can use it you can use it um uh as you
drink your petroleum based water bottle
um there um so uh I’m sorry that wasn’t
fair that wasn’t fair I take it back um
so so um look I I I think that you you
absolutely have to take it into
consideration but you know it’s not the
only consideration but take it into
consideration and and I went back and I
pulled this transcript um from a hearing
that we had in the house natural
resources committee and this was a
senior Administration official and and I
and I asked him I said look you know
what happens when you when you start
reducing domestic production of energy
does that have an impact on demand do
people start saying okay well I’m just
going to Pivot to this other energy
source and I’m going to read you his
comment this is a a senior
Administration official who’s there now
quote we’ve actually done quite a bit of
analysis of this and support a 5-year
program development and if OC s
production which is offshore outer
Continental shell for offshore
production if OCS production were to
stop most of the substitution would come
from imported oil and so look just
extrapolating this answer what he’s
saying is that there’s nothing we can do
domestically to
influence to influence um what sources
of energy other countries consume are
really that we even consume in the
United States but rather what’s going to
happen is you’re going to have other
countries that are going to fill the
void and whether that void is a void
domestically in the United States or
it’s a void that’s happening overseas
other countries are going to step in and
and and you know I said that statistic
earlier during the amount of time that
developed countries have reduced
emissions about 15% developing countries
have gone up 68% it’s why it’s so
important that that if we’re going to
achieve this this this goal that that
congressman cassid and I share America
continuing to be an energy leader uh
globally us helping to lead the energy
technology reduce emissions we’ve got to
make sure that we’re looking at the
implications the global implications of
of of emissions based on the policies
that are uh that are being put forth in
the United States um and I want to
remind you even Hillary Clinton
acknowledged that the Russians were
funding environmental groups that were
out there trying to trash fracking
because they knew it was against their
interest just like I believe that China
is out there pushing for the United
States and others to use the critical
minerals that they’ve developed the
Monopoly on not just the mining but also
the processing and refining we’ve got to
be thoughtful about how we move forward
I can’t say it enough math and science
math and science uh Mr Casten to you the
same geopolitical question I mean the
you the European thing is is real the US
has sort of unique Market
characteristics having destination
flexibility a lot of exports go to the
trading houses we don’t really know what
the future holds is there option value
in these export capacity for us and for
the global market so I’m going to be a
broken record and I want to keep coming
back of if if you’re talking about
energy policy don’t just talk about
Upstream right the we don’t do that in
any other space and arguably the single
best thing we could do domestically and
internationally is to increase energy
productivity I mean think about there’s
only three inputs to an economy labor
capital and energy maybe you could throw
in raw materials if you want
the we track labor productivity on a
weekly basis at be
right there isn’t a there isn’t a
company in the world who would keep
their CEO if their CEO didn’t know what
their return on Capital was and was
pushing that to go up against their
peers nobody tracks energy productivity
you can’t even get the numbers right and
yet it’s one of the primary inputs if
you try to go through and get the
numbers the us we consume about 100
quadrillion BTUs of primary energy a
year for nerdy Reasons I’m not even sure
I trust that number but everybody at
least measures that the same way in a
roughly 21 trillion economy so we we
generate about $200 of GDP for every
million btu that is half the energy
productivity of the UK it is onethird
the energy productivity of Switzerland
imagine if the United States was able to
deliver the same quality of living we
have right now with only a third as much
primary energy input that would be
fantastic that’s a third less exposure
to all that volatility in the world
whether because Vladimir Putin wakes up
on the wrong side of the bed one morning
or some ayatolla does something crazy
isn’t it wonderful to say I don’t give a
damn because it doesn’t affect me
because I’m not I didn’t I’m not
hitching my wagon to that wouldn’t it be
great for us to then take the
technologies that are out there and deoy
them and and again these are countries
that have already gotten to that level
right so if on the other hand we think
you know what we want
is we want more volatility and we want
to ride this wagon because you know
options pricing Theory you want to own
the volatility right well that’s awesome
let’s let’s build out those export
markets and hitch up to that volatility
um let’s not deploy the Technologies
that’s going to make them more efficient
um and and we’re guilty of that like
yeah I get it like the you know the
Russians the Iranians would not like to
have Energy Efficiency
deployed there’s a lot of folks in the
US who wouldn’t like efficiency deployed
either I got a lot of scars on my back
from against utilities um as we’ve
discussed that’s an area efficiency and
conservation where I think we absolutely
agree no no I no no I I agree but I’m
saying like if we’re sitting there and
saying what is in the US national
interest from an energy policy we’ve got
to frame this from a downstream energy
perspective and say how do you get to a
world where you have affordable reliable
useful energy not how do you get to a
world where great news Ma I got a pile
of coal on your doorstep what what what
the hell do I do with that right like I
so so but how do we make that a matter
of of US policy right like why like
double paying windows in Turkey well
like look let me let me start with some
things that I’ve been you know fairly
critical of the Biden Administration on
when when Russia invaded
UK when Russia invaded Ukraine we
immediately said uh Supply Siders are
ascendant we’ve got to ramp up l&
exports we didn’t talk at all about
saying how do we help export efficiency
technology that we have in US companies
to Europe to help make them you know
where we’ve got you know why why weren’t
we using the defense production act to
get those tools out there to reduce the
amount of energy they had to couple
themselves to we should be doing that
another place that I think we need to
have a more honest conversation and and
Garrett and I actually both lied to you
early on I’m going to be ecumenical here
um when we say that the United States is
is cutting their CO2 emissions that
assumes that we hold the United States
to a lesser standard than the United
States government holds contractors to
the United States which is to say we
ignore scope
three you can’t say that we are
simultaneously ramping up our emissions
and Sh sending oil sending coal sending
gas overseas and we’re only going to
take credit for what gets burned in our
country I feel like throwing National
scope three accounting into this
conversation four minutes before we
conclude is a pretty big uh no but but
my point is that if we’re I think we can
be measured we can be measured on
increasing our energy productivity and
we can export the Technologies to grow
that energy productivity we should not
be measured or rewarded for saying I’m
going to take my problem shift it over
here where the accountants aren’t
looking at it and take credit right and
therefore I’ve made the world a better
place by moving it over the other
side I want to make sure I understand
what you’re saying so you’re you’re
basically
endorsing what I’ve said about the
United States having the most efficient
production most efficient economy and
that by coming and ramping up
regulatory uh uh red tape and hurdles
all you’re doing is forcing activities
overseas to less efficient economies no
remember what I said before energy
markets are not efficient from an Energy
Efficiency perspective that was they
trying to put words recognize United
States has something to be proud of from
an Energy Efficiency perspective we
could do much better and that’s that’s
actually a huge opportunity right and
then we should export those Technologies
to do that what we shouldn’t do is say
like you know I mean you were talking
about Russia like why is gas prom like
so dirty because gas prom wouldn’t know
capitalism if it bit him in the ass they
have no downside of of a leaky system
yeah in the US our gas producers have an
economic interest to not leak because
they want to sell more gas but if we’re
now exporting our gas into you know
Eastern block Distribution Systems built
by gas proms predecessors we should not
assume that those systems are not super
leaky or that those are subject to the
same Market Force as we have so
I I realize you were you were you know
having a little fun there Garrett but I
I don’t think we’re as efficient as we
could be I appreciate you taking Ser
peers are more efficient and I think we
I think we should set that as a as a
goal to Aspire to not by saying we’re
the best everybody should just copy it
but I do hear a certain a sense of
obligation you you’re expressing about
sort of how we think about the life
cycle emissions of exports right that
like what happens in Poland or in China
or in India with us LNG matters yeah
along with all the leaks getting it from
here to there yeah exactly right um we
are at time and I would love to do this
longer but I have to pick my kids up
from for baseball um I’m sorry for that
but uh Mr Casten I’d love to give you a
final word and then we’ll get a final
word from Mr grav and apologies to the
audience to not get the questions well
I’ll be I’ll be really briefly just
thank you all for coming this is a great
topic um um Joe thanks for coming
Garrett it’s always a pleasure to do
these with you these These are really
big issues and I I I guess I’ll just
leave you with an
anecdote that’s rattled in my head for a
long time when I was at the the Glasgow
cop I was having this conversation with
one of the one of the European MPS who
was there saying what are you guys doing
differently that you generate so much
more economic activity per million B to
you than we do like why why are we so
bad what are you like what what should
we be copying are these zoning rules
like where do you get it and this this
guy in this good Scottish progue that
I’m not going to emulate started
laughing and he said he said oh it’s
really easy what the problem is he
said the Brits the French the Americans
you all came up with democracy at the
same time it was the same people you
were doing the same work we all came up
with the same basic ideas and in our
case we had had this sort of legacy of
of feudalism and monarchy and we had
people spread out all over the land with
wildly desperate access to resources and
we had to figure out how do you make
democracy work in this context and make
sure that people have some kind of
equivalent access to resour ources and
he said in your case you’d killed all
the natives and so you didn’t have to
worry about that and you just said um
the we’re going to design democracy and
our pressure relief valal is going to be
resource extraction um too many people
in New York Homestead Act you just go
away you get your 40 acres you go
develop you have the land you own it
we’ll give you mineral rights from your
property down to the core of the earth
like you know we’ve we’ve just given
away resources and he said
basically the United States is now
you’ve now spread out over the land and
you still haven’t quite figured out who
you want to be when you grow up and I
think and I think that basic tension
between do we think it is
in is it the essence of being an
American to extract resources and
monetize it for your personal gain or is
it the ESS essence of being an American
to make sure that everybody has an equal
opportunity to succeed and has an equal
access to resources and some equitable
distribution in a capitalist context and
I think that’s the core of this debate
that we haven’t quite decided yet who we
want to be when we grow up um but we’re
out of time yeah well um we have you
know the world’s not ending tomorrow we
can work on it you know inshah uh Mr
Graves go ahead yeah um thanks and and
uh I want to thank all of you for being
here I want to thank Congressman Casten
for the opportunity to to to share ideas
um and I think that this is one of the
most important issues that that we’re
going to face um and I think that we’ve
got to focus on this I think we’ve got
to do so in a way that’s
bipartisan um and in a way that’s going
to have
sustainable
long-term impacts I think one of the
most dangerous things we can do is
exactly what you’re seeing today when
you go from an Obama administration that
has policies over here to a trump
Administration that has policies over
here to a Biden Administration I’m not
going to get up just say over here
um and and what happens is if you’re in
the energy industry and it doesn’t
matter if you’re a proponent of
renewable energy conventional fuels what
have you you’re looking at this and
you’re just like what is going on where
am I going to invest we’ve got to keep
in mind that what investors are doing is
they’re looking for certainty they’re
looking for certainty and if we’re going
to come in every four years or every
eight years we’re going to have these
huge pendulum swings
that’s not what the United States is
known for we’re known for having stable
a stable regulatory environment a stable
economic climate and if we’re
undermining that stability we’re
undermining our ability to lead we’re
undermining our ability to gain
investment and to be the uh innovator
Innovation leaders for the world and so
as we look at policies moving forward
you may think that one Administration is
only looking economic another one is
only looking at environmental in cases I
think you’re
right but I think what we have to do is
we have to change that we have to look
at solutions that check the economic box
and I’m going to take a shot at the IRA
here and and say that we can’t go out
there and expect that we’re going to be
able to subsidize in perpetuity some of
these energy streams that otherwi Energy
Technologies that otherwise wouldn’t
have a prayer wouldn’t have a prayer of
of of
existing and we can’t go out we can’t go
out there and do that you distort
economics and and and so we’ve got to
check that economic box with our Energy
Technologies and we’ve got to check the
environmental box with our Energy
Technologies because that’s the only way
you’re going to have solutions that are
durable solutions that will with stand
or sustain these various administrations
which is why I think it is so important
that people like Congressman Casten and
I spend time thinking through some of
these solutions that can be more durable
through the partisan changes in the
house and the Senate and the White House
making sure that we can continue leading
the world in reducing emissions we can
continue ensuring that Americans have
affordable energy ensuring that we’re
not threatening geopolitics and funding
both sides of Wars ensuring that that we
have reliable Energy Solutions and
aren’t moving in a direction of states
that have proven their Solutions are
unreliable have unreliable grid like
let’s pick on
California making sure that we have
technologies that are exportable and
security of supply chain meaning that we
can’t go intentionally head down a path
where we have countries like China that
have cornered the market on critical
minerals cornered the market on refining
and
processing that is a dangerous direction
for us to go so so so in closing I
talked about Investors I talked about
strategy and I talked about certainty
what the United States would do if we
were a
business is that we would look at what
assets we have what what natural
resources we have what assets we have
and we would develop a business plan to
ensure reliable affordable clean
exportable and secure supply chain
energy strategies that are based upon
our resources the things that we do well
the things that we have here that we can
control and it would continue that path
of reducing energy of ensuring we have a
competitive economy in the United States
and one of the most efficient efficient
economies in the world
um so thank you um really appreciate the
opportunity to join and uh happy to hang
back if folks have questions or want to
throw
things uh thank you both very much this
is I mean I I thought this was a really
rich conversation there’s a couple
threads that are worth pulling on
consumers and producers and their
interests how do we speak to all of us
how do we balance these geopolitical and
climate forces and how do we keep our
eye on long-term goals uh really
grateful that you both spent the hour
with us thank you so much if we wouldn’t
mind giving them a war
appreciation um and I think there are uh
crackers and soft drinks and other
things in the in the lobby and this is
Joseph Mike for csis signing off thank
you all
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The Biden Administration’s decision to pause new approvals for liquified natural gas (LNG) export terminals, was one of the biggest energy policy developments in recent years. The Administration argues that the Department of Energy needs time to reassess U.S. LNG’s climate impact. Congressional Republicans and many in the energy sector oppose the pause, arguing that the Biden Administration is jeopardizing the economic, geopolitical, and environmental potential of the U.S. LNG industry.

The CSIS Energy Security and Climate Change Program is pleased to host a discussion on the topic with Rep. Sean Casten (D-IL) and Rep. Garret Graves (R-LA), two of the leading voices on energy and climate change in Congress. The conversation will provide insight into the economic, geopolitical, and environmental dimensions of U.S. LNG exports as well as Democratic and Republican perspectives on the topic.

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