Natural gas, the energy source that was once hailed as the bridge fuel of the future, is now starting to face resistance from certain groups. One Sierra Club official was very clear in labeling new investments in natural gas as a “mistake” and arguing that what was really needed was an investment in renewables and related technologies. As this negative pressure mounts, the natural gas industry is now fighting back.
Earlier this month, Senator Elizabeth Warren sent a letter to almost a dozen oil and gas companies, accusing them of corporate greed and profiteering for exporting record amounts of natural gas instead of keeping it at home to keep prices low.
“The cause of rapidly rising energy prices for consumers and manufacturers is clear: some of the nation’s largest and most profitable oil and gas companies are putting their massive profits, share prices and dividends for investors, and millions of dollars in CEO pay and bonuses ahead of the needs of American consumers and the nation’s recovery from the pandemic,” Sen. Warren wrote, citing reports in the Wall Street Journal about record export rates.
And yet, at the same time, there is often strong opposition to more natural gas use in the United States. New York’s now-former governor Andrew Cuomo, for instance, was a vocal opponent of new gas infrastructure and put a lot of effort into killing a new gas pipeline project, the final blow delivered just last year. At the same time, two years ago, amid a gas crunch, Cuomo threatened New York’s grid operator with the revocation of its license if it didn’t supply enough power for everyone even though the company cited the shortage of pipeline capacity that is required to supply the gas used to make the electricity.
Like with oil, the feeling of some consumers towards natural gas seems to be “We hate you, but we need you”. And like oil, gas producers are making an effort to clean up their image. BP, for instance, recently won A-grade certification for its gas from MiQ, an independent certifier of methane emissions, which, according to its senior advisor Georges Tijbosch, can help both gas producers and regulators by providing the former with a competitive edge if their gas is low-emission and the latter with the necessary information to tighten control over emissions.
It appears that with the growing awareness of emissions, buyers of energy commodities are also becoming more sensitive to their carbon footprint. So, certification and efforts to lower the emission footprint of natural gas production will pay off by making the company’s product more attractive, albeit more expensive, for buyers.
But some in the industry argue that, even without certification, gas has done a huge amount to help the reduction of emissions by simply replacing coal. In response to Sen. Warren’s letter this month, the chief executive of EQT Energy, Toby Rice, wrote that “The emissions reduction from coal to gas switching seen in the United States between 2005 and 2019 is the equivalent of actually electrifying approximately 190 million cars, or roughly 70% of the total number of cars in the United States. We are currently projected to have global sales of 31.1 million electric vehicles in 2030.”
He also wrote that the higher domestic prices for natural gas were not the result of record exports, saying the ramp-up of these exports had “the potential to be the biggest green initiative on the planet, and it’s not even close.”
“Ramping LNG in a manner that specifically targets the replacement of foreign coal, particularly in China, represents the largest, fastest and most proven opportunity for the United States to address global climate change,” Rice wrote. “That’s the prize—reducing emission levels at a pace we’ve never seen, while simultaneously providing the world with cheap, reliable and clean energy.”
That’s an impressive return of the ball to Warren’s — and other politicians’ —court. Put simply, the choice for politicians like Warren is this: you can either have dirt cheap gas at home and be selfish about it or share the low-emission commodity with the world to help lower global emissions, because whatever the arguments against gas, nobody is arguing that it is dirtier than coal.
At the end of the day, unless the federal government passes legislation to limit exports of natural gas, there is nothing it can do to limit the corporate greed that is part of capitalism. Just the suggestion of more emissions-focused legislation appears to be prompting companies to make greater commitments in this respect, both in oil and gas. Perhaps the tensions between the U.S. administration and the energy industry could have a positive outcome.
By Irina Slav for Oilprice.com
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