Two Wrongs Don’t Make a Right With Bipartisan Energy Bill

REUTERS/Yuri Gripas

Margo Thorning Senior Vice President, ACCF
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Congress needs a review on a basic lesson: Two wrongs don’t make a right.

People deserve to be angry about the slow response to the crisis over lead-contaminated water in Flint, Michigan. But it’s still wrong for Senate Democrats to hold hostage a bipartisan energy bill — one more than a year in the making — to get action on Flint.

The first major energy legislation in nearly a decade, the bill represents rare cooperation between Democrats and Republicans. Its sponsors — Sen. Lisa Murkowski (R-AK) and Sen. Maria Cantwell (D-WA) — worked hard to find common ground with an “all-of-the-above” energy policy that prioritizes economic growth and job creation.

There’s a lot to like in this bill. Among its provisions are measures to boost production from a balanced mix of energy sources, to improve energy efficiency for public buildings like schools, and to modernize the U.S. electrical grid. But perhaps most important of all for the health of the U.S. economy is a streamlined approval process for U.S. exports of liquefied natural gas.

New technological advances have made extracting natural gas cheaper and safer than ever. As a result, America is the world’s largest producer today. Production has jumped 42 percent since 2005, and the government projects another 39 percent increase by 2040. Right now, U.S. production is expanding well beyond our domestic needs for natural gas.

Given this state of affairs, U.S. producers are looking to the international marketplace. But current law requires the Department of Energy to first determine whether LNG exports are in the “public interest” when the gas is going to countries with which the United States doesn’t have a free-trade agreement.

The result is a review process riddled with delays, effectively serving as an export restriction on natural gas. In five years, the Energy Department has granted approval to only a handful of applicants. About 30 are still pending.

The energy bill in the Senate would cut through this unnecessary red tape. It would give the Energy Department a firm but reasonable deadline for approving projects once they have passed required environmental evaluation.

Passing the bill would also open our economy to the enormous benefits LNG exports can provide.

Last year, the President Obama’s Council of Economic Advisors endorsed LNG exports, arguing that allowing U.S. companies free access to the global marketplace would have positive effects on “employment, U.S. geopolitical security, and the environment.” According to their estimates, increased exports could create as many as 65,000 jobs for every 6 billion cubic feet of LNG exported.

Researchers commissioned by the Department of Energy have also weighed in on the benefits of LNG exports. They recently reconfirmed findings from a 2014 DOE study showing that higher levels of exports yield correspondingly greater economic gains for the United States. An analysis by the consulting firm ICF International concluded that LNG exports could contribute up to 665,000 net jobs and $115 billion to U.S. GDP by 2035.

Enabling LNG exports promises not only a brighter economic forecast, but also a cleaner energy future.

Even the newest and cleanest coal-burning power plants emit up to 106 percent more carbon emissions than natural gas plants. Switching from coal to gas could lead to a dramatic reduction in greenhouse gases worldwide. Here in the United States, we’ve already seen carbon emissions from the power sector drop to a 27-year low — mostly due to greater reliance on natural gas.

But a stalled energy bill brings all of these potential gains — for the economy, environment, and job market, and relations with our trading parners — into question. Right now, the Department of Energy has no set deadline to review export applications, and the longest application has been pending for more than 1,000 days.

Before he was leading the charge to block the energy bill, Senate Democratic Minority Leader Harry Reid acknowledged it was “a good bill” that deserved to pass. He was right. Senate Democrats should stop playing politics with America’s energy future.

Margo Thorning is Senior Vice President and Chief Economist for The American Council for Capital Formation.