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The answer depends on where it’s going and what it’s replacing.
President Biden’s decision to pause approving liquified natural gas export terminals until it can better study their climate effects — functionally delaying or even outright preventing their construction — got real political, real fast. Almost immediately, West Virginia Senator Joe Manchin called for a hearing on the president’s decision-making.
“If the Administration has the facts to prove that additional LNG export capacity would hurt Americans, they must make that information public and clear,” he said in a statement last week. “But if this pause is just another political ploy to pander to keep-it-in-the-ground climate activists at the expense of American workers, businesses and our allies in need, I will do everything in my power to end this pause immediately.”
While Senator Manchin is not exactly the administration’s biggest fan lately, he’s also asking some pretty interesting questions. One of the animating ideas of the past few months in climate politics has been the argument that LNG (and maybe even pipeline gas) are in fact far worse for the global climate even than coal, which has long been assumed to be the dirtiest, most carbon-intensive fossil fuel around. That view is based on research by Cornell University scientist Robert Howarth and has been expounded by climate advocates and elected officials alike.
But that research has not yet passed through peer review. Even if it had, Howarth’s past research has gotten criticism from other climate scientists for using some idiosyncratic assumptions that yield more dramatic results.
Make no mistake, meeting the goals of the Paris Agreement and holding global warming to 1.5 degrees Celsius over pre-industrial levels requires winding down our use of fossil fuels as quickly as possible. If we meet those goals, the natural gas export terminals delayed by the Biden administration’s decision will likely go dormant well before the end of their expected lifespans. But it’s not the case that in all possible worlds, continuing or even expanding natural gas production and exports would actually be worse for the climate.
The basic physics of coal emissions versus LNG emissions are just part of the equation. When it’s burned, natural gas releases carbon dioxide, the primary source of human-caused climate change, albeit less carbon dioxide than coal. But natural gas is itself mostly methane, CH4, which traps far more heat than CO2 when it leaks from wells, pipelines, and production facilities. (LNG is also much more energy-intensive to extract, produce, and store than regular natural gas, since it has to be cooled to -260 degrees Fahrenheit, sailed across the ocean and then “regasified” and shipped via pipeline on the other side.) While CH4 is more potent than CO2 from a warming perspective, it also breaks down much more quickly in the atmosphere, which means the warming effect doesn’t last as long.
How to think about LNG’s effect on overall emissions, then, largely depends on how much you think each of these factors matters. “Only if we assume high methane leakage rates and a 20-year global warming potential is natural gas worse than coal, and such assumptions are likely unrealistic,” wrote Carnegie Mellon energy systems researcher Paulina Jaramillo in an essay titled, aptly, “Navigating the LNG Dilemma.”
Absolute emissions aren’t even what we should be asking about, Arvind Ravikumar, a professor at the University of Texas and a leading scholar on natural gas and energy policy, told me. “The climate impact of U.S. LNG depends on what it replaces in countries — whether those alternatives have more or less emissions than U.S. LNG.”
When the United States stepped in to replace much of the gas the European Union would otherwise buy from Russia with LNG, Ravikumar explained, it likely reduced overall emissions because of lower methane emissions from the U.S. gas industry. Before the invasion of Ukraine, Russia supplied about 155 billion cubic meters of natural gas to Europe; by 2022, that was down to around 80 billion cubic meters. That’s a lot of energy to replace. In that time, the U.S. more than doubled its LNG exports to Europe, which has guaranteed demand of at least 50 billion cubic meters from the U.S. through 2030.
Had the U.S. not ramped up its LNG exports, boosters argue, these countries might not have had a viable alternative and might have turned to coal, instead. But that won’t be the case in every single possible future scenario. “There’s no right answer,” Ravikumar told me. “It depends on who buys, what time frame, which country, and how are they using LNG.”
There’s at least one clear case study of the coal-to-gas switch working to lower emissions: the United States itself.
In 2007, the U.S. was consuming just over 1 billion tons of coal for electricity; by 2016 that had declined to 679 million, and by 2022 to just under 500 million — in other words, by more than half. In that same time, natural gas use for electricity grew from 7 trillion cubic feet in 2007 to 10 trillion cubic feet in 2016 to 12 trillion cubic feet in 2022.
U.S. greenhouse gas emissions have dropped more than 15% since 2007 to even below their 1992 levels, according to the Environmental Protection Agency and the Rhodium Group. The drop in emissions has been going on since 2010, which the EPA attributes, in part, to "the growing use of natural gas and renewables to generate electricity in place of more carbon-intensive fuels.”
As climatologist Zeke Hausfather put it in an earlier commentary on an earlier Howarth paper, “While it isn’t responsible for the majority of emissions reductions, natural gas replacing coal is the largest single driver.”
Much of the conceptual infrastructure on which climate policy operates relies on estimating what the world will be like in the future — not just figuring out the effects of different levels of greenhouse gas concentrations in the atmosphere, but also figuring out different likely pathways for the evolution of those emissions over time.
This works in both directions — asking how specific projects either reduce or lower emissions, and asking about what an energy system would look like in a world where emissions have been reduced enough to avoid certain levels of temperature increases. And that’s really where the rubber meets the road.
In a scenario where the world hits its Paris Agreement goals, there would not be the coal-to-gas switching envisioned by LNG advocates precisely because there would be very little coal still being used to generate electricity. The fear, then, is that LNG terminals would either become stranded assets, capital investments that wind up becoming liabilities; or that, once they’re in operation, the companies behind them would use their political and economic leverage — not to mention just the power of inertia — to keep enough natural gas in the global energy system to be profitable.
“Either you’re building and planning to shut it down early,” Hausfather told me, “or you’re building something that’s going to be inconsistent with the world we’re aiming to have under our climate targets.”
In a Paris-compliant world, almost 90% of the world’s coal reserves and over half of the natural gas and oil reserves will stay in the ground, according to researchers from University College London. They estimate that in order to meet the Paris targets, gas production would “see rapid decline” from 2020 to 2050 and would be eliminated as a fuel for electricity generation by 2040, with accompanying “low utilization rates of infrastructure, and limited prospect for future additional liquefaction capacity” for exports.
In other words, in a world that comes in under 1.5 degrees of warming, the emissions reductions from coal-to-gas switching peter out after 2035; with 2 degrees of warming it’s around 2040 to 2045 — in any case, beyond the planned life of the export terminals that the Biden administration’s decision affects.
But how much LNG export capacity the United States builds up in the next decade is only a tiny part of the overall emissions picture now, in 2035, or in 2050. “This is the issue with regulating at a project level in general,” energy consultant Sean Smillie told me. “The decision of any given project in the scheme of global emissions is small. For me, that points to the fact that we’re trying to regulate climate change — which is a systemic issue — at the project level, and that’s a very hard thing to do.”
The biggest question is just how energy systems overseas evolve — and what role LNG exports play in that determination. The European Union is about to decide whether to reduce its net collective emissions 90% from 1990 levels by 2040, on their way to zero by 2050, which would signal a sharp reduction in demand coming from that part of the world. Meanwhile, for U.S. LNG export projects currently in the permitting pipeline, Asian countries are contracted to receive a much bigger share, according to a Public Citizen analysis. Bloombergreports that those buyers have started looking elsewhere — including to Russia.
But what if we don’t hit our Paris Agreement targets, as the United Nations and Bill Gates agree we’re increasingly unlikely to do? What if developing countries prioritize cheap, available energy (like India’s growing coal production) over climate goals? In that case, Ravikumar argues, then LNG export capacity turns from a potential “stranded asset” into an insurance policy.
“The way to think about LNG in the longer term is the insurance against a 3 [degrees of warming] world,” Ravikumar told me. If we fail at taking quick action to change our systems from carbon-polluting to zero-carbon energy, we might still be doing some coal-to-gas switching by 2050.
“It’s hard to say for certain that we will or not need the LNG export terminals by 2050 and 2060,” Elan Sykes, an energy policy analyst at the Progressive Policy Institute and an opponent of the Biden administration’s decision, told me. “Absent aggressive foreign policy measures [like] a Green Marshall Plan for worldwide clean energy, it’s hard to imagine a world where LNG doesn’t provide” some value, whether from continuing to help reduce emissions or simply maintaining a reliable supply of energy, he said.
Modelers are good at figuring out what the energy mix of a 1.5, 2, or 3-degree world would look like. They’re less good at predicting how that energy mix will evolve over time in the world we actually live in — and it’s in that world that the Biden administration will have to decide whether more LNG exports will serve the public interest.
The job isn’t just to make decisions for an ideal world. As Hausfather told me, it’s “aiming at the best versus mitigating the worst.”
With reporting by Emily Pontecorvo.
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The foreign entities of concern rules in the One Big Beautiful Bill would place gigantic new burdens on developers.
Trump campaigned on cutting red tape for energy development. At the start of his second term, he signed an executive order titled, “Unleashing Prosperity Through Deregulation,” promising to kill 10 regulations for each new one he enacted.
The order deems federal regulations an “ever-expanding morass” that “imposes massive costs on the lives of millions of Americans, creates a substantial restraint on our economic growth and ability to build and innovate, and hampers our global competitiveness.” It goes on to say that these regulations “are often difficult for the average person or business to understand,” that they are so complicated that they ultimately increase the cost of compliance, as well as the risks of non-compliance.
Reading this now, the passage echoes the comments I’ve heard from industry groups and tax law experts describing the incredibly complex foreign entities of concern rules that Congress — with the full-throated backing of the Trump administration — is about to impose on clean energy projects and manufacturers. Under the One Big Beautiful Bill Act, wind and solar, as well as utility-scale energy storage, geothermal, nuclear, and all kinds of manufacturing projects will have to abide by restrictions on their Chinese material inputs and contractual or financial ties with Chinese entities in order to qualify for tax credits.
“Foreign entity of concern” is a U.S. government term referring to entities that are “owned by, controlled by, or subject to the jurisdiction or direction of” any of four countries — Russia, Iran, North Korea, and most importantly for clean energy technology, China.
Trump’s tax bill requires companies to meet increasingly strict limits on the amount of material from China they use in their projects and products. A battery factory starting production next year, for example, would have to ensure that 60% of the value of the materials that make up its products have no connection to China. By 2030, the threshold would rise to 85%. The bill lays out similar benchmarks and timelines for clean electricity projects, as well as other kinds of manufacturing.
But how companies should calculate these percentages is not self-evident. The bill also forbids companies from collecting the tax credits if they have business relationships with “specified foreign entities” or “foreign-influenced entities,” terms with complicated definitions that will likely require guidance from the Treasury for companies to be sure they pass the test.
Regulatory uncertainty could stifle development until further guidance is released, but how long that takes will depend on if and when the Trump administration prioritizes getting it done. The One Big Beautiful Bill Act contains a lot of other new tax-related provisions that were central to the Trump campaign, including a tax exemption for tips, which are likely much higher on the department’s to-do list.
Tax credit implementation was a top priority for the Biden administration, and even with much higher staffing levels than the department currently has, it took the Treasury 18 months to publish initial guidance on foreign entities of concern rules for the Inflation Reduction Act’s electric vehicle tax credit. “These things are so unbelievably complicated,” Rachel McCleery, a former senior advisor at the Treasury under Biden, told me.
McCleery questioned whether larger, publicly-owned companies would be able to proceed with major investments in things like battery manufacturing plants until that guidance is out. She gave the example of a company planning to pump out 100,000 batteries per year and claim the per-kilowatt-hour advanced manufacturing tax credit. “That’s going to look like a pretty big number in claims, so you have to be able to confidently and assuredly tell your shareholder, Yep, we’re good, we qualify, and that requires a certification” by a tax counsel, she said. To McCleery, there’s an open question as to whether any tax counsel “would even provide a tax opinion for publicly-traded companies to claim credits of this size without guidance.”
John Cornwell, the director of policy at the Good Energy Collective, which conducts research and advocacy for nuclear power, echoed McCleery’s concerns. “Without very clear guidelines from the Treasury and IRS, until those guidelines are in place, that is going to restrict financing and investment,” Cornwell told me.
Understanding what the law requires will be the first challenge. But following it will involve tracking down supply chain data that may not exist, finding alternative suppliers that may not be able to fill the demand, and establishing extensive documentation of the origins of components sourced through webs of suppliers, sub-suppliers, and materials processors.
The Good Energy Institute put out an issue brief this week describing the myriad hurdles nuclear developers will face in trying to adhere to the tax credit rules. Nuclear plants contain thousands of components, and documenting the origin of everything from “steam generators to smaller items like specialized fasteners, gaskets, and electronic components will introduce substantial and costly administrative burdens,” it says. Additionally the critical minerals used in nuclear projects “often pass through multiple processing stages across different countries before final assembly,” and there are no established industry standards for supply chain documentation.
Beyond the documentation headache, even just finding the materials could be an issue. China dominates the market for specialized nuclear-grade materials manufacturing and precision component fabrication, the report says, and alternative suppliers are likely to charge premiums. Establishing new supply chains will take years, but Trump’s bill will begin enforcing the sourcing rules in 2026. The rules will prove even more difficult for companies trying to build first-of-a-kind advanced nuclear projects, as those rely on more highly specialized supply chains dominated by China.
These challenges may be surmountable, but that will depend, again, on what the Treasury decides, and when. The Department’s guidance could limit the types of components companies have to account for and simplify the documentation process, or it could not. But while companies wait for certainty, they may also be racking up interest. “The longer there are delays, that can have a substantial risk of project success,” Cornwell said.
And companies don’t have forever. Each of the credits comes with a phase-out schedule. Wind manufacturers can only claim the credits until 2028. Other manufacturers have until 2030. Credits for clean power projects will start to phase down in 2034. “Given the fact that a lot of these credits start lapsing in the next few years, there’s a very good chance that, because guidance has not yet come out, you’re actually looking at a much smaller time frame than than what is listed in the bill,” Skip Estes, the government affairs director for Securing America’s Energy Future, or SAFE, told me.
Another issue SAFE has raised is that the way these rules are set up, the foreign sourcing requirements will get more expensive and difficult to comply with as the value of the tax credits goes down. “Our concern is that that’s going to encourage companies to forego the credit altogether and just continue buying from the lowest common denominator, which is typically a Chinese state-owned or -influenced monopoly,” Estes said.
McCleery had another prediction — the regulations will be so burdensome that companies will simply set up shop elsewhere. “I think every industry will certainly be rethinking their future U.S. investments, right? They’ll go overseas, they’ll go to Canada, which dumped a ton of carrots and sticks into industry after we passed the IRA,” she said.
“The irony is that Republicans have historically been the party of deregulation, creating business friendly environments. This is completely opposite, right?”
On the budget debate, MethaneSAT’s untimely demise, and Nvidia
Current conditions: The northwestern U.S. faces “above average significant wildfire potential” for July • A month’s worth of rain fell over just 12 hours in China’s Hubei province, forcing evacuations • The top floor of the Eiffel Tower is closed today due to extreme heat.
The Senate finally passed its version of Trump’s One Big Beautiful Bill Act Tuesday morning, sending the tax package back to the House in hopes of delivering it to Trump by the July 4 holiday. The excise tax on renewables that had been stuffed into the bill over the weekend was removed after Senator Lisa Murkowski of Alaska struck a deal with the Senate leadership designed to secure her vote. In her piece examining exactly what’s in the bill, Heatmap’s Emily Pontecorvo explains that even without the excise tax, the bill would “gum up the works for clean energy projects across the spectrum due to new phase-out schedules for tax credits and fast-approaching deadlines to meet complex foreign sourcing rules.” Debate on the legislation begins on the House floor today. House Speaker Mike Johnson has said he doesn’t like the legislation, and a handful of other Republicans have already signaled they won’t vote for it.
The Environmental Protection Agency this week sent the White House a proposal that is expected to severely weaken the federal government’s ability to rein in planet-warming pollution. Details of the proposal, titled “Greenhouse Gas Endangerment Finding and Motor Vehicle Reconsideration,” aren’t clear yet, but EPA Administrator Lee Zeldin has reportedly been urging the Trump administration to repeal the 2009 “endangerment finding,” which explicitly identified greenhouse gases as a public health threat and gave the EPA the authority to regulate them. Striking down that finding would “free EPA from the legal obligation to regulate climate pollution from most sources, including power plants, cars and trucks, and virtually any other source,” wrote Alex Guillén at Politico. The title of the proposal suggests it aims to roll back EPA tailpipe emissions standards, as well.
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So long, MethaneSAT, we hardly knew ye. The Environmental Defense Fund said Tuesday that it had lost contact with its $88 million methane-detecting satellite, and that the spacecraft was “likely not recoverable.” The team is still trying to figure out exactly what happened. MethaneSAT launched into orbit last March and was collecting data about methane pollution from global fossil fuel infrastructure. “Thanks to MethaneSAT, we have gained critical insight about the distribution and volume of methane being released from oil and gas production areas,” EDF said. “We have also developed an unprecedented capability to interpret the measurements from space and translate them into volumes of methane released. This capacity will be valuable to other missions.“ The good news is that MethaneSAT was far from the only methane-tracking satellite in orbit.
Nvidia is backing a D.C.-based startup called Emerald AI that “enables AI data centers to flexibly adjust their power consumption from the electricity grid on demand.” Its goal is to make the grid more reliable while still meeting the growing energy demands of AI computing. The startup emerged from stealth this week with a $24.5 million seed round led by Radical Ventures and including funding from Nvidia. Emerald AI’s platform “acts as a smart mediator between the grid and a data center,” Nvidia explains. A field test of the software during a grid stress event in Phoenix, Arizona, demonstrated a 25% reduction in the energy consumption of AI workloads over three hours. “Renewable energy, which is intermittent and variable, is easier to add to a grid if that grid has lots of shock absorbers that can shift with changes in power supply,” said Ayse Coskun, Emerald AI’s chief scientist and a professor at Boston University. “Data centers can become some of those shock absorbers.”
In case you missed it: California Governor Gavin Newsom on Monday rolled back the state’s landmark Environmental Quality Act. The law, which had been in place since 1970, required environmental reviews for construction projects and had become a target for those looking to alleviate the state’s housing crisis. The change “means most urban developers will no longer have to study, predict, and mitigate the ways that new housing might affect local traffic, air pollution, flora and fauna, noise levels, groundwater quality, and objects of historic or archeological significance,” explainedCal Matters. On the other hand, it could also mean that much-needed housing projects get approved more quickly.
Tesla is expected to report its Q2 deliveries today, and analysts are projecting a year-over-year drop somewhere from 11% to 13%.
Jesse teaches Rob the basics of energy, power, and what it all has to do with the grid.
What is the difference between energy and power? How does the power grid work? And what’s the difference between a megawatt and a megawatt-hour?
On this week’s episode, we answer those questions and many, many more. This is the start of a new series: Shift Key Summer School. It’s a series of introductory “lecture conversations” meant to cover the basics of energy and the power grid for listeners of every experience level and background. In less than an hour, we try to get you up to speed on how to think about energy, power, horsepower, volts, amps, and what uses (approximately) 1 watt-hour, 1 kilowatt-hour, 1 megawatt-hour, and 1 gigawatt-hour.
Shift Key is hosted by Jesse Jenkins, a professor of energy systems engineering at Princeton University, and Robinson Meyer, Heatmap’s executive editor.
Subscribe to “Shift Key” and find this episode on Apple Podcasts, Spotify, Amazon, YouTube, or wherever you get your podcasts.
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Here is an excerpt from our conversation:
Jesse Jenkins: Let’s start with the joule. The joule is the SI unit for both work and energy. And the basic definition of energy is the ability to do work — not work in a job, but like work in the physics sense, meaning we are moving or displacing an object around. So a joule is defined as 1 newton-meter, among other things. It has an electrical equivalent, too. A newton is a unit of force, and force is accelerating a mass, from basic physics, over some distance in this case. So 1 meter of distance.
So we can break that down further, right? And we can describe the newton as 1 kilogram accelerated at 1 meter per second, squared. And then the work part is over a distance of one meter. So that kind of gives us a sense of something you feel. A kilogram, right, that’s 2.2 pounds. I don’t know, it’s like … I’m trying to think of something in my life that weighs a kilogram. Rob, can you think of something? A couple pounds of food, I guess. A liter of water weighs a kilogram by definition, as well. So if you’ve got like a liter bottle of soda, there’s your kilogram.
Then I want to move it over a meter. So I have a distance I’m displacing it. And then the question is, how fast do I want to do that? How quickly do I want to accelerate that movement? And that’s the acceleration part. And so from there, you kind of get a physical sense of this. If something requires more energy, if I’m moving more mass around, or if I’m moving that mass over a longer distance — 1 meter versus 100 meters versus a kilometer, right? — or if I want to accelerate that mass faster over that distance, so zero to 60 in three seconds versus zero to 60 in 10 seconds in your car, that’s going to take more energy.
Robinson Meyer: I am looking up what weighs … Oh, here we go: A 13-inch MacBook Air weighs about, a little more than a kilogram.
Jenkins: So your laptop. If you want to throw your laptop over a meter, accelerating at a pace of 1 meter per second, squared …
Meyer: That’s about a joule.
Jenkins: … that’s about a joule.
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Music for Shift Key is by Adam Kromelow.