Transcript: The Messy Truth of America’s Natural Gas Exports

This is a transcript of episode one of Shift Key: The Messy Truth About America’s Natural Gas Exports.

Robinson Meyer: Hi. I’m Rob Meyer, I’m the founding executive editor of Heatmap News. And you are listening to the first episode of Shift Key, a new podcast about climate change and the shift away from fossil fuels from Heatmap. My cohost, Jesse Jenkins will join us in a second and we’ll get on with the show, but first, a word from our sponsor.

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Meyer: Hello. I’m Robinson Meyer, the founding executive editor of Heatmap News.

Jesse Jenkins: And I’m Jesse Jenkins, an energy systems professor and climate policy expert at Princeton University.

Meyer: And you are listening to the first episode of Shift Key, a new podcast about climate change and the shift away from fossil fuels from Jesse and me, brought to you by Heatmap News. On today’s episode, we are going to talk about the President’s decision last month to pause approvals for new export terminals for liquefied natural gas. I think it’s been the biggest climate story of the past few weeks. It, as you have already heard, is quite complicated. We’re also going to talk about our upshifts and downshifts for the week. So let’s get into it!

Last month, Jesse, the Biden administration temporarily stopped approving new liquefied natural gas export terminals. They said this was going to allow the energy department to study the effects they would have on the climate, that exporting liquefied natural gas would have on the climate, and it was basically taken kind of immediately as a victory for climate activists. The President said in a statement that, “During this period we will take a hard look at the impacts of LNG exports on energy costs, America’s energy security, and our environment. This pause on new LNG approvals sees the climate crisis for what it is: the existential threat of our time.”

You have written about, or you’ve tweeted about, this pause. I have written a little about it. I think it’s kind of worth flagging that there is something weird about this whole policy discussion. The announcement is that the President has decided to pause new approvals from the energy department of new export terminals of liquefied natural gas. It is not clear what terminals exactly we’re talking about. Because there are some terminals that are already operating, there are some that are under construction—those have already been approved, those aren’t affected by this announcement at all. And then there’s like, some number of terminals in the pipeline. What’s even at the heart of this discussion? What did the President actually do, Jesse, and what terminals are we actually talking about? Because I think there’s tons of numbers floating around about the effect that this pause will have or not have—what is the scale of even the export infrastructure that we’re talking about?

Jenkins: Yeah so it’s important to get our heads around the scale of LNG, or liquefied natural gas exports already, which have really surged in just a few years’ time to a pretty significant scale. So already, existing export terminals in the U.S. can export about, or can consume about, 10% of all U.S. natural gas production, as of 2023. So that’s a big chunk. One tenth of all the gas that we’ve produced in the country can be shipped out of these existing export terminals. That’s up from zero as recently as 2016. So this is all very recent construction. And already under construction are another set of terminals that have their permits approved, are unaffected by this recent decision by the President. Those would basically double our current export capacity. They would be able to consume about 11% more of 2023 gas production. And then beyond those ones which already have their financing lined up and are under construction, there’s a bunch of additional terminals that have already been approved as well, but haven’t quite lined up the financing and long-term offtake or buyer agreements they need to turn a shovel and get started. Those, if all completed, and there’s no guarantee that they would finish, but if all completed, that would almost be equivalent to total U.S. current exports again, so another 9% of all U.S. gas production.

So, what we’re talking about here is the next tranche of terminals that are seeking approval now, but haven’t lined up their permits from both the Federal Energy Regulatory Commission and the Department of Energy. They are charged by Congress both with determining the environmental impact and also whether these terminals are in the public interest. Any exports of natural gas have to be approved as “in the public interest.” We’ll come back a bit later to how exactly we think about that term. So what this pause is doing is basically saying, “Hey, we’ve added a ton of terminals very quickly. We’ve got a lot more in the pipeline, coming up soon. And we have yet more terminals asking for approval. Maybe we should pause and rethink whether or not that scale of export is in the public interest.” And the biggest terminal that is at sort of the heart of this debate right now is—I’m going to reveal my lack of Louisiana French here—but, Calcasieu Pass or CP2. So this is the second and very large expansion of an existing terminal in Louisiana on the Gulf Coast near the Texas border. So this is a big terminal that already exists. The new one would be, I think the largest yet. It’s about a 10 billion dollar project. And it itself, that single facility, could consume about 3% of all U.S. gas production today.

Meyer: I think that’s a very important point, just to go back to what you were saying earlier, which is there’s a set of export terminals already operating—today those consume about 10% of U.S. natural gas. We are locked in to roughly double that, to more than double that, without anything related to this decision.

Jenkins: And we could even triple it.

Meyer: And we could even triple it basically if everything that already has approvals is built. And that’s not necessarily likely. When you talk to energy analysts, they’re like, “Projects get approved here that will never actually get built or secure the financing.” But we could triple it. And so to some degree, this whole discussion—maybe this is a very poor way to frame it—but we are talking about an increase in LNG export capacity that is so far down the road. And also, so removed in some ways, from what’s actually concretely going to happen in the economy—like, what is already locked in—that in some ways it just gives perspective to the whole conversation. Because we are not talking about whether there’s going to be more LNG in 2027. The U.S. is going to be exporting a huge amount more—potentially double—the amount of LNG that it’s exporting now in 2027 or in 2030. We are talking about how many additional LNG terminals on top of that that the U.S. builds, which presumably would then be operating for several decades to come, right? Operating through the 2030s, through the 2040s. This is a question almost about where U.S. LNG export capacity is going to top out and not about will we be exporting more gas in 2027 than we are now, because we know that we absolutely will be exporting more gas in 2027.

Jenkins: That’s really important context for this, because if you hear some of the public debate about it, or some of the reaction from the oil industry, or the gas industry or others, they’re trying to pin this as if Biden is saying, “No more LNG. We’re not going to do LNG exports.” As if it were affecting our current exports, or we’re going to cancel projects already under construction. The reality is that that’s not true at all. And I think the way you framed it is good. Really the question isn’t “Are we going to be able to secure our allies in Europe right now during their current effort to shift away from Russian natural gas?” It’s not, “Are we going to be surging exports?” We will. It’s “What do we want the U.S.’s contribution to the global energy supply mix to look like in the 2030s and 2040s, when the facilities that are currently being permitted would be online and operating?” ‘Cause they’re going to operate for at least 20 years to pay back their investors, at least that’s what they want to do if they don’t want to become stranded assets.

Meyer: It’s kind of worth backing up here for a second and giving context about just how much has changed in the world of LNG, even in the past decade. Less than a decade ago, in 2016 was when the U.S. started exporting liquefied natural gas. From that moment, from when we started exporting LNG, to now, we have gone from obviously having no LNG export industry, to having the world’s largest LNG export industry—surpassing Australia and Qatar, which were previously the two biggest LNG exporters worldwide. I wonder if you could just talk a second about how did we even get to this place, where the U.S. is not only exporting liquefied natural gas but determining the world’s supply of liquefied natural gas, and where these export decisions and export approval decisions made by the federal government have an incredibly important role in determining just how much LNG there will be worldwide?

Jenkins: Yeah it’s actually really remarkable. The whole story of the U.S. gas industry over the last couple decades has been as transformative as the story around how cheap solar P.V. and batteries have gotten, for example. When I started studying energy topics, first got turned on to these issues in the mid 2000s, I started researching these topics and the context for LNG at that point was that the U.S.’s supply of natural gas had peaked and was declining. And we were net importers of gas, and were discussing permits and approvals for LNG import terminals around the country, including one proposed for Coos Bay, Oregon, where I was going to school at the University of Oregon. One import terminal is built in Everett, outside of Boston. But other than that terminal, what happened instead is that we didn’t build any of those import terminals, and the ones that had started as import terminals, flipped the script and started to become export terminals instead. What changed between 2005 and 2016 was the shale gas revolution. It was just starting to take off around the time when we were talking about imports, that companies like Mitchell Energy had figured out how to use directional drilling and hydraulic fracturing to unlock all of this natural gas that was stuck in tight pores within shale formations all across the country. That transformed us from a net importer to a net exporter of both natural gas and oil over the course of about a decade. So, huge reversal. From the time President Obama was thinking about these terminals in his administration, when we were mostly thinking about imports, by the end of his administration they were approving the first export terminals that then were built under the Trump administration, and here we are now.

Meyer: I think it’s important because, first of all, this is a kind of forgotten chapter of U.S. energy policy—like the 2006 energy bill which still shapes a ton of energy policy in the U.S., most notably because it revamped how fuel mileage standards worked, but a whole idea, a whole animating idea behind that law was that the U.S. was about to run out of natural gas, which it had had in kind of limitless supply for decades before that, and we had to figure out what we going to do about that. But then I think at the same time, there’s this other point that comes out of that too, which is that in this announcement that’s going to pause export terminal approvals, Secretary of Energy Jennifer Granholm said that the last study of how LNG affects the climate, of how U.S. LNG exports specifically affect the climate, was conducted in 2018. And 2018 is like 5 years ago now, I guess 6 years ago now, which is long enough that it does make sense to go back and study that. But if you think about it being conducted in 2018, and the industry had only really started in 2016, I think it does actually reveal just how outdated that study may be, and just how much has changed in such a short period of time.

Jenkins: Yeah, it’s almost like maybe we want to pause and take stock of how fast this is moving and think about where we want it to go from here. I think that’s one of the most compelling arguments, to take stock of what’s happened. Because this has been a very rapid change in the U.S.’s role in the global energy supply mix, in the certain geopolitical implications of that, in the implications for the American economy, both on the supply side, the role of gas producers and shippers and the revenues that that brings in. But also just as importantly, the impact on U.S. natural gas prices, and the impact on consumers and industries that depend on natural gas here, which have also been all of a sudden dramatically affected by global markets now, because we’re tied to, in a much bigger way, the impacts of global demand for LNG here in the U.S.

Meyer: Before we move on and talk about what this means broadly, I want to bring up another facet of this discussion, and another facet of this debate. I think the Biden administration decision—one subtext of all of the news about it—is that it caught activists a little bit by surprise. Climate activists had begun campaigning around the LNG export terminal issue, and they had begun lobbying Biden to do it, but he did it very, I think earlier than was expected, and he did it before there was full mobilization around this idea. And that’s quite interesting. I think it’s interesting because it reveals how the Biden administration is thinking about this, and thinking about its relationship with activists. I think it’s interesting because it reveals how eager the administration is to cater to climate activists and to cater to what it sees as interests that particularly motivate young voters. But it also means that some ideas that activists used have just, never went through a cycle of getting talked about or covered. I just want to talk briefly about this idea that I think activists have particularly focused on in campaigning against these terminals, and this is this idea of leakage. The claim that activists have made, and the claim that the left-aligned climate movement has made is that liquified natural gas is not only bad for the climate, it’s actually worse for the climate than coal. When energy experts tend to think about natural gas, they’re like, “Well, it’s bad if it replaces renewables but it’s good if it replaces coal.” And the claim that the climate movement has made is basically, “No no no. It’s actually worse than coal.”

There’s been a lot of citations of this one study by Robert Howarth who is a professor at Cornell. The study has not been peer-reviewed to my knowledge, it has also not been published in a major scientific journal, or in a scientific journal. In fact, the version if you find it online, is basically a PDF. What he claims in the study, which I should say is not what the conventional take on LNG has been, is that if you count up all the leakage, all the places across the natural gas systems—the pipelines, the storage containers, the tankers—if you count all the places where methane leaks out of the system, then natural gas, and especially liquified natural gas, is worse than coal. It’s 30% worse. And if you move LNG across the ocean on particularly old tankers that are very leaky, than natural gas is not only 30% worse than coal, it’s three times worse than coal for the climate. And this set of claims about leakage is interesting because I would say, first of all, it’s a very hard set of claims to reconcile with what the conventional energy accounting is on leakage. But number two, Bill McKibben wrote about it for The New Yorker, it’s kind of permeated the discourse without a lot of interrogation of whether it is true per se. And that isn’t to say that it has to be true for the Biden administration to have made the correct decision here, but it is an extremely important piece of the messaging and the rhetoric around this decision that has not really been interrogated at all yet.

Jenkins: Yeah and there is a wider range of literature on this which Howarth has contributed to over the years in peer-reviewed journals, but is not of course the only one looking at this question and the sort of wider range of literature shows a bit of a different picture. I took a look at the working paper from Howarth. There is a story you can tell if you add it up in a certain way, that there are some shipments of LNG that have very high leakage rates that could be on par with or worse than coal-fired power, that it might displace on the other end. But it is contained to certain circumstances, like you mentioned the really old tankers, that don’t capture the gas that boils off as liquified natural gas is shipped and gets hot enough to start to evaporate, turn back into a gas. We should probably mention, to keep LNG liquid, you have to cool it to minus several hundred degrees in order to keep it in a liquid state and make it dense enough to ship on these tankers. And so that takes a lot of energy, but it also means that some of it boils off, effectively, as it gets above that liquefied point as it ships. Older tankers will vent that to the atmosphere as methane, and methane is a very potent greenhouse gas, particularly on short time horizons. It doesn’t live in the atmosphere as long as CO2, because it’s photodegraded in the atmosphere by sunlight, and breaks down into its constituent parts over time. So the potency of methane relative to CO2 really depends on what time period you’re looking at. So in the scientific literature there’s two shorthands for this that are commonly used. One is the global warming potential over a twenty year period, and the other is the global warming potential over a hundred year period, so GWP20 and GWP100. Basically what that does is tries to integrate the total warming impact that methane emissions or other non-CO2 greenhouse gases have over that time period and then compare it to the amount of impact that a ton of CO2 would have. CO2 is very different from the other greenhouse gases because it’s basically permanent, once it’s up in the atmosphere, it will stay there for centuries, because the processes that pull CO2 out of the atmosphere are very slow. It’s, you know, weathering of rocks on geologic time scales, a little bit of absorption in the oceans each year on net, and so it takes a very long time for CO2 to come out of the atmosphere. For human purposes, it’s effectively permanent.

So if you care a lot about short term impacts, over the next ten or fifteen or twenty years—and you might care a lot about that if you think we’re close to certain irreversible tipping points in the climate system, then you care a lot more about methane than you do about CO2. But if you think that what really matters is the long term total concentration of CO2 in the atmosphere, because that’s what’s going to drive long term equilibrium warming impacts—the flip side of methane not lasting very long, is if we cut it, it will very quickly affect temperature. So it’s a much more direct kind of thermostat knob to turn on than CO2. It’s closer to true that methane is a flow problem and CO2 is a stock problem, so it’s about the cumulative amount of CO2, versus about the annual emissions of methane. Say we focus on CO2 now, and then we cut methane in ten to fifteen years, that will have a very immediate impact on warming circa 2050. Whereas if we focus on methane now and let CO2 accumulate, that’ll have a near-term impact, in the 2030s and 40s, but it will potentially lead to greater warming in the long term. So it’s a really complicated picture. Where you come out on the coal versus gas side of things really hinges a lot on whether you’re looking at this near-term impact or this centuries-scale impact. And whether you’re assuming that we are using very old leaky container ships for LNG shipment, or the more modern ones that don’t let all that energy in that methane get wasted, they capture that methane on board, and use it to power the engines and cooling equipment that keeps the LNG liquid throughout the shipment. And Howarth’s paper actually looks at that too, and shows that for modern tankers, the impact is much smaller than for the worst case scenario.

Meyer: This question about the 20-year versus 100-year horizon, this is the actual disagreement at the heart of the Howarth paper. Is this right, that basically everyone knows that these LNG systems are somewhat leaky—it’s that if you’re looking at a 100-year timescale, you care less about those leaks because the methane that leaks out is degraded by the time you get to year 25 or year 50, and that warming potential that the leaked methane contributed is kind of gone. But if you look at a 20-year timescale, you care a lot because of the greater role that leaky methane plays on short timescales. Is that right?

Jenkins: I think that’s one. I think there’s three things that you have to do in order to come up with the numbers that Howarth does. One is, you have to focus on the 20-year potential. Two is, you have to focus on worst-case leakage scenarios rather than more optimistic scenarios or more forward-looking scenarios that reflect the fact that all of these new exports are going to be carried on modern ships that don’t allow that gas to be wasted. They consume it and use it as their fuel instead of diesel. So that has a much more modest emissions impact. And then also that we’re not going to be significantly reducing methane emissions from the U.S. oil and gas supply chain, which is the current policy of the Biden administration, right? With the methane fee that was established by the Inflation Reduction Act and passed by Congress last session, and methane regulations that were finalized at the EPA under the Biden administration in December, both of which should significantly reduce methane leaks across the U.S. side of that supply chain. So if you look at, say, 2030, when CP2 might be coming online, by that point, if those policies work as intended, U.S. leakage rates should be much lower than they are now, and the modern ships that are built to carry LNG from these new terminals that we’re building now, will avoid those significant shipment-related leakage that gives you the worst case picture.

Those are two big pieces: the 20 year versus 100 year potential, and your pessimism or optimism about leakage. There’s a third piece, which I think we can get into a little bit later, which is what scenarios you assume about what all of that U.S. LNG displaces on the global stage. And if part of that is displacing other people’s natural gas production, which is very likely, then the leakage is very true on both sides of the pond, right? There is leakage in Russia which is actually huge—one of the worst in the world. There’s leakage in other gas producing regions that if we might be displacing, and if you count that on 20-year timescales, it’s also very large. And so the offsetting effect of displacing other production is also quite relevant, and I didn’t see that taken into account in Howarth’s work.

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Meyer: Since this news came out, I think there's been a lot of discussion online that says, you know, about whether this is necessarily the optimal choice. Whether this is necessarily, could we be using that gas to do something else? How should we be managing it? And I just want to make a point before we go on that This is literally what climate policy means. There’s a sense I see from some places, which is like, well, “Is cutting off fossil fuel exports at this very arbitrary place, the optimal policy?” And I just want to make the point that like, number one, we are not on an optimal policy pathway at all. And in the absence of a policy that I think both you and I think is very unlikely to pass, which is a globally normalized carbon price that's imposed evenly in all jurisdictions and is priced at a level that we can attain the 1.5C or 1.6C, whatever end temperature goal we want to achieve—

Jenkins: Yeah, I'm going to go ahead and say that's unlikely.

Meyer: Yes, in the absence of a global carbon price that is uniformly enforced across all jurisdictions, we are going to make suboptimal decisions. And not only are we gonna make suboptimal decisions, but we are going to stop investing in fossil fuels below what would be economically optimal if climate change didn't exist. That's literally what climate change means. And at the same time, we are going to invest above what would be economically optimal in all of these fossil fuels if you take climate change into account, because that is the signal failure of global climate policy, is that we keep plowing money into fossil fuels and under-investing in alternatives and in scaling up alternatives. We’ve underinvested in those things for at least twenty years. That’s a different show about whether we’re still doing it or how much we’re still doing it. I just want to get into this whole discussion by saying when we talk about whether we're fiddling knobs in the right way, or enough this way, or enough that way, or whether we're taking all these things into account, we are never going to do this perfectly. And the whole point of climate change is at some point you just have to stop investing in the fossil fuel system.

Jenkins: Yeah, economists call this the second best policy or third best policy. I just call it “the real world.” We’re all just muddling through all the time and that's how we're going to make progress or not is whether we muddled through better or worse. So I agree, it's theoretically helpful to think about what an economically ideal rationalized policy would be. But we're so far from that world that I think the question is, “is this better than the alternative decision you could make about this particular thing right here?” And hopefully, that's the view that the Department of Energy is taking when they think about the public interest here. It's not like, “Well, could we have had some more ideal climate policy that meant we were doing something else over in this other part of the economy instead of doing this?” That's an interesting conversation to have on Twitter, but maybe not the core of the question that the DOE and the Biden administration are grappling with right here.

Meyer: Yeah. So I think at the heart of this whole thing, including at the heart of this question of what’s in the public interest, is this question of trade-offs. Because when we export liquefied natural gas in the U.S., we’re making a series of trade-offs about how the U.S. energy system should work, and how American consumers and Americans living among energy infrastructure should interact with that energy system, and we’re also making a series of trade-offs about how the world should power itself, and what kind of fuels the world should use. At the most basic level there’s this question of, you know, if you export liquefied natural gas and countries burn it instead of coal, that’s good. And if you export liquefied natural gas and countries burn it instead of building renewables, that’s bad. That is the most basic calculation here. But it is actually very, very hard to know which of those two paths you’re taking as you continue to increase LNG export capacity across the U.S. and as you export every additional ton of liquefied natural gas.

Jenkins: Yeah that’s right and it’s even more complicated, because what you basically have are similar but counter-acting and opposite effects on both sides of the trade equation. So whatever’s happening abroad in terms of natural gas displacing something there, we’re having the opposite effect here, which is that our natural gas prices go up, and we’re consuming less natural gas, so something is substituting for natural gas here, and is that coal or is that renewables? And it’s sort of the flip-side of the coin. So let’s sort of unpack that. There’s a really useful if simplistic framework for this that you’d learn in a Micro Econ 202 class, which is global trade, or the trade of a fungible good between two different regions—the underpinning of all of the modern economy, one part of the world can produce something cheaper than another part of the world, so it makes sense for the place that has the lower cost of supply to export it to the place with the higher cost of supply. The exporting region wins because it gets to sell more of its product at a higher price, and the importing region wins because it gets to consume more of that product at a lower price than if it tried to produce it domestically. So this is sort of the basic framework for trade, and economists would describe this using these concepts of elasticities of supply and demand, which describes basically what happens when you either change demand to prices, or when you change prices to demand.

The basic concept is: we’re going to be exporting a lot more of our North American natural gas supplies. That effectively acts as a big demand increase in the North American context, in the U.S. Already we’re exporting 10% of all gas production, again it could double or even triple with current permits that are already approved. Alright, so what does economics tell us about what happens when demand increases? Well, if you want to produce more, it’s going to come at a higher price. So if we want to get more supply to meet that demand, prices in North America and the U.S. are going to go up for natural gas to induce some of that new supply. So now, we’re exporting more, but U.S. prices for gas are higher, so what does that do for consumption of natural gas? Well, if prices rise, basic economics will tell us that consumers will want to consume less, all else equal. So we’re going to shift away from natural gas in the U.S. as a response to that higher price.

Meyer: So if we were to build more LNG export terminals domestically, the most likely outcome is we burn less natural gas in the U.S., right?

Jenkins: That’s right. We pay a higher price for gas and therefore we burn less of it here, and so the question is, what substitutes for that demand destruction? Why are we lowering our consumption? And there’s three ingredients to that. One is that we could just use less of it. Our major industries like plastics that consume a lot of natural gas to make ethane and ethaline for plastic—they are just less competitive in the global economy, so they consume less, and that could be one form. The other could be that we switch in the electricity sector where gas is often the marginal supplier and kind of swings back and forth depending on price. We could substitute either coal or renewables in some combination to reduce our use of natural gas in the electricity sector. So some combination of those three things: lower consumption, greater renewable energy supply, and greater coal supply is what’s going to drive down consumption of gas in the U.S. And obviously those three things have very different implications for U.S. emissions. With coal, often having been the direct substitute for gas in electricity markets—and we often see this very direct inverse relationship between gas and coal shares as the gas price goes up or down. So in the near term I would expect, if gas prices go up in the U.S., we would see all else equal, more coal-fired power generation, in the long term maybe more renewables additions, because renewables are also more economically attractive the higher the gas price is. I see that a lot in the long-term modeling we do.

I want to unpack another piece of this which is that because demand for gas declines, the increase in U.S. gas production or supply is not as large as the increase in exports. So that’s important to keep in mind. Say we build this facility, it’s enough to consume 3% of U.S. natural gas supply today—that doesn’t mean that U.S. natural gas supply goes up by 3%, because some of that additional exports is going to come from the reduction in consumption, so freeing up current supply to export. Then some of it, a portion of it, is going to come from increased natural gas production in the U.S. But the sort of ratios there depend on what you assume about how relatively responsive supply and demand are to changes in prices. If you assume they’re equally responsive, then it’s a 50/50 split—basically half of the supply of exports comes from reducing consumption, and half of the new exports comes from increasing supply. Could be some other ratio if you assume, as I think is fair, that supply tends to be more responsive to price than consumers. So that’s interesting because if you care about leakage rates, that’s important. The best case scenario is, the reduction in consumption comes from more renewables, and then the increase in supply is smaller than you thought and therefore has less methane leakage than it would otherwise have if you count it one for one as all new exports are coming from new supply.

So I can easily construct a story here, with very plausible assumptions, where increasing LNG exports in the U.S. is a net increase or decrease in U.S. emissions, depending on which of those scenarios you sort of concoct. And in either case it’s in the order of plus or minus one percentage point of 2005 emissions, if we’re accounting for all of the currently pending permits that could be affected by this decision. So it’s a nontrivial amount, but it’s not huge, so the U.S. picture is ambiguous.

If we look at the rest of the world equation, it’s the exact opposite. We’re going to increase supply in the global stage, so that’s going to lower prices. So how do producers and consumers respond to lower prices? Well, the consumer side is going to increase its consumption, and some of that is going to be new energy consumption that wouldn’t otherwise have been economic—people are just going to consume more energy for industry and heating and overall economic welfare. Some of that is also going to substitute for other energy supply that would’ve been provided. That could be renewables or coal in industry and electricity. And again, whether you think that LNG exports are displacing coal or renewables is a huge factor in the global climate calculus. But those lower prices are also going to disincentivize producers elsewhere in the world, whether it’s in Russia or Algeria or Qatar, to reduce their production of natural gas, too. And the leakage rates that go along with that will also fall—so methane emissions overseas will fall, and that also offsets some of the impact here.

Meyer: In other words, because the U.S. is about to regulate methane emissions, assuming the U.S. does regulate methane emissions—which basically means assuming a Biden administration wins a second term—the U.S. is about to have basically cleaner natural gas than anywhere else.

Jenkins: Anywhere but Qatar and the Middle East.

Meyer: Yeah, and so if the effect of the U.S. exporting some natural gas—exporting more LNG—is that it reduces natural gas extraction in, like, Kazakhstan, which is an extremely leaky system, then that could be good from a leak basis. If what you care about is leaks on a 20-year time frame, you can actually construct a world where the U.S. should export a lot of LNG because we really care about reducing leaks globally.

Jenkins: That’s right, yeah. And so on the global stage, again, I can come up with a story where it’s a net increase or decrease of a few tens of millions of tons of emissions. So it’s just a very ambiguous picture from a climate perspective. It’s not quite as cut and dried as a simple equation would give you.

Meyer: Let me just ask a question right out that I think gets at the discussion we just had, which is that do you think we can say with any confidence that cutting off U.S. LNG exports at a certain point—especially at the point that the Biden administration will have to use at least as a minimum, which is roughly double what our current export capacity is—do you think we can say with any confidence that that is going to increase emissions globally? Or even do you think we can say with any confidence that it’s going to decrease emissions globally? Is there any way to talk confidently about what this will do to greenhouse gas emissions globally as a result?

Jenkins: I think if we look at just the individual facility question, just one incremental increase or decrease in U.S. exports, I don’t think there’s any confidence. I think you can easily say it’s a slight benefit for the global climate, I think you can easily say it’s a slight negative for the global climate, I think my prior is that it’s probably relatively neutral. It’s not very good or very bad. So that’s where I sort of come out, if you’re just thinking about a single facility. But I think the other perspective to keep in mind is, what is the aggregate supply that we’re putting on the global stage mean? And how consistent is that or not consistent with a global effort to reduce greenhouse gas emissions and confront climate change? So remember, ostensibly, the world all agreed at the Paris Climate Summit to try to reduce emissions and keep global warming in aggregate to less than 2C and try to target aspirationally 1.5C. If you believe that the world is committed to that goal, then there’s a great paper on this exact question by Shuting Yang, Sara Hastings-Simon, and Arvind Ravikumar, on whether or not we have enough carbon budget effectively left to export the LNG that we’re planning. What they conclude is that in the near-term, pre-2035, there’s probably a reasonable case that LNG, where it substitutes for coal in, say, Pakistan or India or other LNG-importing countries, is a net benefit for the global climate in the very short term.

What they find, and I’ll just quote the abstract here, “We find that the long-term planned LNG expansion is not compatible with Paris climate targets of 1.5C and 2C. Here the potential for emissions reductions from LNG through coal-to-gas switching is limited by—” the fact that, to paraphrase, if we’re going to be on that 2C world, we’ll have already phased out all of the coal or stopped building new coal that could be displaced by LNG in the later half of the 2030s. So at that point, what we’ll be doing as the U.S. is either stranding a bunch of assets, if the world really is serious about that 2C goal, or we’ll be basically committing to lock in more emissions than we can afford under a 2C world.

They also, though, say that we should keep in mind that we are not on track for a 2C world. So while the world is aspirationally pushing in that direction, the current trajectory is more like a 3C trajectory, where it’s likely that emerging economies will be depending on coal through the 2030s and 2040s. And in that case, they argue that U.S. LNG could be thought of as an insurance policy, to make some incremental progress on emissions, and also we should say improve air quality in emerging economies where coal-fired generation and industry is a huge polluter that causes significant loss of life and health effects. Then in that world it sort of maybe is a net benefit. So I come out of it as sort of like, what world do you think we’re living in and where do you think we’re going? Do you act as if we’re in the world that we observe around us right now? Or do you act as if we’re going to move onto the trajectory that we all say—the world has said we care about, a world where we are desperately trying to reduce emissions to a level that holds climate change below 2C.

Meyer: It’s actually kind of an unusual problem to encounter in climate policy, but one that I wonder if we’re going to keep hitting as we get deeper and deeper into the transition. There’s a lot of things that you can do to fight climate change. They are both the things you should do anyway, and insurance against a 3C or 4C world. Insurance against a catastrophically warming world. What is interesting about LNG export, is that it doesn’t have that quality. Like, build a lot more solar. If you’re considering whether we should just build double, triple, quadruple U.S. current solar capacity, the answer is basically always yes. That’s going to both cut off these extreme catastrophic risks that the world experiences with extremely catastrophic levels of global warming, in line with 3C, 4C warming. And also it’s going to get us closer to accomplishing this 1.5C, 1.6C, at an optimal, or the best-we-can-get world, right?

Jenkins: Yup.

Meyer: LNG does not work like that. There’s a very unusual decision we have to make around it, which is: do you aim for the world we want to hit, which is 1.5C, 1.6C, as close to our current level of warming as possible, get to net zero as soon as we can—a world that the U.N., that the Paris agreement, that all the countries globally have committed to and say they want to hit—but a track that at the same time they’re manifestly not on? Or do you want to say, well actually what we want to do is buy insurance against 3C? But it’s a very weird insurance product, because it says like, “well you won’t—”

Jenkins: It’s sort of an admission of failure.

Meyer: Yeah, exactly. It’s almost like you if you were to buy—

Jenkins: A short!

Meyer: Yeah.

Jenkins: You’re shorting the Paris Agreement, effectively. You’re saying I don’t believe that the world is going to get its act together and cut emissions fast enough to comply with our nominal targets, so I’m going to buy a short, which is that we should export more LNG.

Meyer: It’s like if there were a form of life insurance that required you to amputate a couple fingers or maybe, like, a forearm. Or the way this life insurance works is that you can never be rich. So you know your family won’t be destitute after you die, but at the same time, well enjoy living your life, you know you are losing a forearm right?

Jenkins: That’s a grim analogy!

Meyer: It’s a grim analogy but I think it’s such an unusual decision. It’s really not a kind of decision we encounter a lot in other policy spaces.

Jenkins: Yeah, and so I think the question for the U.S. when you’re thinking about what do we do from a climate perspective is, “Do we act in the world over the things that we have influence over?” Right? Which is not what China and India and Pakistan decide to do. Really, we can indirectly influence that. But what we have direct influence over are decisions about U.S. energy production and our economy and U.S. policy. And so the question is, do we use our U.S. policy decisions and the things that we have direct influence over to operate as if the world is going to align itself with our ostensible targets? And with the targets that we've set for the country itself, which is to cut greenhouse gas emissions rapidly and to get on track to net zero by 2050?

Or do we say, you know what, we'll do that for our domestic economy, we'll make sure that we cut our own emissions. But as far as exports go, that's not our responsibility, that's up to the global stage, and what they demand and as long as the world is demanding more gas, or oil or coal from the U.S., we’ll supply it, because that signifies that, you know, they're making decisions that aren't consistent with that world, and we might as well supply it instead of somebody else. I think that's the calculus, right? It’s which world do you operate in? You can easily make the, again, the realist take, which is like, well, what's the point of giving up our exports, especially if they're marginally cleaner than other people's exports, if the demand is still out there, and it's gonna be just satisfied by Russia or by somebody else?

But it also is an admission that we just don't believe that the world is going to do what we are committed to doing. I think you have to ask yourself, like, would we have more influence over the rest of the world if we actually acted as if we believed it? And not just over our domestic emissions, but over our exports? This is particularly relevant for countries like Australia. They talk about this all the time, where their domestic emissions are like one tenth of the amount of emissions that go out the door, or on the ships with their coal and LNG exports. So they're a huge net exporter of energy, you know, and so it's like, a much more central part of the debate in Australia is like, well, what is their responsibility as a global climate actor? Do they only have to meet their domestic climate goals, or do they also have to take some responsibility for their energy exports? We just really haven't been having that conversation at the same level in the US. And maybe that's exactly the point of, you know, forcing this issue right now.

Meyer: There's another side of that though, which is, let's say we bet against the world's ability to hit its own climate targets, we build these export terminals. We are like, “Well, we're going to try to hit our targets. But if you want to buy gas, that's fine.” If the world then hits its targets, if the world keeps to its Paris Agreement goals, then we're the one stuck with the stranded assets!

Jenkins: That's true!

Meyer: Then suddenly, there's all these rusty LNG terminals sitting around the Gulf Coast that didn't need to be built. And that's a hit to our economy. And so I think there's like, to some degree, the view where we say, “We're just going to let the world be the world, and we're going to do the best we can. But if the world wants to buy our natural gas, then we're happy to sell it” is actually not the most selfish way of looking at this. Because if you were to fully, because you have to think about whether there's actually going to be that demand there in order to figure out whether this even makes sense as an investment. Not that I mean, by the way—as a policy question, this isn't really a question about whether this, these makes sense as an investment, because that's presumably up to, because the only thing the government has been asked to do is figure out whether they're in the public interest, that's more a question about investors. Still, I don't think we want all this rusty construction that never got used sitting around in the Gulf Coast, because we bet against the world and we bet wrong.

Jenkins: Yeah. I mean, that's, I think, essentially, the question that the investors have to grapple with. And there's certainly a bear case and a bull case. This is why a lot of these terminals that have been approved, don't yet have enough contracted demand to actually get the banks lined up and go start construction. So I think there is really an open question about whether the demand will even be there for these projects. In the end the case that the folks pushing back on the Biden administration would make right now is, “Well, that's up to the private sector, you shouldn't be meddling with that, you know, if there's demand for it, there's demand for it, let the private sector decide.”

I think that's somewhat fair, because if we aren't putting public money behind these projects, the way we do for, say, for clean energy projects that are getting subsidies from the U.S. for construction, then it's more of a private sector question. On the other hand, at the local level, there is a lot of public support—packages here, there's basically tax abatements for all of these projects to encourage them to site in Louisiana instead of Texas or Mississippi or whatever. So the states sort of fight over it, and at the local level, one of the things I was really struck by in the reporting that Heatmap put up recently talking to residents near CP2 and these other terminals was, just the level of tax abatements that have been provided for existing terminals mean that they're paying nothing into the local economies, public coffers. They don't pay local, local or state taxes. And so the communities that are bearing the toxic and polluting impacts of these facilities in their backyards are not getting any sort of public compensation for that. That is an important question at the local level.

Meyer: I think it's important to bring in this perspective, too, because this is a whole other argument that exists about the whole other way of even understanding this decision, which is that there's an entire set of activists who are engaged on this issue who care about the climate, but that is not actually their main argument they make. What they argue is that “These terminals go into our communities, or people from the Gulf Coast. These terminals go into our communities, they're extremely pollution intensive. They give our kids asthma. Our communities, because of how close they are to fossil fuel extraction, and because of all these different sites, smell like rotten eggs all the time, it smells bad. Cancer rates are very high. We don't want this infrastructure here. And so it's not in our public interest to have it.”

And when you factor in the tax abatements that gets even worse, right? I think this is like a whole other argument against these LNG terminals, that they are extremely pollution intensive. And what I should say is, it’s a very bio-diverse area of the country. You know, people don’t think about the Gulf Coast as being bio-diverse, but by the way, Alabama, Mississippi, Louisiana, some of the most biodiverse areas of the continental United States. Setting aside biodiversity, it’s bad to have a big, cancerous, carcinogenic, hyper-polluting, smelly piece of infrastructure next to your town. And that's a whole other case against these terminals. And that's been a whole other nexus of how people have argued about them to the Biden administration. I think that's totally valid.

I think what's interesting is that that actually suggests another kind of trade-off, right? Because if, and I don't want to be too academic about this, but like, if a country in Sub-Saharan Africa and Southeast Asia is deciding whether to burn coal, or to burn imported U.S. liquid natural gas, and we don't make that liquid natural gas available, so they burn coal instead—that’s like bad for all the people who live around that coal plant. Right? Now they have asthma, now they have heart disease, and they're interacting, not with natural gas air pollution, which is bad but cleaner than coal. They're interacting with coal, which produces one of the worst kinds of power-related air pollution that there is and is responsible for early deaths and stunted births and stunted growth and heart disease and lung disease worldwide, and is the main driver of global air pollution problems. I think what's interesting is like, how do you balance, if you're the Biden administration, these local concerns in the Gulf Coast, around the local air pollution effects and local water pollution effects of an LNG terminal, with this trade off that maybe that means people around the world have to encounter more coal pollution? Conventional toxic air pollution from coal? Ultimately, I think you say, “Well, look, folks in the Gulf Coast, those are Biden's constituents, those are Americans. And so we should rank their desire to avoid pollution higher.” I think that lens is one that if we were to bring to other aspects of foreign policy, or even other aspects of climate policy, would be seen and depicted as really noxious ways to understand foreign policy, and a really bad way to think about the world and an unethical way to think about the world. And that's just like another one of these trade-offs. That's kind of inherent in where you draw the line that I think is really, really difficult. Very interesting.

Jenkins: Yeah. And it all comes back to this question of the public interest, who is the public that you're interested in?

Meyer: Right.

Jenkins: And it's not clear in statute, what that means. So until the Supreme Court overthrows the Chevron Doctrine, which we'll talk about in another podcast, the current law of the land is that the agencies need to interpret what that means and figure out how to decide what's in the public interest. So we'll see what happens. But I think this does raise this big question, right, who is the public that you're interested in here, if you're the Biden administration, or the Department of Energy? And you know what we've seen here is that there are some pretty clear winners and losers domestically. To sum up, the winners are gas producers and owners of LNG pipelines that shipped to the terminals and the terminals that ship this gas overseas. Those are the winners.

They get more money for their product, they sell more of their product, they make more profit. And, you know, if you're just looking at sort of the U.S. national accounts, right, our GDP, like that's on the positive side of the ledger. But of course, we should also keep in mind that there are particular people who benefit from that, right? It's a particular class and group of people in the U.S. that exclusively benefit basically, from that side of the equation.

On the other side of the equation, and I think at the end of the day, this is the part that the Biden administration will lean into, because it's the strongest case and the most broadly popular case against the terminals, if they decide to, you know, justify their decision here more aggressively. And that's that anyone in the U.S., any business or household or industry that consumes natural gas, is going to be paying a higher price if we are going to export more to the world, because that's a big increase in demand for U.S. supply. And when demand goes up, prices go up. Even more concerning, I think, is that the U.S. will see much more volatile natural gas prices, the more we link our markets to the global stage. We see this in the oil markets all the time, right?

We are a net exporter of oil, we are physically energy secure, right? That long-sought goal of energy independence, we've achieved it. If there was a conflict of war that sort of broke out tomorrow, we could meet all of our domestic needs, without any trouble. That said, when a crazy dictator on the other side of the world—thanks Vlad—you know, decides to invade his neighbor right in an unprovoked war, and causes a huge global conflict and disruption of energy supplies, prices at the pump in Princeton, and you know, Des Moines and Denver, that goes up overnight. Because oil is a globally traded fungible commodity. And if demand in Europe spikes, people are willing to pay a huge amount because supply from Russia is disrupted, that's gonna affect the prices that we have to pay even for the gas and oil that we produce here in the United States. And that has not been the case, historically, right? We've been a separate market for gas. While oil has been globally traded, we have been isolated in North America, because gas is so much harder to ship around the world than oil is.

Well with LNG, it's, you know, it costs more to ship but it becomes easy to ship it as a liquid just like oil. And if we are now you know, going to be shipping something like a third of all of our supply overseas, if there's a conflict or weather-related disaster that knocks out supply somewhere around the world, or a big increase in demand, you know, because of a cold weather event, or you know, in the case of Japan, after Fukushima, they shut down all their nuclear plants and had a huge increase in demand for LNG overnight, like any of those kinds of global conflicts or crises that are totally out of our control, will immediately increase natural gas prices across the United States. Not by as much as the global price, there's always going to be a wedge between the two because of shipping costs, but it will drive up prices. And that's exactly what we saw in 2022, when prices in the U.S. tripled, because of the demand for LNG in Europe and Asia and elsewhere. So that's the clear loser side, it's like households trying to heat themselves in the winter, and in a year when there's some conflict on the other side of the world that drives up their heating prices, they have no control over. And any U.S. industries that depend on cheap gas to be globally competitive, and might lose market share, you know, might have to lay off people, you know, might not contribute as much to our economy on that side of the ledger.

Meyer: And this is not like a minor consideration either, right? Like this is actually a significant piece of macroeconomic policymaking. This would have a major effect on the U.S. macroeconomy, because cheap natural gas and cheap electricity are not like rounding errors on how the current U.S. economy is structured. Over the past decade and a half, they have become major traits of the U.S. economy and major determinants of U.S. global competitiveness. And that's not to say, by the way, that it should be cheap forever. I think what's going to happen over time is that we replace that cheap U.S. natural gas as an input into electricity with cheap renewables and cheap zero carbon electricity. But increasing U.S. natural gas costs and increasing U.S. electricity costs is not a minor thing. That is actually a very significant piece of macroeconomic policymaking and would matter quite a bit to a lot of industries that have nothing to do with fossil fuels.

Jenkins: That's right. And I should say, this was a question that the Obama administration looked at, I think in circa 2016 or 2014, that was looked at under the Trump administration. So they have done these analyses in the past. And the conclusion, which is sort of basic economics is like on net, there are gains from trade here to be had, you know, because we're going to be selling or producing more gas and selling it at a higher price and earning more profits for gas producers that offsets these other negative impacts.

But I think again, it raises the question of who is the public that you care about? Do you just care about the aggregate GDP? Or do you care about more about certain constituents or industries more than others, right? Do you care that about household costs more than you care about, you know, the profit of LNG companies? Or stockholders and gas producers? That's just a subjective question, right? There's no objective answer there. There are winners and losers in every trade decision on both sides of the ledger, right? Both in the importing and exporting countries.

Meyer: And do you care about commodity exports or higher manufacturing exports? There’s a lot here.

Jenkins: Yeah, maybe you might want to pause and think about it. And that's where I come out after spending a week thinking about it myself. It's like, yeah, there's a lot to unpack here. And things are changing rapidly, right? The global geopolitical situation is not at all the same as it was six years ago, or four years ago, the climate situation is not really the same as it was, you know, six years ago or four years ago. And, you know, the U.S. economy is shifting in important ways, too. So maybe you want to pause and think about how far you want to go here. That I think is the best case for the Biden administration's decision. It's just like, Whoa, this is moving real fast. Let's slow down. And think about all of the myriad implications of this decision on consumers, on local populations in Louisiana, on you know, globally competitive businesses and industries that depend on cheap gas and electricity, on our role in the global economy and geopolitics and security as a big exporter of LNG. I mean, these are all relevant pieces of the equation. And there isn't really a clear cut answer here.

[AD BREAK]

Jenkins: All right, Rob. So what has you excited this week? What is your upshift for the week?

Meyer: I think my upshift for the week is unusually vehicle-related. And it is that the EIA came out with a finding this week that hybrids, plug in hybrids, and battery electric vehicles were 16.3% of new car sales last year. That's obviously not where we need to be. But it represents significant growth from last year, or rather from 2020, when hybrids, plug in hybrids and battery vehicles were 12.9% of sales. It continues to grow. I think two interesting things is that hybrids and fully electric vehicles are kind of growing at roughly the same rate, battery electric may be catching up. It's good news for a lot of reasons. I mean, does it reflect that the battery electric market is where we would want it to be? Not necessarily but I think it's good news because it shows that especially as tailpipe regulations as the EPA prepares to regulate greenhouse gas emissions from light duty vehicles, from light duty cars and trucks, that there's a lot of potential there to increase the BEV and hybrid share. And especially that consumers are recognizing that well, if they're not ready to buy an electric vehicle yet they should buy a hybrid, which is something that a lot of consumers I know who bought new cars recently have gone through.

Jenkins: Yeah, I think actually what was surprising there was the hybrid portion of that picture. I think we were all expecting battery electric sales to increase, and you know, the question is how much. I think that it reached about, just pure battery electric vehicles, top 7% of all U.S. sales. But what was surprising is the hybrid share, which was basically flat for the last several years, at around 5% of the market, soared to over 7.5% of the market, over 1.1 million hybrids sold in 2023, about exactly the same amount of total vehicles as battery electric vehicles. So there's been some reporting that like you know, people are choosing hybrids as EV demand slows, but that's actually not the case. It's that instead of just EVs growing, we have EVs growing at a 50% Share, annual increase, and all of a sudden hybrids are back in the game! With the release of a lot of new models that don't really cost any more than the conventional versions. It almost makes me wonder why we even sell the conventional versions of some of these cars.

But I recently saw that the Hyundai Tucson hybrid cost about $600 more than the equivalent trim of the internal combustion version. And it's just a better car, like it's got 50% better fuel economy, it's faster, it's got more horsepower. It's quieter when you're driving around the city, like why do they even sell the other one? And so that's sort of why I think we're seeing hybrid sales go up, it's just if you're gonna buy an internal combustion engine car, the better internal combustion engine car, it happens to be a hybrid now, and it doesn't cost you an arm and a leg more. And it pays itself back in just a matter of months in fuel costs.

Meyer: Jesse, what's your upshift for the week?

Jenkins: So my upshift on a little more personal note, I just began a new teaching semester here at Princeton, and I'm teaching my favorite class, which is the Introduction to the Electricity Sector. We cover engineering, economics and regulation. And it's a really fun class. This is the fifth year I've been teaching it here at Princeton. I helped teach it with my adviser at MIT for several years and kind of adapted it when I got here to Princeton.

And it's really running nice and smoothly now. The fifth time's the charm, right? So this year, it's been fun, it's running smoothly, we have a big excited class. And what I really love about the class is the mix of students in it, we have about half undergraduates and half graduate students. And you know, maybe half of the students are from engineering disciplines. But it really spans the entire university. We've got, you know, engineering students that are interested in the electricity sector, we've got policy students from the School of Public and International Affairs, we have science and humanities and economics and political science students. And so it's just a really interesting mix. And I think it reflects just how inherently interdisciplinary and also inherently important the electricity sector is. You know, I always find it exciting to see students from all these different backgrounds deciding they want to spend this semester with me, learning about electricity regulation, and thermodynamics and microeconomics principles. So it's gonna be a fun one.

Meyer: Yeah, that's sweet. What's your downshift?

Jenkins: So my downshift was news that I read this week, it was broken by the Guardian, that the U.S. oil lobby, the American Petroleum Institute, just took out like an eight figure media buy, to spread the idea that fossil fuels are vital to global energy security—not, you know, coincidental timing around the debates over LNG. So we can expect the airwaves and the paid advertising in the newspaper and everything to just be flooded with ads, making the case that because the world is in crisis, and conflict, and there's a war in the Middle East, and there's war in Ukraine, that that makes U.S. oil and gas supplies so much more important for the global security situation. Obviously they're gonna make the most compelling case they can for their industry, that's their job. But I think the thing that makes me most angry or frustrated about this, the reason that's my downshift, is that it ignores the part of the story where the U.S. is totally vulnerable to these conflicts, too.

We talked about that earlier that, you know, when there's a war, say, Houthis interdite trade through the Suez Canal, and that disrupts all kinds of oil shipments from the Middle East to Europe, like that isn't just contained in Europe, that spills over and infects the price of the pump, and the cost of heating homes right here in the U.S. immediately. So this idea that, you know, the oil and gas industry is so good for security, it may be true for sort of global geopolitics and like helping our allies overseas. But it doesn't mean that the U.S. economy is secure by any means. We are totally vulnerable to these conflicts around the world. And we will be until we sever our reliance on globally traded commodities like oil and LNG.

And the only way to do that, of course, is to accelerate the Clean Energy Transition, to accelerate the growth of EVs, and of heat pumps and renewable energy, that are capital investments. Once you make them, you're no longer dependent on what happens on the other side of the world. And, you know, they're not running the ad campaign making that point.

Meyer: Well, I'm not going to claim that that's an upshift. But I do think that this is kind of interesting in the light of the LNG decision, because my understanding is that that campaign was locked in before the LNG decision was even made. And the Biden administration I have to say while it has presided over, of course, the U.S. drilling more oil and natural gas than it ever has before, in not only U.S. history, but the U.S. is drilling more oil and natural gas than any country ever before has.

Jenkins: Yeah, we’re now the Saudi Arabia of oil.

Meyer: Well, without the ability to control it, but yeah. But I think at the same time, what this shows is that, like, the oil industry isn't gonna give credit for that either. Chevron just this week announced that it was going to expand capacity again this year. And I think that there is this kind of like realpolitik way of looking at this, which is like, “Look, if the oil and gas industry is going to run these giant ad campaigns against Democratic administrations, no matter what Democratic officials actually do, then by all means Democratic administrations should like try to slow the growth of those industries.”

I mean, that's a very, very, like sociopathic way of looking at it. But like, if there is this very tough question, that's like, “Should the U.S. do this? Who would it be bad for, who would it be good for, and the primary beneficiaries of such a policy would be the fossil fuel industry itself and not U.S. consumers? Then why should Biden not pause LNG exports, right?”

My downshift for the week, speaking of capital goods, speaking of big investments, was that Jerome Powell, the Chairman of the Federal Reserve really made it seem like the Fed isn't going to cut rates in March, which is actually quite worrying me at this point. Interest rates are at their highest point in more than 20 years. That's really decreasing investment in renewables and in the kind of big clean electricity and clean energy investments that we need to fight climate change.

Jenkins: It also makes EVs more expensive to lease.

Meyer: Yeah, it’s just bad for the transition all around. I understand the Feds’ desire to make sure that it finishes fighting inflation. But I think inflation has been pretty much under control for the past six months. And I'm worried that although we have this very booming economy right now that like, it's a little unstable, and keeping rates too high could kill it. And I'm also just worried that we're not, that a lot of great investments and a lot of great investment that's already happened from American companies and in technologies and infrastructure that could be built here in the U.S., is not going to happen or companies are going to die because capital is so expensive right now. So, that's my downshift for the week. Y

Jenkins: You heard it here, folks, Robinson Meyer launching his campaign for Fed Chair. You got my vote.

Meyer: Okay. Well, this has been great. And, Jesse, I'll see you here next week. And thanks so much! This was fun.

Jenkins: Okay, That's a wrap.

Meyer: Shift Key is a production of Heatmap News. The podcast was edited by Jillian Goodman, our Editor in Chief is Nico Lauricella, multimedia editing and audio engineering by Jacob Lambert and Nick Woodberry. Our music is by Adam Kromelow. Thanks so much for listening. And see you next week.