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The full conversation from Shift Key, episode one
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.
[AD BREAK]
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.
[AD BREAK]
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.
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A few Super Bowls ago, when General Motors used its ad spots to pitch Americans on the idea of the GMC Hummer EV, it tried to flip the script on the stereotypes that had always dogged the gas-guzzling SUV. Yes, it implied, you can drive a military-derived menace to society and still do your part for the planet, as long as it’s electric.
You don’t hear much about the Hummer anymore — it didn’t sell especially well, and the Tesla Cybertruck came along to fill the tank niche in the electric car market. But the reasoning behind its launch endures. Any EV, even a monstrous one, is a good EV if it convinces somebody, somewhere, to give up gasoline.
This line of thinking isn’t wrong. A fully electric version of a big truck or SUV is far better, emissions-wise, than a gas-powered vehicle of equivalent size. It’s arguably superior to a smaller and efficient combustion car, too. A Ford F-150 Lightning, for example, scores nearly 70 in the Environmental Protection Agency’s miles per gallon equivalent metric, abbreviated MPGe, that’s meant to compare the energy consumption of EVs and other cars. That blows away the 20-some miles per gallon that the gas F-150 gets and even exceeds the 57 combined miles per gallon of the current Toyota Prius hybrid.
In terms of America’s EV adoption, then, we’ve come to see all EVs as being created equal. Yet our penchant for large EVs that aren’t particularly efficient at squeezing miles from their batteries will become a problem as more Americans go electric.
Big, heavy cars use more energy. This is how we worried about the greenness of cars back in the days before the EV: Needlessly enormous models such as the Ford Expedition and the Hummer H2 deserved to be shamed, while owning a fuel-sipping hybrid or a dinky subcompact was the height of virtue.
This logic has gotten a bit lost in the scale-up phase of electric vehicles going mainstream. We talk at length about EV sales and how fast their numbers are growing; we rarely talk about whether the EVs we buy are as energy-efficient as they could be. As a new white paper from the American Council for an Energy-Efficient Economy points out, though, getting more miles out of our EV batteries would save drivers money and reduce the strain on the grid that will come from millions of people charging their cars.
The simplest way to measure an EV’s fuel efficiency is to know how many miles it travels per kilowatt-hour of electricity. Popular crossovers like Tesla’s Model Y and Kia’s EV6 achieve a pretty-good 3.5 miles per kilowatt-hour. Look at bigger, heavier vehicles and you’ll see a major fall-off. InsideEVs found that Rivian’s R1S gets between 2.1 and 2.4 miles per kilowatt-hour. The hulking Hummer EV scores just 1.5, according to Motor Trend’s testing. The EPA’s MPGe data is another way to see the same story. The 60-some miles per gallon equivalent of an electric pickup like the Rivian R1T or Chevy Silverado EV crushes the mileage of petro trucks, but pales next to the 140-plus MPGe that an electric sedan from Hyundai or Lucid can claim. (Those EVs can deliver 4 or more miles per kilowatt-hour.)
Even modest gains in EV efficiency could cause beneficial ripple effects, the ACEEE says. Drivers who own a 3.5 miles per kilowatt-hour car would save hundreds of dollars on fuel annually compared to those whose vehicles get 2.5 miles per kilowatt-hour. More efficient cars should be less expensive, as well. Huge, inefficient EVs need to carry enormous batteries just to reach an adequate range, and the bigger the battery, the bigger the cost. Whereas a Model Y’s battery capacity ranges from 60 kilowatt-hours for standard range to 81 kilowatt-hours for long range, a Rivian’s runs from 92 to 141.5 kilowatt-hours. ACEEE calculates that the jump from 2.5 to 3.5 kilowatt-hours could shave nearly $5,000 from the cost of making a car because it would need so much less battery.
Making EVs more efficient would mean faster charging stops, too, since drivers wouldn’t need to cram so many kilowatt-hours into their batteries. It would ease demand for electricity, making it easier for the grid to keep pace with an electrifying society. But convincing Americans to buy smaller, more efficient vehicles has been an uphill battle for decades.
Earlier this summer, Ford CEO Jim Farley called for a return to smaller vehicles as more of the U.S. car fleet turns over to electric. Yet it was Ford that just a few years ago quit making cars altogether (outside of the Mustang) because it reaped so much more profit on the pricier crossovers, SUVs, and pickups that Americans have voted for with their wallets. And not long after Farley’s speech, the company scaled back its EV ambitions, clearly struggling to find a way to sell electric vehicles profitably.
The issue is not only carbuyers’ preference for big, heavy vehicles. ACEEE points out that public policy doesn’t punish big electric cars. “The EPA standard treats all EVs as having zero emissions. It therefore provides no incentive to improve EV efficiency since inefficient and efficient EVs are treated the same for compliance purposes,” the paper says.
That is why ACEEE floats the idea of a policy change. For example, its paper suggests the fees some states levy against EVs (ostensibly to make up for the lost revenue from those cars avoiding the gas tax) could be tweaked to charge more for inefficient EVs. Rebates for purchasing an EV could be changed in the same manner.
It was, after all, regulatory loopholes and misplaced incentives that helped big gas guzzlers conquer the roads in the first place. With better rules about big EVs, perhaps we could avoid repeating the mistakes of the past.
On new heat records, Trump’s sea level statements, and a super typhoon
Current conditions: Torrential rains flooded the streets of Milan, Italy • The U.K. recorded its coldest summer since 2015 • The temperature in Palm Springs, California, hit 121 degrees Fahrenheit yesterday.
Summer 2024 was officially the warmest on record in the Northern Hemisphere, according to new data from the EU’s Copernicus Climate Change Service. Between June and August, the average global temperature was 1.24 degrees Fahrenheit higher than the 1991-2020 average, beating out last summer’s record. August 2024 tied August 2023 for joint-hottest month ever recorded globally, with an average surface air temperature of 62.27 degrees Fahrenheit.
C3S
“During the past three months of 2024, the globe has experienced the hottest June and August, the hottest day on record, and the hottest boreal summer on record,” said Samantha Burgess, deputy director of C3S. “This string of record temperatures is increasing the likelihood of 2024 being the hottest year on record. The temperature-related extreme events witnessed this summer will only become more intense, with more devastating consequences for people and the planet unless we take urgent action to reduce greenhouse gas emissions.”
During a speech at the Economic Club of New York yesterday, former President Donald Trump said that because of climate change, “the ocean is going to go down 100th of an inch within the next 400 years,” and dismissed this as “not our problem.” This appears to be a warped variation of his repeated claim that “the ocean is going to rise one eighth of an inch over the next 400 years.” He’s said this many times, occasionally subbing in “200 to 300 years” for 400 years. Either way, he’s incorrect. “Trump’s numbers are orders of magnitude off the mark,” wrote Heatmap’s Jeva Lange in her epic historical fact check of Trump’s various climate statements. “The oceans are on track to rise 3.5 feet to 7 feet along America’s coastlines by 2100,” Lange said. Back in 2022, Michael Oppenheimer, director of the Center for Policy Research on Energy and the Environment at Princeton University, called Trump’s sea-level calculation “so far from accurate as to appear to have been entirely fabricated.”
The U.S. and China had “excellent discussions” during climate talks this week in Beijing, climate envoy John Podesta said today. The two nations came closer to being on the same page about climate finance and greenhouse gas emissions cuts. “Notwithstanding some friction in our bilateral relationship, we can find places to collaborate for the good of our people and the good of our climate,” Podesta said. As Bloombergnoted, this is likely the last opportunity for the world’s two biggest emitters to try to find common ground ahead of the U.S. presidential election and the COP29 climate summit in November.
Ford reported some interesting August sales figures yesterday. The company saw a 50% jump in hybrid sales last month compared to a year before, and a 29% rise in electric vehicle sales, with F-150 Lightning sales up 160% year over year. But internal combustion engine cars still made up 86% of total monthly sales. The automaker recently scrapped its plans to build a three-row EV crossover and instead plans to make that vehicle as a hybrid, and will double down on producing more hybrid models.
China evacuated 400,000 people from some of its southern provinces in anticipation of Super Typhoon Yagi. Schools are shut down, flights have been canceled, and Hong Kong’s stock market is closed. The storm struck the Philippines earlier this week but has doubled in strength since, and now packs wind speeds of about 140 miles per hour, giving it the power of a Category 4 hurricane. It made landfall on the popular tourist island of Hainan this morning and is expected to hit Guangdong, China's most populous province, before churning toward Vietnam’s historic Ha Long Bay. It is the strongest typhoon to strike China’s southern coast in 10 years, and according to NASA, it has been supercharged by unusually warm water in the Northwest Pacific Basin.
“Everybody’s getting drunk and having a good time: ‘Oh, look at the gift they brought us!’ But at night, they’re going to sneak out of that horse, and they’re going to leave an environmental disaster.” –A long-time resident of Superior, Arizona, ponders the promise and perils of mining the town’s copper deposits, one of the largest remaining in the world.
The raw material of America’s energy transition is poised for another boom.
In the town of Superior, Arizona, there is a hotel. In the hotel, there is a room. And in the room, there is a ghost.
Henry Muñoz’s father owned the building in the early 1980s, back when it was still a boarding house and the “Magma” in its name, Hotel Magma, referred to the copper mine up the hill. One night, a boarder from Nogales, Mexico, awoke to a phantom trying to pin her to the wall with the mattress; naturally, she demanded a new room. When Muñoz, then in his fearless early 20s, heard this story from his father, he became curious. Following his swing shift at the mine, Muñoz posted himself to the room with a case of beer and passed the hours until dawn drinking and waiting for the spirit to make itself known.
Muñoz didn’t see a ghost that night, but he has since become well acquainted with others in town. There is the Mexican bakery, which used to sell pink cookies but now opens only when the late owner’s granddaughter feels up to it. There’s the old Magma Club, its once-segregated swimming pool — available one day a week to Hispanics — long since filled in. Muñoz can still point out where all the former bars were on Main Street, the ones that drew crowds of carousing miners in the good years before copper prices plunged in 1981 and Magma boarded up and left town. Now their dusty windows are what give out-of-towners from nearby Phoenix reason to write off Superior as “dead.”
“What happens when a mine closes, the hardship that brings to people — today’s generation has never experienced that,” Muñoz told me.
Superior is home to about 2,400 people, less than half its population when the mine was booming. To tourists zipping past on U.S. 60 to visit the Wild West sites in the Superstition Mountains, it might look half a step away from becoming a ghost town, itself. As recently as 2018, pictures of Main Street were used as stock photos to illustrate things like “America’s worsening geographic inequality.”
But if you take the exit into town, it’s clear something in Superior is changing. The once-haunted boarding house has undergone a multi-million-dollar renovation into a boutique hotel, charging staycationers that make the hour drive south from Scottsdale $200 a night. Across the street, Bellas Cafe whips up terrific sandwiches in a gleaming, retro-chic kitchen. The Chamber of Commerce building, a little further down the block, has been painted an inviting shade of purple. And propped in the window of some of the storefronts with their lights on, you might even see a sign: WE SUPPORT RESOLUTION COPPER.
Resolution Copper’s offices are located in the former Magma Hospital, where Muñoz was born and where his mother died. People in hard hats and safety vests mill about the parking lot, miners without a mine, which is not an unusual sight in Superior these days — no copper has been sold out of the immediate area in over two decades. And yet just a nine-minute drive further up the hill and another 15-minute elevator ride down the deepest mine shaft in the country lies one of the world’s largest remaining copper deposits. It’s estimated to be 40 billion pounds, enough to meet a quarter of U.S. demand, according to the company’s analysis.
That’s “huge,” Adam Simon, an Earth and environmental sciences professor at the University of Michigan, told me, and not just in terms of sheer size.
“Copper is the most important metal for all technologies we think of as part of the energy transition: battery electric vehicles, grid-scale battery storage, wind turbines, solar panels,” Simon said. In May, he published a study with Lawrence Cathles, an Earth and atmospheric sciences researcher at Cornell University, which looked at 120 years of copper-mining data and found that just to meet the demands of “business as usual,” the world will need 115% more of the material between 2018 and 2050 than has been previously mined in all of human history, even with recycling rates taken into account.
Aluminum, used in high-voltage lines, is sometimes floated as a potential substitute, but it’s not as good of a conductor, and copper is almost always the preferred metal in batteries and electricity generation. Renewables are particularly copper-intensive; one offshore wind turbine can require up to 29 tons. What lies in the hills behind Superior, then, represents “millions of electric vehicles, millions of wind turbines, millions of solar panels. And it’s also lots of jobs, from top to bottom — jobs for people with bachelor’s degrees in engineering, mining, geology, and environmental science, all the way down to security officers and truck drivers,” Simon said. He added: “The world will need more copper year over year for both socioeconomic improvement in the Global South and also the energy transition, and neither of those can happen without increasing the amount of copper that we produce.”
Muñoz insisted to me that the promises of jobs and a robust local economy are a kind of Trojan horse. “Everybody’s getting drunk and having a good time: ‘Oh, look at the gift they brought us!’” he said of Superior’s support for Resolution Copper. “But at night, they’re going to sneak out of that horse, and they’re going to leave an environmental disaster.”
For now, though, the copper has just one catch: Resolution isn’t allowed to touch it.
If not for a painted sign declaring the ground HOLY LAND, there would be nothing visible to suggest the 16 oak-shaded tent sites over Resolution Copper’s ore body were anything particularly special. The Oak Flat campground is less than five miles past Superior, but at an elevation of nearly 4,000 feet, it can feel almost 10 degrees Fahrenheit cooler. On the late June day that I visited with Muñoz, Sylvia Delgado, and Orlando “Marro” Perea — the leaders of the Concerned Citizens and Retired Miners Coalition — the floor of the East Valley was 113 degrees Fahrenheit, and the altitude offered only limited relief.
Directly below us and to the east of the campground, beneath a bouldery, yucca-studded desert, lies the copper deposit. At 7,000 or so feet deep, extracting it would require an advanced mining process called block caving, in which ore is collected from below through what is essentially a controlled cave-in, like sand slipping through the neck of an hourglass.
Muñoz, a fifth-generation miner, prefers the metaphor of going to the dentist. “They drill out your tooth and refill it: that’s basically traditional cut-and-fill mining,” he told me. “Block cave, on the other hand, would be going to the dentist and having them pull out the whole molar. It just leaves a vacant hole.” In this case, the resulting cavity would be almost two miles wide and over 1,000 feet deep by the time the ore was exhausted sometime in the 2060s.
Even four decades is just a blink of an eye for Oak Flat, though, where human history goes back at least 1,500years; anthropologists say the mine’s sinkhole would swallow countless Indigenous burial locations and archeological sites, including petroglyphs depicting antlered animals that Muñoz and Perea showed me hidden deep in the rocks. Even more alarmingly, the subsidence would obliterate Chí'chil Biłdagoteel, the Western Apache’s name for the lands around Oak Flat, which are sacred to at least 10 federally recognized tribes. The members of the San Carlos Apache who are leading the opposition effort, and use the location for a four-day-long girlhood coming-of-age ceremony, say it is the only place where their prayers can reach the Creator directly.
Mining and Indigenous sovereignty have been at odds in Arizona for over a century. “The Apache is as near the lobo, or wolf of the country, as any human being can be to a beast,” The New York Times wrote in 1859, claiming the tribe was “the greatest obstacle to the operations of the mining companies” in the area. Three years later, the U.S. Army’s departmental commander ordered Apache men killed “wherever found,” the social archaeologist John Welch writes in his eye-opening historical survey of the region, in which he also advocates for using the term “genocide” to describe the government’s policies. That violence still casts a shadow in Superior: Apache Leap, an astonishing escarpment that looms over the town and backs up against Oak Flat, is named for a legend that cornered Apache warriors jumped to their deaths from its cliffs rather than surrender to the U.S. Cavalry.
As the Apache were being forced onto reservations and into residential boarding schools during the late 1890s, a treaty with the government set aside Oak Flat for protection. The land was later fortified against mining by President Dwight D. Eisenhower, with the federal protections reconfirmed by the Nixon administration in the 1960s. (The defunct Magma Mine that fueled the first copper boom in Superior is located just off this 760-acre “Oak Flat Withdrawal Area.”)
In 1995, the enormity of the Oak Flat ore body — and the billions it would be worth if it could be accessed — started to become apparent. The British and Australian mining companies Rio Tinto and BHP Billiton formed a U.S. subsidiary, Resolution Copper, which bought the old Magma mine and began to lobby Arizona politicians to sign over the neighboring parcel of Oak Flat. Between 2004 and 2013, lawmakers from the state introduced 11 different land transfer bills into Congress, none of which managed to earn broad support.
Then, in December 2014, President Barack Obama signed a must-pass defense spending bill. On page 1,103 was a midnight rider, inserted by Arizona Republican Senators John McCain and Jeff Flake, which authorized a land transfer of 2,400 acres of Tonto National Forest, including Oak Flat, to Resolution Copper in exchange for private land the company had bought in other parts of the state. (Flake previously worked as a paid lobbyist for a Rio Tinto uranium mine, and the company contributed to McCain’s 2014 Senate campaign.)
Heatmap Illustration / Esri, TomTom, Garmin, FAO, NOAA, USGS, © OpenStreetMap contributors, and the GIS User Community
The senators’ rider also included an odd little twist. While the National Environmental Policy Act requires the Forest Service to conduct an environmental impact statement for a potential mine, the bill stipulated that the land transfer to Resolution Copper had to be completed within a 60-day window of the final environmental impact statement’s release, regardless of what the FEIS found.
After six years of study, the FEIS was rushed to publication by President Donald Trump in the final five days of his term, triggering that 60-day countdown. President Biden rescinded Trump’s FEIS once he took office in 2021, pending further consultation with the tribes, but the clock will begin anew once a revised FEIS is released, potentially later this year. (The new FEIS was expected last summer, but the Forest Service has since reported there is no timeline for its release. The agency declined to comment to Heatmap for this story, citing ongoing litigation.)
A spokesperson for Resolution Copper told me that the company is “committed to being a good steward of the land, air, and water throughout the entirety of this project,” and described programs to restore the local ecology and preserve certain natural features, including Apache Leap. “At each step,” the spokesperson said, “we have taken great care to solicit and act upon the input of our Native American and other neighbors. We have made many changes to the project scope to accommodate those concerns and will continue those efforts over the life of the project.”
Meanwhile, Apache Stronghold — the San Carlos Apache-led religious nonprofit opposing the mine — filed a lawsuit to block the land transfer, arguing that the destruction of Oak Flat infringes on their First Amendment right to practice their religion. The lower courts haven’t agreed, citing a controversial 1988 decision against tribes who made a similar argument in defense of a sacred grove of trees in California. Apache Stronghold, joined by the religious liberty group Becket, is now asking the U.S. Supreme Court to hear its case, a decision that is expected any day now. Nearly everyone I spoke with for this story, however, was pessimistic that the Justices would agree to hear the battle over Oak Flat, meaning the lower court’s ruling against Apache Stronghold would stand.
If Mila Besich could have it her way, Biden would visit Superior. He’d marvel at Apache Leap and Picketpost Mountain, visit the impressive new Superior Enterprise Center — paid for partially with money from his 2021 American Rescue Plan Act — and maybe wrap up the day with a purple scoop of prickly pear ice cream from Felicia’s Ice Cream Shop. And, most importantly, he’d hear her pitch: that “Superior and the state of Arizona have a once-in-a-generation opportunity to be the leader in advancing your green energy strategy.” She says Superior — and America — needs this mine.
Superior is a blue town, and Besich, its mayor, is a Democrat, which means she has found herself in the awkward position of defending Resolution Copper against colleagues like Congressman Raúl Grijalva of Tucson and Senator Bernie Sanders of Vermont, who have introduced unsuccessful bills in Congress to prevent the land transfer. There is something of a bitter irony, too, in seeing her party tout the economic upsides of the energy transition while standing in the way of Superior’s mine, which would employ an average of 1,434 workers per year and add over $1 billion annually to Arizona’s economy during its lifespan, according to the FEIS.
“Every mayor wants more jobs in their community,” Besich told me simply. But, she also pointed out, “Copper is critical to the green economy, so if we want the green economy, we should want to be mining American copper.”
Superior, of course, isn’t just any town. “Everybody here either worked in the mines or had family that worked in the mines,” James Schenck, a former employee of Resolution Copper who supports the mine and serves as the treasurer for Rebuild Superior, a nonprofit working to diversify the local economy, told me. “They understand the downsides, and some of them, for a while, were having a hard time understanding how this is different than what went on before.”
Though everyone seems to be on cordial terms — at one point during my visit, I was having lunch with Muñoz and Delgado when Besich walked in, and everyone smiled politely at one another — there are still clear factions. A Facebook group for locals warns against “posts concerning DRAMA, POLITICS, RELIGION, and MINING,” presumably the same topics to be avoided at family Thanksgivings.
The critical mineral experts I talked to for this story, though, said Schenck is largely right on that point. “Mining in 2024 is radically different than mining in 1954 or in 1904,” Simon told me. “It is really surgical.”
Muñoz is one of those in town who still isn’t buying it, and has converted his garage into an interpretive center for exposing the perceived infiltrators. As soft classic rock played over the speakers and a fan whirred to keep us cool, he showed me the 3D model he had commissioned of the Oak Flat sinkhole, with a miniature Eiffel Tower subsumed in its crater for scale. Laid out on a table on the other side of the room was a row of six dictionary-thick, spiral-bound sections of the FEIS, their most pertinent sections bookmarked. On the walls, Muñoz had hung pictures of comparable tailings sites in other parts of the world — cautionary tales of the hazards posed during the long lifespan of mines. (Including the water demands, no small concern in a place like Arizona, which opens a whole other can of worms).
“I use my experience to educate the people,” Muñoz said. “This isn’t what it’s made out to be. They’re going to play you.”
Muñoz was employed at the Magma Copper mine until 1982, when he was 27. “One day they said, ‘We’re shutting down.’ They folded up just like a carnival does on Monday morning,” he recalled. The abrupt departure devastated Superior: In These Timesdescribed the following years as an “economic cataclysm” for the town. By 1989, the median household income was just $16,118 compared to $36,806 in Queen Creek, the nearest Phoenix suburb just a 45-minute drive away.
“I witnessed grown men cry,” Muñoz said. “Men who’d been in the mines pretty close to 30 years — they never knew nothing else.” His father, the former boarding house owner, was among them: “He had limited writing abilities and what have you. He was 58. People lost their homes here. They lost their cars. There were divorces. Some people committed suicide. The drinking, the drugs. It was a bad time.”
Muñoz went on food stamps and unemployment. “This generation that is coming up, they’ve never experienced that,” he said. “They’ve never experienced a repossession note in the mail from the bank. They’ve never experienced a disconnection notice hanging from your front door knob. And they’ve never experienced calling up the utilities and saying, ‘Hey, can you wait until Friday when my unemployment check comes in?’”
Superior’s story isn’t unique; Arizona’s Copper Triangle is a constellation of hollowed-out company towns. Like many other out-of-work Magma miners, Muñoz eventually found a job at San Manuel, a BHP-owned block cave mine about an hour south of Superior. Then, in 1999, copper prices stuttered again, and by 2003, it shut down, too.
Muñoz had just returned from a car show in San Manuel when we met in his garage, and he reported it was still a sorry sight. “The main grocery store is closed, the Subway, all the buildings are boarded up, and the schools are shut down,” he said. The mine “just abandoned that town.”
Even as Muñoz and the Concerned Citizens and Retired Miners Coalition work with Apache Stronghold and national environmentalist groups like HECHO, the Sierra Club, and the National Wildlife Federation try to block Resolution Copper’s mine, there is a distinct feeling in Superior of its inevitability. Schenck, the treasurer for Rebuild Superior, told me he suspects just “10% or 15%” of people in town are “against the project.”
“My personal belief is this copper deposit is going to be developed at some point,” Schenck said. “It’s too important.”
Besich, the mayor, gave this impression too. “What people need to understand is, this ore body is not going anywhere,” she said. “Someone will mine it in the future.” She views Superior and the copper industry as partners in an “arranged marriage,” and her job as mayor is helping them “figure out how to get along.”
From the outside, though, Resolution Copper looks more like a sugar daddy. To date, Rio Tinto and BHP have spent more than $2 billion combined pursuing the Oak Flat mine, including pumping money into the Chamber of Commerce building, the Enterprise Center, and the fire department. When the town of Kearny, downstream of the mine’s proposed tailings site, needed a new ambulance, Resolution Copper offered to help foot the bill. Local high schoolers and tribal members can even apply for Resolution Copper scholarships.
Critics say Resolution Copper is buying political and social influence in the Copper Corridor, a modern-day iteration of the propaganda tactics that swept aside the Apache in the late 1800s. Rio Tinto and BHP “remain committed to influencing U.S. government decisions about the use of public lands and minerals, regardless of additional harms to those lands, to Native Americans, or to National Register historic sites and sacred places,” the archaeologist Welch wrote in his Oak Flat study.
Rio Tinto is infamous even in the mining industry for its poor history of handling community- and heritage-related concerns. To pick a recent example, the company drew international condemnation for its 2020 destruction of the Juukan Gorge cave in Western Australia, a sacred site to the Aboriginal people that had evidence of continuous human occupation going back to the Ice Age. Though Rio Tinto had the legal right to destroy the 45,000-year-old caves, “it is hard to believe community engagement is being taken seriously” by the company, Glynn Cochrane, a former Rio Tinto senior advisor, said in a testimony in the aftermath. Archaeologists and sympathetic politicians have warned that the cultural and spiritual loss caused by mining Oak Flat would be like a second Juukan Gorge.
The San Carlos Apache are not a monolith, however, and the community has differing beliefs about the cultural importance of Oak Flat. Tribal members who support the mine or work for Resolution Copper are often cited by non-Native supporters as proof of Apache Stronghold’s supposedly arbitrary defense of Oak Flat. (Apache Stronghold, which is on a prayer journey to petition the Supreme Court, did not return Heatmap’s request for comment.)
Muñoz and his team are specifically worried about how Superior, the town, will make out. U.S. copper smelters are already at capacity, meaning Resolution Copper would likely send much if not all of the raw copper extracted at Oak Flat to China for processing. (Rio Tinto’s largest shareholder is the Aluminum Corporation of China.) The spokesperson for Resolution Copper told me that it’s the company’s priority to process the ore domestically, and Rio Tinto does have its own facility in the U.S., the Kennecott copper smelting facility in Utah. Yet it hasn’t committed publicly to processing the Arizona ore there, and it’s far from clear that it even has the capacity to do so.
For Simon, the University of Michigan professor, that shouldn’t be a deterrent: “If we mine more copper here and it just means we have to export it — who cares?” he pushed back. “If it has to go to China and they smelt it, then you send it to China and they smelt it. Climate is the prize, and if we want to mitigate our impact, we’ve got to do it. There are no ifs, ands, or buts.”
Oak Flat is also located outside of Superior’s town limits, meaning the community would only recoup about $500,000 in tax revenue, on the high end, from the mine annually, according to the 2021 FEIS — Schenek told me the town’s budget is around $3 million, so it’s hardly insignificant, though it is peanuts compared to the $38 million the state would reap. The FEIS additionally estimated that only about a quarter of the mine’s eventual employees would actually “seek to live in or near Superior;” many would choose instead to commute the hour or so from Phoenix’s Maricopa County.
Because of technological advances in mining and robotics, the mine also won’t bring back the physical jobs locals remember from the 1970s — by Resolution Copper’s own admission. Besich, at least, isn’t bothered by this detail: “In all reality, I don’t see my children and their peers wanting to do the manual physical labor that my grandfather, my father, and certainly my great-grandfather did,” she told me. “So the change in technique is good, and I think that it’s actually better for the environment in the long term.” She added that Resolution Copper’s investment in things like local infrastructure and worker training programs will compensate for the comparably insignificant tax revenue the town will otherwise receive, ensuring Superior gets a fair cut of the bonanza.
What supporters and opponents of the mine can agree on is that Superior must avoid the devastation of the 1980s if or when the Oak Flat mine is exhausted in 40 or more years. Besich and Schenck told me their vision is for Superior to be a town with a mine, not a mining town. But is such a thing even possible? In recent years, Superior has tried to position itself as an outdoor recreation gateway to the many climbing routes and hiking trails in the area. Yet I struggle to imagine anyone would want to vacation or recreate so close to a massive mining operation.
Muñoz believes Superior should throw itself entirely into tourism, which brings in three times as much revenue as the copper industry in Arizona. He dismissed arguments that losing the mine this far into negotiations and preparations would set the town back two decades, telling me about a conversation he had with Vicky Peacey, the president of Resolution Copper. “She said, ‘How do I tell my 300-plus employees that they don’t have a job?’” he recalled. “I said, ‘The same way BHP told the 3,300 in San Manuel they didn’t have a job. Magma Copper didn’t have a problem telling us we didn’t have a job in ‘82.”
Whatever gets decided about Oak Flat will reverberate far beyond Superior, though. “We’ve got to keep our eyes on the prize,” Simon told me. “And if the prize is mitigating human impacts on climate, and that requires the energy transition, and that requires copper, and we have a potential mine in Arizona that would provide 500,000 tons of copper every year for decades — we need to do that.”
At the end of my day in Superior, I went with Muñoz and Delgado, another former miner, to visit the haunted boarding house.
The renovated interior was surprisingly beautiful, decorated with period-appropriate details like iron bed frames, clawfoot bathtubs, and lace curtains that softened the harshness of the mid-afternoon light. Though even the FEIS warns that “mining in Arizona has followed a ‘boom and bust’ cycle, which potentially leads to great economic uncertainty,” it was with a pang that I imagined the building one day falling back into disrepair. It, and the town, had survived too much.
After peeking into Room 103, where Muñoz had passed his tipsy night all those decades ago, we asked the friendly woman working the front desk if she’d had any supernatural experiences herself — surely she’d seen the mattress-flipping phantom, or swinging chandeliers, or perhaps a white-boot miner who’d come down from the hills?
To our disappointment, she shook her head. For now, whatever ghosts there once might have been in Superior had gone.
Editor’s note: This story has been updated to include comment from Resolution Copper.