As much as we would like to use America’s abundance of natural gas as a political lever against Russia’s Vladimir Putin, uncertainty over the demand for relatively high-cost U.S. gas will likely force us to be more realistic about what we can accomplish.
A better strategy would be to supply Europe with coal and nuclear technology, which could be used instead of Russian natural gas for electricity production. To that end, we should eliminate government restrictions on coal mining and the export of nuclear plant components.
European countries that are 70 percent to 100 percent dependent on Russian gas – countries like Poland, Lithuania, Hungary and Ukraine – would like to get out from under Russia’s grip. But Russian gas is substantially cheaper than U.S. liquefied natural gas, and even the most vulnerable countries are unlikely to change who they buy their gas from.
Besides, meaningful quantities of LNG will not become available for export until the end of this decade at the earliest.
Currently, the U.S. is producing more gas than we can consume, and we should be grateful for that. If not for the boom in shale-gas production, the U.S. would still be importing LNG to meet our needs.
Picture this: Were Russia to interrupt gas deliveries to Europe, the loss of supplies would force European countries to obtain natural gas on the international market, which would drive up world prices. Among those who would have to pay more for gas would be American consumers.
The fact that we’re now shielded from events overseas is due in no small way to the surge in U.S. gas production.
We can and should take action now.
If the U.S. government were to expedite the approval of licenses to export LNG, it would signal our resolve to become a major player in the global gas market.
To date, seven terminals to export LNG have been approved, with two under construction. There are applications pending for 25 more terminals, but they are being slow-walked.
A number of those terminals will never be built due to the high cost of LNG infrastructure construction and the difficulty of obtaining the necessary financing. Still, Congress should approve proposed legislation to require the Department of Energy to speed up its licensing process.
In the long term, U.S. LNG will temper European gas prices, and that will cut into Russia’s revenues.
Ramping up coal exports could have an immediate impact, however.
The U.S. currently exports around 100 million tons of coal, and there is no overstating the geopolitical consequences in Russia from rising exports.
Similarly, the sale of nuclear technology could strengthen America’s energy position. At least a dozen European countries have nuclear plants under construction or planned. According to the U.S. Commerce Department, the global nuclear market will reach $740 billion in this decade.
Currently, Russia is the No. 1 supplier of nuclear components and equipment, with more than 30 percent of the market. China is not far behind. The U.S. share is 7 percent.
Increasing U.S. competitiveness won’t be easy, but streamlining the permitting process for nuclear exports would help greatly. Because U.S. reactor suppliers must obtain approval from three departments – state, commerce and energy – plus the Nuclear Regulatory Commission, the licensing process can take a year or longer, whereas our competitors in other nuclear countries can obtain an export license within a month.
Russia’s takeover of Crimea is a fact. The question then is: What do the U.S. and our allies do about it? On the energy front, the first order of business is to speed up approval of LNG export terminals. Then make way for increased coal and nuclear exports.
Together they could help displace Russia’s dominant energy position in Europe, while delivering economic benefits here at home.
Jim Constantopoulos is a professor of geology and director of the Miles Mineral Museum.