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US liquefied natural gas is fueling global progress

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In 2018, worldwide energy demand grew 2.3 percent – the fastest this decade – while increases in efficiency and coal-to-natural gas switching in power generation also drove emissions reductions.

The combination of industry innovation and smart public policy has positioned the U.S. as a go-to supplier of affordable, cleaner-burning energy, which serves as a strategic asset for the economy, the environment and our national security.

The U.S. leads the world in natural gas production, and record production makes U.S. liquefied natural gas (LNG) an affordable and competitive option in global markets. Exports of U.S. LNG are set to jump a projected 72 percent this year compared to 2018, and the emergence of the U.S. as a world LNG supplier is good news for the American economy. Research shows LNG exports could generate up to 452,000 U.S. jobs, and add up to $74 billion annually to U.S. GDP, by 2035.

The advantages for our trading partners are just as clear. As nations phase out reliance on coal and nuclear power – due to a combination of economic and environmental factors – the use of natural gas in European electricity generation climbed nearly 30 percent between 2015 and 2017. European natural gas demand is growing at the same time production from European suppliers like Norway and the Netherlands is declining.

In Asian markets, spot LNG prices have fallen to their lowest levels in more than 10 years, even as demand for LNG has risen significantly. LNG imports in Asia, led by Japan, China and South Korea, are projected to exceed expectations again this year as natural gas remains one of the fastest growing fuel sources across the continent. Near-term supply growth, projected to reach an additional 35 million tons of LNG in 2019, will be largely driven by U.S. exports and will be absorbed primarily by Europe and Asia.

In Europe, energy exports also represent a critical tool for achieving U.S. geopolitical objectives and boosting regional security. The International Energy Agency has deemed U.S. LNG a welcome answer to disruptions from Russia, which currently supplies about 40 percent of Europe’s natural gas. Moscow’s history of withholding energy cargoes during its ongoing conflict with Ukraine – through which about 80 percent of its European exports pass – demonstrates the importance of market diversity for reigning in bad actors.

At home, natural gas is the leading source of electricity generation, and the U.S. leads the world in reducing emissions of carbon dioxide. Those two data points are related – with the natural gas shift accounting for more than 60 percent of power sector carbon dioxide emission reductions achieved since 2005. And we can export that progress, helping reduce greenhouse gas emissions in places like China, an essential component to meeting this global challenge.

Additionally, in just the past five years, coal-to-natural gas switching has improved Beijing winter air quality a remarkable 78 percent, significantly reducing nitrogen oxides, sulfur dioxide and particulate matter. Exporting to this rapidly growing market is a win-win for the U.S. economy and global air quality.

Inexpensive LNG is also complementing efforts to reduce emissions in Europe, where lower prices – coupled with rising carbon taxes – are shifting the economics of electricity generation and incentivizing natural gas consumption. Through mid-year 2019, coal-fired power generation has declined 19 percent across the European Union. At this pace, the region is expected to reduce carbon dioxide emissions by 65 million tons compared to last year, decreasing the EU’s overall greenhouse gas output by 1.5 percent.

Meanwhile, the economic and strategic advantages up for grabs in the global LNG market are not lost on our competitors. Nations like Qatar, Russia and Australia are building the export facilities and transportation infrastructure necessary to compete. Though the U.S. is projected to become the world’s largest LNG exporter by 2025, we must be nimble to maintain our competitive advantage as a leading natural gas producer.

The transition from a major importer to one of the world’s top exporters of natural gas is one of the most remarkable measures of the American energy revolution. Industry leadership and market-driven policies have helped position the U.S. at epicenter of global LNG trade – bringing billions in investments and thousands of good-paying jobs, while delivering more affordable fuels and driving emissions reductions. U.S. LNG serves as a force for progress, at home and across the globe.

Dustin Meyer is Policy Advisor at API, Fred Hutchison is president & CEO of LNG Allies, and Charlie Rield is Executive Director of the Center for LNG.


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