Guest Contributor William Krist with Dani Litovsky: LNG – to export or not to export, that is the question

The United States is rapidly moving from being dependent on imported fossil fuels to becoming a major world producer.  We’re sitting on vast supplies of natural gas, and recent technological innovations have made it possible to tap previously unattainable resources.  So what should we do with these new-found riches?  Producers of natural gas, by and large, want to be able to sell where they can get the best price, and often that will mean selling overseas.  But consumers oppose exporting our natural gas, arguing that keeping these supplies to ourselves will keep the price here in the U.S. lower than the world price, and that this will give them a competitive advantage.  They believe this will add more value to the economy and trade account than exporting LNG.  And some environmentalists oppose exports because they believe this would raise the price of natural gas and thereby encourage more production.

From an economic perspective, allowing exports would lead to some increase in domestic prices, but the price of natural gas in the U.S. is far lower than in many other markets, for example, $2.66 per thousand cubic feet on average in the U.S. in 2012 compared to some $10 in the U.K. Somewhat higher prices in the U.S. because of exports would encourage greater U.S. production, but prices in the U.S. would still be lower than in most markets because of transportation costs, and this would continue to give manufacturers that use natural gas a cost advantage.  From an environmental perspective, natural gas is less polluting than other fossil fuels.  Until renewable energy such as wind and solar can meet the world’s energy needs – a prospect that is likely to be at least a decade away – encouraging the use of natural gas probably has a positive environmental impact.

From a trade policy perspective, restricting exports would likely run afoul of World Trade Organization (WTO) rules, and it would weaken our complaints about other countries’ export of vital minerals, which many believe is an attempt by China to gain a competitive advantage at its trade partners’ expense.

The economic impact of allowing natural gas exports is likely to be small, as is the environmental impact.  So perhaps this debate is more like “much ado about nothing.”

(Click here for a paper that sets out these issues in more detail.)

William K. Krist is a Senior Policy Scholar at the Woodrow Wilson Center.  He is a former Senior Vice President of the American Electronics Association.  He has written extensively on trade, development, and the environment.

Live Webcast Tomorrow: In Search of Arctic Energy

The Wilson Center’s Canada Institute, Environmental Change and Security Program, European Studies, Kennan Institute, and Program on America and the Global Economy

 present

In Search of Arctic Energy

 

 with

 Charles Emmerson, senior research fellow, Energy, Environment and Development Programme, Chatham House

Zachary Hamilla, principal Arctic analyst, Office of Naval Intelligence

Jed Hamilton, senior Arctic consultant, ExxonMobil Upstream Research Company

Robert Johnston, director, Eurasia Group

Julia Nanay, senior director, PFC Energy

 and moderator

 Jim Slutz, president and managing director, Global Energy Strategies LLC

            As ice continues to melt in the Arctic, previously inaccessible and undiscovered resources are becoming available to the world. Driven by ever increasing energy demands, exploration of the Arctic has exploded in recent years. As the competition for these resources has increased, new partnerships and rivalries have begun to emerge at the Northern Pole. To discuss the expansion of Arctic activity, the Wilson Center will host an event focused on understanding the forces driving the increase in exploration. Our panel of Arctic oil and gas industry professionals will reveal what new techniques and technologies are allowing this unprecedented activity. In addition, Arctic experts will examine what nations can do to protect the environment, increase production, and ensure international cooperation.

Thursday, July 12, 2012

9:00 a.m. – 12:00 p.m.

Woodrow Wilson International Center for Scholars

6th Floor Flom Auditorium

 Please allow extra time to enter the building. A photo ID is required for entry.

Directions at www.WilsonCenter.org/directions

 RSVP to Canada@wilsoncenter.org or here

Limited Seating Available

 

 

Promoting “Green Growth” in the Development Conversation

Last week, an audience at the Wilson Center heard new recommendations from the World Bank on how to get countries to grow green. Their report, titled Inclusive Green Growth: The Pathway to Sustainable Development, calls on governments to “think green when pursing growth policies which can be inclusive, efficient, affordable, and necessary to sustain economic expansion in the years ahead.” It makes the point that sustainable growth is critical to meeting the needs of developing nations, and that unsustainable growth will lead to greater socio-economic problems if environmental and social considerations are not accounted for.

The World Bank’s “Inclusive Green Growth” model recommends using more than just a nation’s Gross Domestic Product (GDP) to evaluate its economic growth. It requires using “case-by-case analysis” to minimize short-term costs and promotes enacting “well-designed” regulations to encourage private-sector development that still protects the environment. The World Bank explicitly states that “green growth is not anti-growth,” and presents a plan that implements policies which will allow for greater development that is also “greener” development.

The model that the World Bank has developed focuses on three main pillars to achieving sustainable development: economic, social and environmental sustainability. Economic sustainability requires tailoring a country’s sustainable development strategies to specific circumstances. Meanwhile, social and environmental sustainability encourages sound decision-making by stakeholders in the hopes of building better partnerships between the public and private sectors to meet “up-front capital needs with innovative financing tools.” This recent report by the World Bank highlights how environmental and sustainable growth will be the key to generating a more prosperous and sound world economy. The Inclusive Green Growth project is so important because it points out the need to change our attitude and approach international development efforts moving forward.

Click here to view the video from the event.

Posted By: Jonathan Sherman

Sources: The World Bank

Photo Credit: 24 Solar Panels courtesy of Flickr user Michael Coghlan

America’s Energy Boom: Is Independence Closer Than We Think?

Economist and oil expert Philip Verleger recently discussed America’s current energy boom and its implications at the Peterson Institute for International Economics.  He is currently a private consultant on energy issues and a former senior economist with the Council of Economic Advisers and the Treasury Department during the Carter Administration.  As an oil and energy analyst for almost 40 years, he says he has never seen anything like the current energy boom that the United States is currently enjoying, emphasizing that the U.S. could soon be a net oil and energy exporter.  Verleger is not the only one catching on to this development.  In late March, a major article was published in The New York Times highlighting these changing circumstances.

Verleger now recognizes that the U.S. will be a low-cost producer of energy well into the future, projecting that domestic production will have a “50, 70, maybe 80% cost advantage,” subsequently enticing companies to return production back to the United States.  In this new environment, every increase in global prices will now be a competitive advantage for U.S. and its exports moving forward, providing a base for stronger economic growth than many of the other industrialized countries.

For years, many administrations had sought the “high-cost solutions” to energy independence driven by major investments in alternatives, but now we finally have the “low-cost solutions.” In looking at the causes behind this change, he states that major oil companies left the United States and abandoned production, but reduced costs and size of computers allowed smaller companies to compete technologically and develop smaller fields untouched by large companies.  Another contributor was the development of the energy futures markets that stabilized prices and built inventories, enabling investment growth.  Verleger noted the key role of regulators that have mandated fuel economy improvements, the use of ethanol in gasoline, and other environmental regulations.  The auto industry itself has also been a factor, changing business models in the wake of its 2009 “near death experience.” Further contributing to price declines, domestic gasoline demand has been falling between “5 and 6% year over year” as well.

Looking to the future, Verleger is quite optimistic.  He believes these circumstances lay the foundation for a U.S. competitive advantage that will last for at least 10 to 15 years, maybe even 30 years.  He predicts that this phenomenon will add one-half to a full percentage point to the U.S. GDP growth rate through both consumption and investment.  However, he is still cautious on a few fronts.  First, he worries that major oil companies will be unable to compete in this low-cost, low-price environment.  Second, we must significantly improve our infrastructure. Finally, he doesn’t think the U.S. will become protectionist of this advantage through export quotas, but he says that the temptation will be there and will be difficult to fight.  Nevertheless, these changes are likely to strengthen the dollar and trade balances, help to control debt and deficits, and enhance overall economic competitiveness.

 

Posted by: Brian Gowen

Photo Credit: Oil well pump jacks courtesy of flickr user Richard Masoner / Cyclelicious

U.S. Announces Tariffs on Chinese Solar Panels

A New York Times article reported that the U.S. Commerce Department announced on March 20 a decision to impose tariffs on solar panels from China, having concluded that the Chinese government provided export subsidies to manufacturers. U.S. firms that depend on the imports of inexpensive Chinese solar panels were relieved that the tariff rates of 2.9 to 4.73 percent were lower than expected, while American competitors to the Chinese firms were not satisfied. However, the Commerce Department is due to decide in May whether these subsidized Chinese imports can be considered dumping. Should the act of dumping be confirmed, tariff rates will be further increased.

China’s rapidly growing green energy industry is clearly demonstrated by the enormous increase in U.S. imports of Chinese solar panels: from $21.3 million in 2005 to $2.65 billion in 2011. Such a fast rate of growth was made possible in part by government subsidies, which stem from the Chinese government’s concern for greater energy and economic security

The authors noted that some experts have suggested looking at the “trade strategies worked out between the United States and Japan in the 1980s to manage Japan’s rapid rise as an exporter.” However, the plan’s feasibility is unclear because U.S. leverage over Japan at the time was probably greater than U.S. leverage over China today. A trade official offered a different viewpoint – Beijing and Washington need to resolve the situation in a “mutually and globally beneficial way,” instead of taking unilateral action.

Posted By: Pokyee Yu

Sources: The New York Times

Photo Credit: solar panels courtesy of flickr user spanginator

You are Invited – Climate Finance: Innovative Financing Sources for Sustainable Development

      New Rules for Global Finance, Heinrich Böll Stiftung – North America, and the Woodrow Wilson

International Center for Scholars

Present

Climate Finance: Innovative Financing Sources for

Sustainable Development

Introduction

John Sewell, Senior Scholar, Woodrow Wilson International Center for Scholars

Discussants:

Beth Urbanas, Deputy Director, Office of Environment & Energy, U.S. Treasury (invited); Ian Parry, Technical Assistance Advisor (Climate Change and Environment), Tax Policy, Fiscal Affairs Department, International Monetary Fund; Ari Huhtala, Senior Environmental Specialist, Climate Change Team,  Environment Department, World Bank; Liane Schalatek, Associate Director, Heinrich Böll Stiftung – North America; David Waskow, Climate Change Program Manager, Oxfam America

The climate summit in Durban/South Africa ended this weekend with a comprehensive yet unfinished climate agreement. Yet some advances were made in the discourse about providing urgently needed financial resources to deal with climate effects in developing countries.  Financing would come from the industrialized countries and be in addition to existing commitments.  In addition, the added resources will be used to address major development, social and environmental benefits that go well beyond a narrow mitigation and adaptation focus.  With traditional donor countries’ budgets severely constrained, innovative and alternative financing sources for sustainable development are gaining some momentum, inside and outside the climate negotiations context.  This panel will bring together speakers from a variety of backgrounds, including international financial institutions, governments, think tanks and civil society groups.  The panel will focus on some of the concrete financing options on the table for sustainable development that go beyond direct public contributions by developed countries.  These varied proposals include taxes and levies on air and maritime transport, special drawing rights and financial transaction taxes.

Thursday, December 15, 2011 ~ 12-2pm ~ 5^th Floor Conference Room

RSVP (acceptances only) to jbaker@new-rules.org

Posted by: PAGE Staff

Energy Efficiency for Innovation

Many private energy companies have implemented rebate programs for their customers who purchase energy-efficient appliances.  Programs have been set up in many states, including most recently Oklahoma.  Greg Philips, president of one of the state’s largest gas companies, Oklahoma Natural Gas, recently commented, “We are serious about encouraging our customers to be more energy-efficient”.   Similar programs are being introduced in New York, North Carolina, and elsewhere along the East Coast in conjunction with the damage caused by Hurricane Irene last month.

Not only are home owners benefiting from the increased attention to energy-efficient appliances, small businesses are as well.  According to a national survey released by Small Business Majority, of 1,200 business owners nationwide, energy costs including fuel, electricity, heating and cooling are of high importance.  Some argue that a focus on eliminating these costs will allow for increased prosperity for small business – with 68% of those surveyed having already installed energy-efficient lighting, appliances and insulation.

John Arensmeyer, CEO and founder of the advocacy group, Small Business Majority, stated that “Standards that increase fuel efficiency…will deliver innovations that consumers want without putting the product financially out of reach. Allowing the EPA to regulate harmful carbon emissions could help stabilize the market and set clear goals for our nation’s future in the clean energy economy.”

Posted by: Georgina Ellison

Sources: Business News Daily, Business Week, Staten Island Advance, The Huffington Post

Photo Credit: Energy Star Certification courtesy of flick user MoneyBlogNewz

Clean Energy Investment and Innovation

With gas prices hovering around $4 a gallon, and widespread unrest in the Middle East, U.S. energy security has become an increasingly important issue.   Last week Stephen Chu, Secretary of the Department of Energy, announced that up to $130 million from the Advanced Research Projects Agency-Energy (ARPA-E) will be available to develop five areas of green technology: solar power efficiency, transport and conversion of thermal energy, improved electricity grid control, rare earth alternatives for motors and wind generators, and biochemical alternatives to oil.  ARPA-E will reward these efforts to transition the U.S. energy market away from oil exports toward more renewable, local sources for power.  Chu touted ARPA-E’s funding for key projects as “unleashing American innovation to strengthen America’s global competitiveness and win the clean energy race.”

The United States has also looked abroad in  recent months to collaborate with allies and broaden the push to a cleaner energy future.  The DOE recently signed a memorandum of understanding with the Qatar Science & Technology Park (QSTP) to promote cooperation and information sharing in the progress towards sustainable solutions.  The two countries signed the agreement in order to “spur energy innovation, create new markets for clean energy and support economic growth.”  Deputy Energy Secretary Daniel Poneman noted that collaboration would help “develop the next generation of clean energy technologies more quickly,” enhancing both countries’ standing in the global energy market.

The urgency this issue was highlighted by Senator Harry Reid on his return from a trip to China.  Reid, joined by a bipartisan group of 9 fellow senators, said that “our trip… was an unmistakable reminder how hard the U.S. has to work if it wants to remain competitive.”  The delegation met with Chinese Central Bank officials, and left impressed with China’s progress in energy technologies.  “[China is] doing it for the economy, and for job creation. We need to understand in this country that if we do not want to be dependent on foreign oil, we must develop this sector of our economy.”

Speaking at a PAGE event at the Wilson Center event last summer, Dr. Arun Majumdar—Director of ARPA-E—agreed that America’s energy future is “at the core of our national security, economic security, and environmental security.” As DARPA was formed largely to compete with the Russian Sputnik launch, Dr. Majumdar noted that ARPA-E represents a call for the U.S. to increase its competitiveness for the growing clean energy market.  “We need to inspire the next generation of kids to do things like they did in response to that (earlier challenge).”

Posted by: John Coit

Sources: forbes.com, solarnovus.com, solarthermalmagazine.com

Photo Credit: Solar Panel 2 by flickr user pixor

You are Invited: India’s Quest for a Lower Carbon Footprint

THE ASIA PROGRAM and THE GLOBAL ENERGY INITIATIVE

present:

India’s Quest for a Lower Carbon Footprint

Tuesday, May 10, 2011    4:00 pm–5:30 pm

6^th Floor Board Room

Featuring: Ajay Shankar

FICCI Scholar, WoodrowWilsonCenter

Media organizations are requested to contact the Asia Program in advance at 202/691-4020 or asia@wilsoncenter.org. Otherwise, RSVPs are NOT necessary. Please allow for routine security procedures when you arrive at the Center. A photo ID is required for entry. The Center is located in the southeast wing of the Ronald Reagan Building, 1300 Pennsylvania Avenue, NW, Washington, D.C. The closest Metro station is Federal Triangle on the blue and orange lines. For detailed directions, please visit the Center’s website, www.wilsoncenter.org/directions.

Posted by: PAGE Staff

Watch Live: The Free-Market Path to Electric Cars

The live webcast of this event has concluded.  To view a video archive please check back here.

The Program on America and the Global Economy (PAGE)

Presents

The Free-Market Path to Electric Cars

Featuring: Peter Huber, Senior Fellow, Manhattan Institute

Moderated by: Kent Hughes, Director, Program on America and the Global Economy, Woodrow Wilson Center; Commentator: Max Parness, MIT Energy Fellow and Switzer Fellow, Massachusetts Institute of Technology

Peter Huber is a senior fellow at the Manhattan Institute writing on the issues of drug development, energy, technology, and the law.

He most recently wrote The Bottomless Well, coauthored with Mark Mills, which Bill Gates said “is the only book I’ve ever seen that really explains energy, its history and what it will be like going forward”. Huber’s previous book, Hard Green: Saving the Environment from the Environmentalists (Basic Books, 2000), which was called “the richest contribution ever made to the greening of the political mind” by William F. Buckley, Jr., set out a new conservative manifesto on the environment which advocates a return to conservation and environmental policy based on sound science and market economics. In 1997 he authored two books, Law and Disorder in Cyberspace: Abolish the FCC and Let Common Law Rule the Telecosm, which is an examination of telecommunications policy (Oxford University Press) and (with the University of Pennsylvania’s Kenneth Foster) Judging Science, Scientific Knowledge and the Federal Courts (MIT Press). Previous books include Orwell’s Revenge: The 1984 Palimpsest, (Free Press, 1994), Galileo’s Revenge: Junk Science in the Courtroom (Perseus Book Group, 1991); and Liability: The Legal Revolution and its Consequences (Basic Books, 1988).

Max Parness is an Energy-MIT Energy Fellow and Switzer Fellow pursuing his Master of Science degree in Technology and Policy at the Massachusetts Institute of Technology. His research addresses the environmental and cost impacts of electric vehicles on electric power production. Prior to beginning his studies at MIT, Max worked on industrial energy efficiency in the Beijing office of the Natural Resources Defense Council. He received his Bachelor of Science in Electrical Engineering from Drexel University.

Thursday, April 14:  2:00 to 3:30 p.m.

5^th Floor Conference Room, Woodrow Wilson Center

RSVP (acceptances only) to page@wilsoncenter.org

Posted by: PAGE Staff