Starkey Citizens for a Clean & Healthy Environment
Markey Wants Do-Over of DOE Study on Exports

>Rep. Ed Markey (D-Mass.) wants the Energy Department to revise its "deeply flawed" macroeconomic study of exporting liquefied natural gas. The ranking member of the Natural Resources Committee told Energy Secretary Steven Chu in a letter that the study makes flawed assumptions, underestimates how some gas users will be affected, and should be revamped.

> At issue is a report DOE released earlier this month that found exporting LNG would create economic benefits for the United States. >

> DOE commissioned NERA Economic Consulting to conduct the report, which also found that "for every one of the market scenarios examined, net economic benefits increased as the level of LNG exports increased (EnergyWire, Dec. 6). >

> "The flaws in the NERA study indicate that we still have a long way to go before we can be confident that large-scale LNG exporting is truly in America's interest and can be done in a way that protects American consumers and manufacturers," Markey said in the letter sent Friday. >

> The congressman said NERA's study found that many American consumers would be harmed by allowing LNG exports to move forward but "fundamental flaws" in the report led to conclusions "that severely underestimate the negative impacts of large-scale natural gas exporting." >

> Specifically, Markey said NERA's model used energy projections that were published in 2010 that underestimate the growth that has already occurred in domestic gas demand. Markey pointed to power plants that are switching from coal to gas to comply with new U.S. EPA clean air rules and heavy industrial users that are making billions of dollars of investments that rely on gas consumption. >

> "Yet the NERA study failed to capture this new economic reality because it used natural gas demand projects for these rapidly changing sectors that are significantly out of date," he said. >

> Markey also faulted DOE for comparing the effect of LNG exports to a greenhouse gas cap-and-trade system envisioned under H.R. 2454, climate legislation he crafted with Rep. Henry Waxman (D-Calif.) in the 111th Congress. Markey said DOE failed to consider that the lawmakers included allowances for industry sectors that would be negatively affected by capping emissions, whereas the NERA study simply overlooked effects on companies like DuPont, General Electric Co., Dow Chemical Co., Alcoa Inc. and other supporters of the legislation. >

> "With natural gas exports, however, there are no analogous policies to those contained in the Waxman-Markey legislation to help maintain affordable energy for consumers and help American manufacturers maintain global competitiveness," he said. >

> Instead, the NERA report should analyze the effects of LNG exports on U.S. manufacturing sector by sector, he said. >

> The report also made inaccurate assumptions about which parties would benefit from LNG exports, Markey added. >

> NERA assumed that U.S. companies would buy infrastructure for LNG exports, but Markey said foreign companies owned by foreign governments are likely to benefit. >

> "In fact, because of an oil company court challenge, many foreign state-owned companies are already producing billions of dollars worth of oil and gas in U.S. waters in the Gulf of Mexico without paying a dime in royalties to U.S. taxpayers," Markey said. >

> The study needs to be redone and the costs and benefits of LNG exports should be examined based on geography and income level, Markey said. >

> The letter puts Markey at odds with lawmakers like Sen. Lisa Murkowski (R-Alaska), the ranking member of the Senate Natural Resources Committee, who is supportive of LNG exports. On the other hand, the Sierra Club has called on DOE to take a closer look at the effect of exports on gas production and the use of hydraulic fracturing. >

> Incoming Senate Natural Resources Chairman Ron Wyden (D-Ore.) asked Chu in October to explain exactly how the agency will handle a growing number of applications from U.S. companies hoping to export -- and cash in on -- a surge of cheap natural gas. >

> Seth B. Shonkoff, PhD, MPH
> Executive Director | Physicians, Scientists, & Engineers for Healthy Energy
> Environmental Researcher | University of California, Berkeley | 221 University Hall > office: 510.664.4443 | cell: 510.295.7969 >

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