Oct 30, 2020 - Energy & Environment

Oil group CEO on France blocking LNG deal: "We take great umbrage"

Illustration of a gas stove burner from above, with a red strike-through.

Illustration: Annelise Capossela/Axios

The CEO of the American Petroleum Institute criticized the French government’s move blocking a $7 billion deal to import U.S. liquefied natural gas over concerns about climate change.

Why it matters: The tension reflects intercontinental division over how aggressively governments and companies should tackle global warming, including the potent greenhouse gas methane that’s the primary component of gas.

What happened: The French government told the power company Engie, which is partially government-owned, to hold off on an LNG deal with U.S. company NextDecade, a French site reported earlier this month (and Politico confirmed).

  • This particular LNG comes from gas produced in the Permian Basin spanning Texas and New Mexico, a region that’s faced criticism for high levels of flaring (wasting) methane.

What they’re saying: "We take great umbrage at that of course,” said Mike Sommers, CEO and president of API, in what are his first comments on the matter.

  • “We do not think that gas or oil for that matter from other countries is any cleaner than what is produced in the United States,” he said.

The big picture: Europe has long been more aggressive on climate-change policy than its counterpart across the Atlantic, but the divide has grown wider under President Trump, who has rolled back most federal climate rules, including methane standards. Meanwhile, the European Union just announced a strategy to cut down on such emissions.

How it works: When burned, natural gas emits half as much carbon dioxide as coal, the electricity source it’s often replacing, which is why it has reduced emissions in the U.S. as it displaced coal. It gets more complicated.

  • Companies often waste natural gas (and thus put methane into the air) when infrastructure is lacking or oil prices are too low.
  • It also takes a lot of energy to liquefy the gas for shipping and then reprocess once the gas gets to its destination, which raises the climate-change footprint.
  • The Energy Department, under both Trump and the Obama administration, issued reports finding American LNG had a similar climate footprint compared to gas coming from Russia and Algeria.

Go deeper: Natural gas is helping combat climate change--but not enough

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