France is slamming on the brakes on a US$7-billion liquefied natural gas import deal by energy trader and utility Engie, out of concern that the product coming from a Texas fossil is too emissions-intensive.
“The delay highlights a growing concern among some U.S. natural gas exporters that the regulatory rollbacks pushed by the Trump administration, especially those easing Obama-era limits on the potent greenhouse gas methane, plus the industry’s overall failure to rein in emissions, are making it more difficult to sell their product overseas as a cleaner alternative to oil or coal,” Politico reports.
The delay or outright cancellation of the 20-year, 220-million-ton deal could affect the decision by Houston-based NextDecade on whether to build a new export terminal in Brownsville.
Lorette Philippot, head of private finance campaigns at Les Amis de la Terre in France, said the government is concerned about methane controls at the West Texas oil and gas fields that would supply the terminal, Politico adds. “It could still be signed in the coming weeks,” Philippot said. “But what is sure is the political, reputational risk around the validation of the contracts is one of the elements there. The climate impacts played a role.”
Politico says that focus “could become a problem for U.S. LNG sellers that get their natural gas from West Texas, where methane emissions are high and many oil-focused companies vent or burn off the natural gas that is a byproduct of those wells. About 1.4 million tonnes of methane escape a year from fields in the Permian Basin, an oil and gas hotspot covering West Texas and eastern New Mexico.” That figure came from a U.S. Environmental Defense Fund study released in April.
Methane emissions are “sure to become a contentious issue as more countries try to improve their environmental records, partly by cutting imports of energy deemed too dirty,” the publication adds, citing ClearView Energy Director of Analysis Kevin Book.
“We’re probably going to go from trade war to carbon trade war pretty seamlessly in the next 10 years,” Book said. “Whatever you think is going to happen on climate, you have to predicate it against that.”