EPA imposes trade sanctions on America

Last month, Russian President Vladimir Putin announced a ban on agricultural imports from countries that have sanctioned Russia over its aggression against Ukraine. While the ban made headlines, most commenters viewed it as a largely symbolic action, which would do little to help Russia’s strategic position internationally.

But within days, news reports surfaced of another government attempt to block international trade that would not only harm American industry, but would strengthen Mr. Putin, as well. These actions, however, come not from the Russian government, but from the U.S. Environmental Protection Agency.

Natural gas has been booming in the last few years, with production up more than a third since 2005. Innovative technologies such as fracturing, directional drilling and seismic imaging, financed and developed by the private sector, have unlocked shale resources that were long-identified but considered uneconomical. The shale boom is so huge that a number of facilities previously built to import liquefied natural gas are now being retrofitted for export instead. Natural gas prices are several times higher in Europe than in the United States, and many European countries are dependent on Russian natural gas as a source of energy, a dependence Russia has not been shy of exploiting for political purposes. Greater export of American natural gas would not only benefit America and Europe economically, but it would clip Mr. Putin’s wings by removing his quasi-monopoly over European energy.

Energy is, of course, a highly regulated field, and so these facilities require approvals from the federal Department of Energy (DOE) and the Federal Energy Regulatory Commission (FERC) before they can go into operation. And while the business of energy is dynamic, the federal approval process moves at a turtle’s pace. The DOE approved several export facilities earlier this year, but more than a dozen export applications are still waiting for approval.

EPA approval is not required by law. Nevertheless, EPA has repeatedly weighed in on the applications, sending letters to FERC in March, July and August expressing concern over possible FERC approval of export facilities in Freeport, Corpus Christi, and Cameron Parish, Louisiana. EPA objected that FERC had not “consider(ed) the extent to which implementation of the proposed project could increase the demand for domestic natural gas extraction, as well as potential environmental impacts associated with the potential increased production of natural gas.” This was a concern because “(there) are greenhouse gas emissions associated with the production, transport, and combustion of the natural gas proposed to be exported.”

EPA’s actions are part of a larger pattern of actions made against fossil fuel use generally. In 2010, EPA pulled a similar stunt when it objected to a potential State Department approval of the Keystone Pipeline based on concerns over greenhouse gas emissions. As here, EPA had no real formal role in the approval process, but decided to insert itself nonetheless.

EPA’s climate math is questionable. Greenhouse gas emissions have fallen faster in the United States in recent years than in any other country on the planet, and the shale boom is a big reason for that. By contrast, Germany’s attempt to move to renewable energy has backfired, leading to more increased reliance on coal for electricity. Should EPA succeed in slowing natural gas exports, it will do little to stop global warming. It will, however, strengthen Mr. Putin’s hand and cause economic harm both in America and worldwide.

EPA’s actions are just one example of the increasing conflict between the power of energy and the power of government. Which of the two prevails will help to determine the course of the next century.

Josiah Neeley is the policy analyst for the Armstrong Center for Energy & the Environment at the Texas Public Policy Foundation, a nonprofit, free-market research institute based in Austin.