Exporting natural gas just got easier.

This afternoon, the Department of Energy approved the second application for a facility to export liquefied natural gas (LNG) worldwide. Today’s approval to export up to 1.4 billion cubic feet of natural gas per day goes to Freeport LNG Expansion, on Quintana Island in Texas, for 25 years. The approval process now moves to the Federal Energy Regulatory Commissions (FERC), so the company is not in the clear yet.

Several companies have received nearly two dozen permits from DoE to export LNG to countries with which the U.S. has a free trade agreement (FTA), but the approval process has been much slower for permits to export to non-FTA countries. 19 facilities that want to export LNG to non-FTA countries are still under review by the Energy Department — including a joint project between ExxonMobil and Qatar Petroleum.

The natural gas industry is booming in the United States, largely due to the practice of fracking, which opened up large parts of the country to extraction previously thought uneconomical to drill. Natural gas can be transported via pipeline across land, but when companies want to export the fuel overseas, they have to use ships. Since natural gas (mostly methane) in gas form would require a large ship to transport, it must be cooled and liquefied before it can be exported across an ocean.

In the last decade, companies built facilities to import natural gas because the U.S. expected lower production than what fracking actually allowed. Once the shale gas boom sharply increased domestic production, they have tried to turn those import terminals into export terminals. Cheniere Energy’s Sabine Pass terminal, the first facility to receive DoE approval to export to non-FTA countries, is one example of this.

The reason for the delay of such applications is due to opposition largely from the chemical industry, which fears that exports will lead to an increase in the price of natural gas (which it uses for industrial purposes), and those who care about carbon emissions and the environment, who point out that the U.S. still does not know the consequences that exports will have on carbon emissions.

Congressman Ed Markey, running for John Kerry’s old senate seat in Massachusetts, said today that “The Department of Energy still doesn’t even know what the impact of natural gas exports will be on domestic businesses and consumers, but they are approving more exports anyway.”

If the U.S. is increasing exports, it becomes even more critical to ensure that the natural gas obtained through hydraulic fracturing is as safe as possible, with zero fugitive emissions. Yesterday the Interior Department released draft fracking rules, and there are some easy ways (5 in fact) to make the rules adequately protect Americans and reduce greenhouse gas emissions. It is one thing to argue for weak safeguards to give Americans access to “cheap energy” — it is another to argue for weak rules that poison the air and water to export the energy to other countries.

The net climate effects of LNG exports depend largely on the energy currently used by the importing country — what the gas will replace. Coal-heavy economies that replace their coal with natural gas should see lower emissions, but this transition could threaten more valuable transitions to renewable energy.

The Energy Department said in today’s approval that “the exports proposed in this Application are likely to yield net economic benefits to the United States.” Left unsaid is the fact that the more fossil fuels left in the ground, the easier it is to reduce greenhouse gas emissions, which would benefit the economy in myriad ways.

In a long-awaited decision, the U.S. Commerce Department has issued a preliminary decision to apply tariffs to Chinese-made solar modules being imported into the U.S. The tariffs range from 31 percent to 250 percent.

The preliminary tariffs were issued after a lengthy investigation by the Commerce Department into whether Chinese companies are “dumping” solar panels into the U.S. market below cost. These tariffs follow a March decision to issue small countervailing duties on Chinese module producers that are getting illegal domestic subsidies, according to Commerce.

Today’s issued tariffs are as follows: Trina, 31.14 percent; Suntech, 31.22 percent; and 31.18 percent for all other Chinese producers that participated in the investigation. For companies that did not participate, Commerce has slapped a massive preliminary tariff of 249.96 percent.

The combination of these new tariffs and the countervailing duties will add substantial cost to imported Chinese solar panels. With panel prices hovering in the $1 per watt range, it could add around 30 cents a watt to each panel for leading producers, and vastly more for producers that didn’t get involved in Commerce’s investigation.

These are preliminary fines and can be negotiated and changed before Commerce makes a final decision. The solar industry’s trade group, the Solar Energy Industries Association, has called on the U.S. and Chinese governments to negotiate a settlement — potentially resulting in more moderate tariffs:

“The solar industry calls upon the U.S. and Chinese governments to immediately work together towards a mutually-satisfactory resolution of the growing trade conflict within the solar industry.  While trade remedy proceedings are basic principles of the rules-based global trading system, so too are collaboration and negotiations.

“Importantly, disputes within one segment of the industry affect the entire solar supply chain–and these broad implications must be recognized.  In addition, the U.S. solar manufacturing base goes well beyond solar cell and module production and includes billions of dollars of recent investments into the production of polysilicon, polymers, and solar manufacturing equipment, products which are largely destined for export.  If the U.S.-China solar trade disputes continue to escalate, it will jeopardize these U.S. investments.

“Given these broader implications, it is imperative that the U.S., China, and other players in the dynamic global marketplace work constructively to avert or resolve trade disputes that will ultimately hurt consumers and businesses throughout the solar value chain.”

The solar industry has been on edge since last October, when the manufacturer SolarWorld and six other anonymous companies issued a complaint about illegal trade practices. They argued that China’s subsidies were allowing companies to dump panels below cost, thus driving U.S.-based manufacturers out of business.

However, downstream developers have enjoyed falling panel prices — a factor that has allowed the industry to expand 109% in 2011. A group of solar companies known as the Coalition for American Solar Energy has been staunchly opposed to tariffs, saying they’ll dramatically drive up the cost of solar installations in the U.S.

Read more

by Kate Gordon

A simmering trade dispute between the U.S. and China will likely come to a head tomorrow when the U.S. Department of Commerce issues its determination on alleged trade violations by Chinese solar manufacturers.  Surprisingly, the U.S. solar industry is not in agreement on the need to hold the Chinese accountable.  It should be.

On one side are those who claim China has been illegally subsidizing and dumping its solar products in the U.S. market, forcing many American manufacturers into bankruptcy.  These companies, mostly manufacturers of solar panels and related products, claim Chinese solar companies have benefited from government largesse in the form of free land and facilities, electricity and water, and low- or no-cost loans that keep prices for Chinese-made solar products artificially low.  In addition, they claim these Chinese companies are illegally “dumping” their cheap solar panels into the American market, making it nearly impossible for U.S. manufacturers to compete.

On the other side are those, mostly solar installers, who have benefited from the ability to buy low-cost solar panels, which they claim has allowed them to do solar installations at a lower cost and therefore expand the use of solar power in America.  This group of U.S. companies argues that U.S. manufacturers can’t compete with the Chinese when it comes to solar panel production, because the Chinese are simply more efficient and can do production at a lower cost.  They also worry that pursuing a trade case will incite a “trade war” with China, which will erode their profit margins, slow U.S. industry growth across the value chain, and make it even harder for solar energy to compete with traditional fossil fuels.

Both sides have compelling arguments.  So who’s right?

One way to answer that question is to say that we’ll find out who’s right when the Department of Commerce issues its findings.  Commerce has already found that China is unfairly subsidizing its solar industry, and has imposed tariffs on Chinese solar manufacturers as a result.  The upcoming decision, on whether China is also illegally dumping those panels into the U.S. market, may bring larger tariffs if China is found to be in violation of our mutually-agreed-upon, and heavily negotiated, trade agreements.  The entire point of the trade enforcement regime is to figure out whether a country is in fact breaking the rules, and if so, to issue sanctions. It’s a system based on the rule of law, something we Americans hold dear, and for good reason.

But would a decision against China undermine America’s emerging solar energy industry? There is no question that solar energy faces an uphill battle in the U.S.  The combination of century-old subsidies to fossil fuel companies and the lack of any real national commitment to renewable energy makes it difficult for emerging energy technologies to compete here.  But that doesn’t mean that the United States needs cheap Chinese solar panels so badly that we should just roll over and let a foreign government break enforceable international trade rules.  If Commerce finds that the Chinese government has acted illegally, then the Chinese government and the industry it is subsidizing should pay a price for that behavior.

Our faith in the rule of law is too important for us to abandon our international trade obligations in favor of cheap imported solar panels.  So, too, is our need to support the U.S. manufacturing sector by protecting it from unlawful trade practices.  Manufacturing is a crucial piece of the U.S. economy. Our ability to stay innovative and competitive in a time of intense global pressures relies on manufacturing companies, which contribute fully 70 percent of all the private research and development spending in America.  And these companies are major job creators: a recent report by SEMI found that manufacturing jobs had the highest job multiplier of any segment of the American economy.

That’s why we should be supporting clean energy manufacturers in their efforts to compete with China, through programs like the Clean Energy Manufacturing Tax Credit program that President Obama recently urged Congress to extend, or through Senator Sherrod Brown’s “Security and Energy in Manufacturing Act,” rather than punishing them for trying to compete on a level playing field. Because that’s the crucial point:  every American company should be able to compete on a level playing field in the international marketplace.  That’s good for solar manufacturers in the current case, but it’s good for all American companies – and for our economy as a whole – in the long run.

Kate Gordon is vice president for energy policy at the Center for American Progress.

Related Posts:

• Commerce Department Announces Small Tariffs On Chinese Solar Panels
• 5 Myths and Realities About U.S.-China Solar Trade Competition: Our Nation Cannot Capitulate to China’s Solar Technology Ambitions