By Daniel Gottfried*
(FPRI) — Since taking office, President Joseph Biden has promoted a foreign policy for the middle class, a key promise from the campaign trail. According to National Security Advisor Jake Sullivan, this means that “everything we do in our foreign policy and national security will be measured by a basic metric: Is it going to make life better, safer, and easier for working families?” There are many potential options to achieve the Biden administration’s goal of a foreign policy that works for all Americans. One such option is exporting American liquefied natural gas (LNG) to the countries in Central and Eastern Europe that make up the Three Seas Initiative.
Today, the United States is the world’s largest producer of natural gas. In order to export natural gas overseas, it must be liquified and transported via ship to specialized import terminals that cost billions of dollars to construct. Through the continued opening of Central and Eastern European gas markets, President Biden has an opportunity to make good on his promise to Americans across the country.
Three Seas Initiative
The Three Seas Initiative is composed of 12 countries that touch the Adriatic, Baltic, and Black Seas. It is a regional collaboration focused on building local energy, transportation, and digital infrastructure. Founded in 2016 by Polish President Andrzej Duda and then-Croatian President Kolinda Grabar Kitarovic, the Three Seas Initiative aims to rectify the infrastructure gap in Europe that has remained since the end of the Cold War. The initiative now holds annual summits and business forums, and identifies projects to spur economic growth and “level regional disparities,” such as an LNG terminal on the Croatian island of Kirk; an LNG terminal in Paldiski, Estonia; an LNG terminal in Skulte, Latvia; the purchase of an LNG tanker for the LNG terminal in Klaipeda, Lithuania; and several pipelines crisscrossing the region that would enable the transport of American LNG across the European Union’s fastest growing economic bloc.
The Trump administration committed up to a billion dollars to the Three Seas Investment Fund, a commercial fund set up to manage infrastructure investment and direct funds towards priority projects. Given the potential for these projects to create markets for American LNG, Polish Prime Minister Morawiecki is correct when he says that the billion-dollar investment is a “tiny amount of money for the United States.” Washington should invest more. By investing in the infrastructure needs of countries from Estonia to Bulgaria, the United States will see a direct dividend in states from Texas to Maryland.
LNG and the Middle Class
International Union of Operating Engineers Local 66 Business Manager James Kunz wrote in the Pittsburgh Post-Gazette that “the natural-gas industry has been a godsend, helping to boost jobs with family-supporting pay and good benefits.”
Increases in exports of natural gas provide significant benefits to working families. A 2018 report on the impacts of LNG exports completed for the Department of Energy by NERA Economic Consulting found that “all scenarios [considered] are welfare-improving for the average U.S. household.”
The real-life impacts of LNG on middle class communities across the country are meaningful. A 2019 paper in the American Economic Journal concluded that increased oil and natural gas production is characterized by gains in total income of between 3.3 and 6.1 percent, gains in employment between 3.7 and 5.5 percent, gains in housing prices of 5.7 percent, and gains in housing rental rates of 2.9 percent. Even taking into account potential negative impacts on the community, the paper found that “the net welfare of allowing fracking appear to be substantial and positive for local communities.”
In addition, owners of land in states with natural gas are also paid for use of their property. University of Pittsburgh economist Jeremy Weber told The Baltimore Sun that “residents living in Pennsylvania’s gas-rich regions received about $1 billion in natural gas royalties in 2018.”
Exports of LNG to Three Seas countries—and expanding and improving LNG infrastructure in these countries—will increase revenue for shale economies across the country.
The Middle-Class Role in Clean Energy
President Biden believes that the climate crisis is “an opportunity to create millions of good paying jobs around the world in innovative sectors.” And that includes the LNG industry. Secretary of Energy Jennifer Granholm adds that “there is a jobs opportunity, a continuous carbon reduction opportunity in the LNG field.” Increasing exports of LNG can be both an economically responsible decision and one that is responsible for the planet.
Now is a unique time to capitalize on the opportunity created by Central and Eastern Europe as they search for ways to reduce their dependence on Russian gas and turn away from dirty coal. Instead of telling America’s middle class that they are part of the problem when it comes to climate change, President Biden can ask them to be part of the solution and make a profit while doing it.
The Paris Agreement’s goal of limiting global warming to 1.5° Celsius can only be met if the world phases out coal by 2030. Three Seas countries like Bulgaria, Croatia, Czechia, Poland, Romania, and Slovenia plan to continue using coal beyond the 2030 target. Poland remains the EU’s largest coal user and producer. Historically, Europe’s use of LNG leads to a reduction in coal use.
While an immediate transition to renewables may be preferable, in the Central and Eastern European context, it is wise to consider one of President Biden’s favorite phrases: “Don’t compare me to the Almighty, compare me to the alternative.”
According to a report released by the NATO Parliamentary Assembly, “A number of electricity grids in Central and Eastern Europe are old and outdated, cannot cope with renewable energy and suffer uncontrolled loop flows.” The existing infrastructure is a better fit for LNG.
Ultimately, investments in LNG and renewables must be made in concert. But given the amount of time and investment that it will take to transition the Three Seas region to renewables, LNG can help provide a clean energy bridge to a carbon-free future.
As European Commission President Ursula von der Leyen once wrote, “Gas will have a role to play in the transition towards a carbon-neutral economy in particular making full use of the potential of affordable liquified natural gas.”
In the Three Seas Initiative, the United States has an opportunity to build markets for the American export of clean energy and to take the middle class along with it.
The views expressed in this article are those of the author alone and do not necessarily reflect the position of the Foreign Policy Research Institute, a non-partisan organization that seeks to publish well-argued, policy-oriented articles on American foreign policy and national security priorities.
*About the author: Daniel Gottfried is an Associate Scholar and Research Assistant in the Eurasia Program at the Foreign Policy Research Institute, and a contributing writer for FPRI’s BMB Russia.
Source: This article was published by FPRI