72
We also take note of EIA’s projections in the
Annual Energy Outlook 2017 (AEO 2017),
published on January 5, 2017,
187
for natural gas supply, demand, and prices. The AEO 2017
Reference case incorporates the Clean Power Plan (CPP) final rule
188
and assumes that all states
choose to meet a mass-based standard to cover both existing and new sources of carbon
dioxide
emissions. Although Reference case lower-48 domestic dry natural gas production for the year
2040 (the end of the forecast period in AEO 2014) increased by 2.9 Bcf/d between AEO 2014
and AEO 2017 (from 99.4 Bcf/d to 102.3 Bcf/d), the projected 2040 Henry Hub price declined
from $8.15 per million British thermal units (MMBtu) to $5.07/MMBtu (both prices in constant
2016 dollars). While some of the increased lower-48 production goes to satisfy increased
domestic consumption, the majority supports a 2.0 Bcf/d increase in the projected lower-48
Reference case 2040 net exports from 13.7 Bcf/d in AEO 2014 to 15.6 Bcf/d in AEO 2017. This
increase in net lower-48 exports reflects both a decrease in net pipeline exports of 3.0 Bcf/d and
an increase in net LNG exports of 5.0 Bcf/d.
AEO 2017 also included a Reference case without implementation of the Clean Power
Plan.
In that case, lower-48 dry natural gas production for the year 2040 was 101.6 Bcf/d, and
the projected 2040 Henry Hub price was $5.01. As described here, both AEO 2017 Reference
cases (with and without the Clean Power Plan), even more so than the AEO 2014, project robust
domestic supply conditions that are more than adequate to meet domestic needs and supply
exports.
187
U.S. Energy Info. Admin.,
Annual Energy Outlook 2017
(Jan. 2017),
available at:
http://www.eia.gov/outlooks/aeo/.
188
U.S. Envtl. Protection Agency, Carbon Pollution Emission Guidelines for Existing Stationary Sources: Electric
Utility Generating Units; Final Rule, 80 Fed. Reg. 64,662 (Oct. 23, 2015) (effective Dec. 22, 2015). On February 9,
2016, the U.S. Supreme Court issued a stay of the effectiveness of this rule pending review.
See Chamber of
Commerce, et al. v. EPA, et al., Order in Pending Case, 577 U.S. ___ (2016). Additionally, on April 28, 2017, the
U.S. Court of Appeals for the District of Columbia Circuit issued an order holding the case in abeyance for 60 days.
See West Virginia,
et al. v. EPA,
et al., Order, Case No. 15-1363 (D.C. Cir. April 28, 2017).
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B.
Distributional Impacts
1.
Gross Domestic Product (GDP)
a.
Comments
Several commenters, including IECA, allege that any macroeconomic benefits from the
2015 LNG Export Study are likely overstated. Cascadia Wildlands, Sierra Club, and Hair on
Fire Oregon, among others, allege that, in concluding that LNG exports would
create a net
benefit to the economy, the 2015 Study relied too heavily on the fact that exports will increase
GDP while failing to give adequate weight to projected domestic natural gas price increases,
foreign natural gas price decreases, and deleterious socio-economic, sectoral,
and regional
impacts on consumers, households, and the middle class, including wage-earners. Additionally,
Cascadia Wildlands notes that the 2015 Study concludes that economic benefits associated with
LNG exports are only “marginally positive,” and asserts that this margin is so small as to be
within the margin of error for the Study’s calculations. IECA argues that the 2015 Study fails to
account for the lost capital investment opportunity that would have occurred in the absence of
LNG exports, as well as for the significant jobs that would have been created in the United States
had it not been
for higher natural gas prices, thus eliminating any “marginally positive” benefits
associated with LNG exports.
Conversely, a number of other commenters, including American Petroleum Institute
(API), Exxon Mobil Corporation, African American Environmentalist Association, William
Shughart, Western Energy Alliance, and the City of Tulsa’s Office of the Mayor, assert
that LNG
exports will create jobs and boost the economy. For example, the African American
Environmentalist Association states that a report by ICF International shows that LNG exports
will result in a net gain in employment in the United States, and that the job impacts of LNG
exports will grow larger as export volumes rise.
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b.
DOE/FE Analysis
The 2015 LNG Export Study analyzed the macroeconomic impacts of LNG exports in
five areas. These are U.S. natural gas production and investment, U.S.
natural gas prices,
recycling of extra profits from the U.S. natural gas sector, changes to natural gas production and
investment in the rest of the world, and international natural gas prices.
189
Although some
commenters assert that the 2015 Study failed to give adequate weight to changes in natural gas
prices, Rice-Oxford noted that the first two areas of impact—U.S. natural gas production and
investment and U.S. natural gas prices—are the most significant for the United States and
broadly offset each other.
The Studies found that increasing LNG exports could increase GDP by up to $20 billion.
The 2015 Rice-Oxford Study found in its Reference domestic case (the 20 Bcf/d export case)
that,
in the long run, U.S. GDP was 0.03 percent higher on average ($7.7 billion annually in
constant 2015 dollars) over 2026-2040 than in the 12 Bcf/d export case.
190
In the high resource
recovery case, where exports reached 28 Bcf/d of natural gas, the 2015 Study found that U.S.
GDP was 0.07 percent higher on average ($20 billion annually in constant 2015 dollars) over
2026-2040 than in the 12 Bcf/d export case. The 2015 Study’s result of GDP gains is consistent
with the results of the EIA 2014 LNG Export Study. The 2014 EIA Study found that GDP
increases across all cases “range from 0.05% to 0.17% and generally increase with the amount of
added LNG exports required to fulfill an export scenario for the applicable baseline.”
191
This
equals an annual net increase to GDP of $12 billion to $20 billion across the scenarios from the
189
2015 Study at 14.
190
See id.
191
2014 Study at 12.