When facts change – 02/17/2024 – Candido Bracher

“When the facts change, I change my opinion. And you, what do you do?”

The phrase, attributed to economist John Maynard Keynes, occurred to me when reflecting on the meaning of a measure announced by US President Joe Biden at the end of January, which had modest repercussions among us.

This is the decision to indefinitely suspend licenses for the establishment of new LNG (liquefied natural gas) export terminals along the American coast.

To give you an idea of ​​the scope of the measure, it interrupts the approval process of 17 terminal projects, whose total gas exports, it is estimated, would result in the annual emission of 3.2 billion tons of GHG (greenhouse gases ), equivalent to approximately double Brazilian emissions, or the totality of European Union emissions.

A brief explanation about LNG. The most economical way to transport natural gas is through gas pipelines, connecting the fields from where the gas is extracted to consumers.

This is how gas from Russia is transported to Europe, for example. It has the advantage of relatively low cost, but permanently links producers and consumers, subjecting both to the inconveniences of situations in which there is a single supplier (monopoly) or consumer (monopsony). European countries recently suffered the negative effects of this situation, when the invasion of Ukraine resulted in the interruption of gas supplies by Russia.

LNG originates from the same natural gas, but the gas pipelines transport it only to the export terminal, where the gas is liquefied through a process that involves cooling it to temperatures of -160ºC. The gas is then placed in tanks and transported on specially prepared ships to the port of the consuming country, where an import terminal promotes its gasification, so that it can be consumed.

The USA, which in 2023 took the world lead in LNG exports, ahead of Qatar and Australia, had no relevance in this market until 2016. The rapid evolution of American participation reflects the great expansion of gas extraction through “fracking”. (hydraulic fracturing) and explains the intense campaign promoted by the oil and gas industry for approval of the projects.

The arguments of this group are the usual: generation of local jobs, energy security for importing countries and even the defense that the projects would contribute to the reduction of global emissions, since, in many consumer countries, gas would replace coal, which is more harmful to the environment.

On the other hand -reflect those in favor of suspending licenses-, the investments necessary to expand capacity, especially in the import terminals of consuming countries, would commit them economically to consuming the product for a much longer period of time than that envisaged. the abundant availability of clean forms of energy generation.

President Biden, in determining the measure, stated: “This pause in new LNG approvals recognizes the climate crisis for what it is: the existential threat of our time.” The phrase reflects a consistent provision in relation to the final text of COP28, which prescribes the “transition towards the end of fossil fuels in energy systems”.

The suspension of LNG terminal licenses, although not a definitive measure and can be reversed at any time, is the first relevant restrictive initiative from an environmental point of view adopted by the USA at the federal level.

Until now, the main American environmental legislation, the IRA (inflation reduction law), has limited itself to stimulating, through large tax incentives, the development of “clean” technologies, but does not provide for any burden on GHG-emitting activities.

There is no way to minimize the importance of this measure that brings the USA closer to the European Union, which to date has led efforts to establish global governance to combat climate change.

A well-founded expectation is being created that the richest country in the world will go from being an obstacle to becoming an agent in overcoming the climate challenge. The facts are changing, and I feel inclined to change my opinion.

I am also tempted to end this column with the optimistic tone of the last sentence, but that would imply ignoring the fragility of this important decision ahead of the American elections, next November.

To use a common US metaphor, the suspension of licenses doesn’t even have a snowball’s chance in hell of surviving a possible Republican Party victory.

The candidate leading the party’s caucuses, Donald Trump, declared in relation to oil, with his usual vernacular elegance, that the US will “drill, baby, drill”, if he returns to the White House . And there is no point in placing hopes on his contender, Nikki Haley, who is also critical of Biden’s environmental policies, going so far as to call his main environmental measure, the IRA, a “communist manifesto”.

Jane Godall, the environmentalist and primatologist who says she spent the best years of her life among gorillas in Rwanda, consciously gave up this way of life, believing that she could contribute more to the preservation of the planet by promoting ecological awareness through her manifestations. public.

In January, about to turn 90, she declared in an interview in Davos that 2024 is a decisive year for overcoming the planet’s climate challenges, since almost half of the world’s population will go to the polls to elect their leaders in countries as important as the USA, India, Mexico and South Africa. May your warning be heard!