US government guarantees EU’s gas supply: ‘We have more than adequate capacity to cover their needs’ | Economy and Business

Joe Biden’s administration dropped an information bomb at the end of January. Although not unexpected, the pause on expansion plans for liquefied natural gas (LNG, which is transported via ship) terminals sowed fear among the main buyers of this fuel, particularly the 27 members of the European Union (EU). More than ever — given the ongoing Ukraine-Russia war — these nations depend on American fossil fuel production.

A couple of weeks after this decision was taken, the authorities of the North American giant are attempting to offer reassurances. “With the current facilities, we have more than adequate capacity,” emphasizes Mike Considine, a deputy secretary at the U.S. Department of Energy, in a conversation with EL PAÍS that took place during his recent visit to Spain. “Before making the decision, we made calculations to be sure that there wouldn’t be any type of interruption,” the senior official explains.

Considine has more than 15 years of experience in the field of foreign investment in energy. He has worked with both Republican and Democratic administrations. “A great effort was made to analyze current capacity and [look at] what’s required, particularly by Europe in the short-term.”

Sitting in a room at the U.S. embassy in Madrid, Considine plays down the impact of this decision, while attempting to assuage fears. “It only affects the new permits, a very small number [of terminals]… The current [liquefaction] capacity exceeds the LNG [export] needs, especially to Europe.”

The analysis and calculations made by the Department of Energy, he notes, go beyond environmental considerations. The Biden administration has explained its decision by citing the heavy environmental impact of these projects, but Deputy Assistant Secretary Considine also mentions basic economics as being a reason for this move. The forecast, he says, has changed. After a decade of “unprecedented” expansion — in the words of the International Energy Agency (IEA) — demand growth “will slow in the coming years, as consumption falls in markets belonging to [advanced economies].” Hence, investing billions in expensive infrastructure — with no certainty of return — would be nothing short of fiscally reckless.

American LNG has been — along with Qatari and Norwegian LNG — the main European resource to weather the shortage of Russian gas as a result of the war. Most of the fuel exported by the world’s leading power, however, is obtained through hydraulic fracturing (fracking), a technique highlighted by environmental groups for its heavy negative impact on nature.

More foreign investment in energy

After the pandemic and the subsequent inflation, the U.S. government has redoubled its commitment to energy with the Inflation Reduction Act (IRA). However, despite its name, this proposal pursues a double objective that has little to do with directly targeting the rising prices of consumer goods. Instead, it focuses on reducing greenhouse gas emissions and strengthening economic growth.

“In the 15 years that I’ve been doing this regulatory work, foreign investments in the [U.S.] energy sector haven’t stopped increasing. The vast majority of [these investors] come from Europe,” Considine emphasizes. “And the IRA offers a new opportunity for them to grow even more: many European companies are looking at the possibilities that this framework offers them, [so that they can bolster] their expansion possibilities in the U.S. It’s a catalyst.”

He also denies that this incentive program — largely fiscal — is causing unfair competition with Europe. “It will find its own balance, ensuring that companies have the right incentives to continue investing,” he predicts.

National security

Considine’s day-to-day role is to “ensure that foreign investments are in line with U.S. national security priorities.” He’s director of the Office for Foreign Investment and National Security, a body in charge of approving all foreign direct investment and relations from the point of view of security and integrity. Amidst the Russian invasion of Ukraine — and with China competing for the title of world power — the volume of work has grown exponentially. “We analyze the transactions and make sure we maintain a balance. In most cases, [energy projects] are approved… sometimes with conditions,” he summarizes.

The very concept of national security, he says, has become much more dynamic than ever before. To a large extent, this is due to technological acceleration: “Artificial intelligence, quantum computing, biotechnology, microelectronics… All of [these technologies] have a dual use. They can have applications in the commercial sector, but they can also have serious implications at the military level,” he points out. “In our mobile phones and computers we have, for example, semiconductor technology that’s very similar to what’s used in advanced radar systems and other military systems.”

China’s exponential rise in recent decades is increasing the workload at his office. “[China] is one of the largest investors in the U.S. and has its own problems in terms of capital mobility and [effectively channelling] its investments.” Contrary to what one might think, he emphasizes, “most” of the investment cases analyzed by the investment filtering body are approved without reservations.

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