Green light on H.R.6: an alternative solution comes to light to balance Russia’s monopoly on Eastern European natural gas supplies

By Orsolya Doricsak

May 28, 2014

On Wednesday, April 30, the House Energy and Commerce Committee passed H.R.6, a bill that would speed up liquefied natural gas (LNG) export to World Trade Organization (WTO) countries. “The committee advanced the bill proposed by Rep. Cory Gardner (R-CO) in a 33-18 vote, but with significant changes made after a bipartisan agreement was reached,” according to The Hill.

The recent crisis in Ukraine brings to light the dependence of East European countries on Russia for energy, particularly natural gas. The seriousness of the situation in the region opened skeptics’ eyes: an urgent solution is needed.  Easing U.S. restrictions on LNG exports is being touted as a possible solution for Europe.

H.R.6, the Domestic Prosperity and Global Freedom Act, was introduced on March 6 by Rep. Gardner and other members of the House Energy and Commerce Committee.  In effect, H.R.6 “amends the Natural Gas Act to require the expedited approval by the Federal Power Commission of applications for the export of natural gas from the United States to a World Trade Organization (WTO) member nation.” This legislation will help expedite the export of American LNG to global allies, including Ukraine and other Eastern European nations. 

The Central and Eastern European Coalition (CEEC) – of which the Armenian Assembly of America is a member – has not taken a position on this legislation at this time. Political Officer and Congressional Liaison of the Embassy of Hungary, Ms. Anna Smith Lacey, highlighted the importance of H.R.6 from the point of view of the Visegrad countries (Czech Republic, Hungary, Slovakia and Poland) in her presentation, held at the last CEEC conference in downtown Washintgon, D.C.

image

The critical relationship between the stakeholders makes the situation even more complicated. The responsibility of the House – and of the Senate in the future – is huge. Supporters and opponents are aggressively lobbying Capitol Hill.

At the time of this publication, H.R. 6 has 54 cosponsors, 52 Republican/2 Democrat (see here for a complete list).

R. Bruce Josten, executive vice president for Government Affairs, the second ranking officer at the U.S. Chamber of Commerce and the organization’s senior government and political affairs executive, strongly voiced his support of the legislation. The U.S. Chamber of Commerce, which represents more than three million businesses of all sizes, sectors, and regions, as well as state and local chambers and industry associations supports opening up American LNG to world markets. The bill “[…] would eliminate trade barriers limiting and delaying export of natural gas and bring more supply of this critical energy source to the world, while spurring additional investment in new domestic production,” Mr. Josten said.

On March 25, Ms. Anita Orban, Ambassador-at-Large for Energy Security for the Republic of Hungary, provided her perspective on the importance of LNG liberalization for the central and eastern European region. Ambassador Orban represented the Visegrad Group (currently chaired by Hungary), the Baltics, and Eastern Europe in testimony before the House Subcommittee on Energy and Power. Orban highlighted the serious situation in Ukraine, which she called “the largest security crisis that Europe has seen since the end of the Cold War,” by making it clear that “energy dependence, especially that of central eastern Europe and Ukraine is on everybody’s mind.” “Energy security came to the forefront of security considerations and become a flagship topic within the European Union. The Hungarian Visegrad Presidency also put this on top of the group’s agenda for 2013-2014,” Orban said. There is no country in the central eastern European region that is not dependent on Russian energy. Currently, this part of Europe depends on Moscow for at least 70% of their total gas consumption.  “In short, by liberalizing LNG exports, by eliminating the legal and administrative obstacles to the free trading of this vital, domestically produced commodity, the United States would provide fast and long-lasting protection for its allies against the most important dangers of natural gas dependency. Moreover, it would also enable them to act more freely in assisting Ukraine in case an energy crisis developed there,” Orban testified. 

On the other hand, the opposition’s main argument against American LNG export is that it would be harmful to America’s interest; energy prices would increase, employers would lose their energy cost advantages, and further jobs would be lost. The international president of the United Steelworkers (USW) wrote a letter of opposition of H.R. 6, on behalf of 850,000 employees it represents, to the U.S. House Committee on Energy and Commerce Chairman Fred Upton (R-MI) and Ranking Member Henry A. Waxman (D-CA). “The dramatic increase of liquid natural gas (LNG) exports envisioned by this bill is unwise and would be harmful to American interests. Consumers will see their energy prices rise, employers – particularly in the manufacturing sector – would lose the energy cost advantage which is driving the growth of this sector, and most importantly, jobs would be lost. In a time of persistently high unemployment, these jobs must not be sacrificed in order to transfer vast wealth to the gas extraction sector. I urge you to oppose this short-sighted and harmful bill.” The letter of oppositions to the H.R.6 act is available here.

In addition, the Center for Effective Government, Clean Water Action, Delaware Riverkeeper Network, Earthjustice, Earthworks, Environment America, Food & Water Watch, Sierra Club, and Western Resource Advocates also wrote the committee on behalf of their members and supporters in opposition to H.R.6. “[…] this bill could have a detrimental effect on both American consumers and American industries that rely on natural gas. Studies on the impact of LNG exports conclude that as more gas is exported, prices will go up. As of April 7, 2014, DOE [Department of Energy] has granted either conditional or final approval for seven applications to export LNG to non-FTA (free trade agreement) countries. None of these seven has come online yet. Even the one project that has already commenced construction does not expect to export LNG until 2016. DOE is processing these applications every 60 days. This bill is not needed to speed the ongoing process. In order to truly preserve the public’s interest in decisions about when, how and where to export natural gas, DOE must participate. For all of these reasons, we urge you to oppose H.R. 6,” reads a joint statement. 

Finding alternative energy resources in this situation should be based on several factors – beside the economic, environmental and social efficiencies – strong adherence to democratic  principles and the rule of law are (or at least ought to be) equally important aspects in decision making.

If you are interested in learning more about this subject, or would like to get the latest news regarding H.R.6, please visit the House Energy & Commerce Committee here.

Orsolya Doricsak is a graduate student studying Communication and Media Sciences at Corvinus University of Budapest, Hungary. She is currently doing a research at the Armenian Assembly of America in Washington, DC in international relations and political communications. 

About Armenian Assembly of America

Established in 1972, the Armenian Assembly of America is the largest Washington-based nationwide organization promoting public understanding and awareness of Armenian issues. The Assembly is a non-partisan, 501(c)(3) tax-exempt membership organization.
This entry was posted in Uncategorized and tagged , , , , , , , , , , , . Bookmark the permalink.

Leave a Reply