Arthur Laffer and Patrick Giordano Chicago Tribune
Two recent events have been incredibly troublesome but have ultimately brought home the energy and climate crises plaguing the planet. Russia’s unprovoked attack on Ukraine exposed two follies: Europe’s deep dependence on Russia for oil and natural gas and US imports of Russian oil. Meanwhile, the recent report of the United Nations Intergovernmental Panel on Climate Change has expertly documented the dramatic adverse effects of climate change on people around the world.
With bipartisan support, President Joe Biden announced a ban on US imports of Russian energy. But he still continues to demonize North American fossil fuels.
After decades of dependence on foreign energy sources, we achieved energy independence in 2019 and 2020, but now we have lost that independence. Recently, Biden acknowledged that we need to achieve energy independence again.
Biden should eliminate the moratorium on new oil and gas leases on federal lands. In addition, the United States should approve the Keystone XL pipeline so that we can significantly increase imports from friendly Canada and thus limit imports from foreign players such as Saudi Arabia, the United Arab Emirates, the Venezuela and Iran. These actions are necessary for national security.
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The United States must also implement all necessary policies to significantly increase liquefied natural gas exports to Europe. We need to approve additional export terminals, as well as additional pipelines to transport natural gas to turn it into its liquefied form. These measures will help accelerate Europe’s ability to eliminate its dependence on Russia for 40% of its natural gas.
The European Union and the newly installed German government, with the support of the German Green Party, have recently declared that they want to use much more liquefied natural gas and adopt policies to achieve this. However, to completely eliminate Russian natural gas without destroying their economies, European countries would also have to allow hydraulic fracturing.
There is no denying that natural gas fracking, coupled with the deregulation of gas and electricity markets, has allowed the United States to keep natural gas and electricity prices very low compared to European prices. Natural gas prices in Europe have consistently been at least five times higher than natural gas prices in the United States over the past 12 months. These high prices hammered European consumers and allowed Russia to finance its unreasonable war in Ukraine.
Fracking bans have also led to increased carbon emissions in Europe, as high natural gas prices have prevented the replacement of natural gas with much dirtier coal in their power plants. In fact, many European power plants have recently switched from natural gas to coal due to incredibly high natural gas prices in Europe. In contrast, the United States has dramatically reduced its carbon emissions by replacing coal with natural gas at more than 100 power plants. Burning natural gas for electricity generation produces half the carbon emissions of burning coal.
At the same time, the United States and Europe take all necessary measures to restore the energy independence of the United States and eliminate European dependence on Russian energy, all reasonable measures to combat against climate change must also be taken. These actions are not mutually exclusive and both are necessary for the economic and environmental health of the United States, Europe, and the world.
Significant progress against climate change is being made in the United States through the bipartisan Infrastructure Act. For example, $65 billion is being spent to support power grid improvements, which will enable the transmission of electricity generated by renewable energy sources to where it can be produced most cost-effectively. The bipartisan Infrastructure Act also provides $7.5 billion to accelerate the construction of a national network of electric vehicle charging stations and $9.5 billion for green hydrogen initiatives using renewable energy for the conversion of water into hydrogen.
As Senator Joe Manchin, Chairman of the Committee on Energy and Natural Resources, recently stated, “We must recommit to achieving energy independence by adopting a comprehensive energy policy to ensure that the American people have reliable access, reliable and affordable energy without neglecting our climate responsibilities.
The same approach to energy and climate policy should be used in Europe. As former world chess champion and critic of Vladimir Putin Garry Kasparov succinctly stated in a recent Tribune op-ed: The United States should “replace Russian energy exports by increasing production and opening up new sources , from hydraulic fracturing to nuclear and renewable energies. Giving authoritarians so much leverage for extortion is unacceptable. There’s no point in saving the planet if you don’t save the people on it.
Now that the Russian invasion of Ukraine has united Americans, Europeans, and many others, let’s act quickly together to save people and the planet.
Arthur Laffer is president of Laffer Associates, an economic consulting firm. Patrick Giordano is Managing Director of Giordano & Associates, an energy law firm.