Interview with Bureau Veritas: US LNG permitting freeze could unleash upsurge in renewables and hydrogen

---

This is a free premium article to give you a sample of what Offshore Energy has to offer as part of our premium section. You can upgrade to premium access here.

---

The reckoning with the climate change challenges brings the rise in intensity of the winds of change, which are sweeping across the global energy landscape to prepare it for a carbon-free and sustainable future. Bearing in mind the shifting political and economic tides propping up a worldwide pivot to clean sources of supply, two representatives from Bureau Veritas have provided their take on the current energy trends, highlighting that renewables and hydrogen are positioned to reap the benefits from the recent U.S. liquefied natural gas (LNG) permitting pause. Depending on the length of this pause, regions around the world will feel its implications in different ways while U.S. offshore wind is poised to flourish regardless of its duration.

As nations around the globe continue to grapple with the effects of climate change, the enormous appetite for oil and natural gas is locking horns with the ever-increasing desire to transition away from fossil fuels and move to low-carbon and green energy to avoid treacherous high-emission currents and navigate decarbonization waters for safe sailing to a net zero future. While some of the climate action undertakings threaten to make coal, oil, and gas obsolete, a reality check shows that the world is not closing in on the Paris Agreement goals, as fossil fuels still hold sway over 80% of the global energy mix while renewables control 20%.

With countries actively seeking new ways to step up their decarbonization efforts, the Biden administration recently announced a temporary LNG permitting pause to review the environmental and economic impacts of LNG export facilities to non-Free Trade Agreement (FTA) countries. A barrage of reactions has come in the wake of the LNG permitting freeze, ranging from welcoming the move with open arms as a harbinger of renewable energy deployment acceleration to describing it as a disruption of the development of U.S. LNG infrastructure and a step bound to undermine global energy security.

In response to the LNG pause, the American Petroleum Institute (API), a U.S. trade association representing the oil and gas industry, warned that such a move would undercut President Joe Biden’s pledge to send roughly 5 billion cubic feet per day of LNG through 2030 to Europe to help end its dependence on Russian gas.

On the other hand, Earthjustice and more than 65 climate and environmental organizations have thrown their support behind President Biden’s LNG export approval pause and urged Congress not to accelerate the expansion of LNG infrastructure. In a recent letter, these organizations called for a rejection of the Unlocking Domestic LNG Potential Act, a House bill that would remove the Department of Energy’s legal obligation to assess the full impacts of LNG expansion on the economy, consumer energy costs, climate, and local communities.

Auburn Bell, Earthjustice Legislative Representative for Climate and Energy, outlined: “Hamstringing DOE to lock the U.S. and the world into decades of more fossil fuel extraction and expansion goes against scientific consensus, perpetuates environmental injustices at the frontlines of gas infrastructure, and raises energy prices for everyone. DOE should retain its authority to make public interest determinations for LNG exports in a transparent, consistent, and scientifically sound way that is also in line with the administration’s environmental justice policies.

“Members of Congress must not step in the way of commonsense updates to DOE’s criteria for reviewing LNG exports. At this late stage in the climate crisis, we cannot afford to write a blank check to LNG developers by weakening laws and regulations that protect communities and the world from the negative impacts of LNG exports.”

This letter does not seem to bear fruit or carry much weight, as the U.S. House of Representatives has since passed H.R. 7176, the Unlocking Domestic LNG Potential Act. After the vote, Earthjustice blasted the passage of the bill to undo President Biden’s LNG pause, emphasizing that building more LNG export infrastructure would provide a lifeline to fossil fuel players.

Bell underlined: “At a time when we need bold action to address climate change and environmental injustice, the last thing we need is legislation that throttles DOE’s ability to make public interest determinations for LNG exports in a transparent, consistent, and scientifically sound way. We’ve long known LNG to be a dirty business.

“Building more LNG export infrastructure will lock us in to decades of fossil fuel reliance, drive up energy costs for consumers, and continue to endanger the health of fenceline communities. We urge the Senate to reject this harmful, short-sighted proposal that would further weaken the regulatory safeguards we need to fight climate change and protect communities.”

While contemplating the potential consequences of the U.S. LNG permitting freeze, Offshore Energy (OE) has reached out to Rajiv Sabharwal, Bureau Veritas’ Vice President of Business Development – Energy, to get his views on the long-term and short-term impact of this pause not just on the U.S. energy ecosystem but also on the global one.

Sabharwal, who is also one of Bureau Veritas’ hydrogen experts, is an Advisory Board member at the Energy Industry Council’s (EIC) annual event “Connect Oil & Gas USA” and Rice University E&C financial committee.

With a multidimensional global experience under his belt, Sabharwal is equipped with a vast knowledge of the oil, gas, and power industries while also possessing expertise in LNG and downstream sectors. This made him a perfect fit for this interview to glean more insights into the current and future energy market trends.

• OE: Will the U.S. LNG permitting pause have a positive impact on the acceleration of renewable energy deployment not just at home but also abroad? If so, which renewable sources stand to benefit the most from this move?

Rajiv Sabharwal: The U.S. LNG permitting pause is a temporary measure that aims to review the environmental and economic impacts of LNG export facilities to non-FTA countries, as part of the Biden administration’s climate agenda. The pause could have a positive impact on the acceleration of renewable energy deployment, both in the U.S. and abroad, depending on its duration and outcome.

If the pause becomes permanent or prolonged, it could have different effects in different regions. In the U.S., the abundant availability of natural gas could drive the deployment of low-carbon hydrogen production using natural gas with carbon capture and storage (CCS), as a way to reduce greenhouse gas emissions and create a domestic hydrogen market.

In Europe, the pause could force the region to expedite the development and deployment of wind, solar, and green hydrogen, as well as increase its energy security and diversify its energy sources, to mitigate the risk of a lack of LNG supply from the U.S.

In Asia, especially in developing economies, the pause could force them to look for alternative LNG suppliers, such as Qatar, Australia, or Russia, or switch to coal, until they are able to develop and deploy renewable sources, primarily from hydrogen and solar.

Therefore, the U.S. LNG permitting pause could have a positive impact on the acceleration of renewable energy deployment, especially for solar, wind, and hydrogen, but the extent and direction of this impact would depend on the duration and outcome of the pause, as well as the regional and global energy dynamics.

• OE: Is natural gas, primarily LNG, needed as a bridge fuel for the transition to low-carbon and clean energy?

Rajiv Sabharwal: Natural gas, particularly in its liquefied form, plays a crucial role as a bridge fuel in the transition towards low-carbon and clean energy solutions. LNG offers significant environmental benefits compared to traditional coal power generation, emitting lower levels of pollutants such as NOx, SOx, particulates, and mercury. Additionally, LNG can reduce greenhouse gas emissions by up to 60%, contributing to improved air quality and reduced environmental impact.

While renewable energy technologies like renewable hydrogen and high-efficiency solar cells show promise, they are still in the early stages of development, and costs remain a consideration. During this transitional period, LNG provides a practical and readily available alternative fuel. Its established infrastructure and relatively lower cost make it a viable option for meeting energy needs while cleaner alternatives continue to develop.

In summary, LNG serves as a transitional fuel that balances the need for immediate energy requirements with environmental considerations. While renewable energy technologies evolve, LNG offers a pragmatic solution to meet growing energy demands while reducing emissions and facilitating the transition towards cleaner energy sources.

As technology advances and costs decrease, LNG will continue to play a pivotal role in the global energy landscape. Moreover, LNG, coupled with effective and responsible carbon capturing, can enhance its role as an intermediate fuel in the transition to cleaner energy sources.

• OE: With the U.S. LNG permitting freeze in place, do you expect the conversion to hydrogen-ready LNG infrastructure to speed up?

Rajiv Sabharwal: If the U.S. LNG permitting freeze becomes permanent or prolonged, it could result in an abundance of natural gas available in the U.S., which could accelerate the development of low-carbon hydrogen production and deployment with CCS or CCUS. This would reduce the greenhouse gas emissions and methane leakage associated with natural gas use and create a domestic hydrogen market.

Moreover, this additional investment could also help to develop or reuse the current gas infrastructure to transport hydrogen and promote the use of hydrogen in the transportation sector. This solution would provide a low-emission fuel that could complement or replace LNG in the future.

Meanwhile, legal action and uncertainty loom over the U.S. oil and gas industry’s future leasing opportunities, as API has filed a petition to challenge the Biden administration’s 2024-2029 National Outer Continental Shelf Oil and Gas Leasing Program, which came with the lowest number of lease sales in U.S. history, encompassing a maximum of three potential oil and gas lease sales in the Gulf of Mexico area slated for 2025, 2027, and 2029, respectively.

Ryan Meyers, API’s Senior Vice President and General Counsel, underscored: “Demand for affordable, reliable energy is only growing, yet this administration has used every tool at its disposal to restrict access to vast energy resources in federal waters.

“In issuing a five-year program with the fewest lease sales in history, the administration is limiting access in a region responsible for generating among the lowest carbon-intensive barrels in the world, putting American consumers at greater risk of relying on foreign sources for our future energy needs. Today, we are taking action to challenge this shortsighted program so that future generations of Americans will continue to benefit from our energy advantage for decades to come.”

This lawsuit comes after API, together with Shell, Chevron, and the State of Lousiana, won another one in December 2023 related to the controversial oil and gas Lease Sale 261 for acreage in federal waters in the Gulf of Mexico, which gathered close to a whopping $382.2 million in high bids afterward. This is the largest amount such a lease sale has collected in almost a decade or rather in the last eight years.

The news about the new lawsuit over the five-year offshore leasing program did not sit well with environmental groups, which are seeking stronger protections for the Gulf of Mexico area due to climate, public health, and environmental concerns, as they believe that more oil and gas drilling will thwart U.S. climate goals to curb greenhouse gas emissions.

As a result, these environmental groups and Gulf-based organizations have filed a legal challenge of their own to hold the Interior Department accountable for what they deem to be its failure to adequately consider the public health impacts on frontline communities in its final five-year program.

Brettny Hardy, Earthjustice Attorney, pointed out: “Fossil fuel development is untenable if we want a livable future. The oil and gas industry is already sitting on nine million acres of undeveloped leases. They certainly are not entitled to more. Although we acknowledge the government’s focus on climate impacts with the release of this five-year offshore leasing plan, we are taking legal action today because we are concerned about how it will jeopardize the health of overburdened communities.”

While the program does consider the climate impact of continued oil-and-gas leasing, Earthjustice is adamant that DOI did not assess the environmental justice effects of continued offshore fossil fuel development and that it also “failed to properly evaluate” the impacts of oil-and-gas leasing on endangered species, particularly how new leasing would “further imperil” the critically endangered Rice’s whale.

Hallie Templeton, Legal Director for Friends of the Earth, commented: “We are not surprised by this industry challenge, given its track record of suing every time the Biden administration makes any attempt to break free from fossil fuels.

“While the five-year program does offer a record-low number of sales and greater focus on climate change, unfortunately it continues to unlawfully overlook many significant harms of the offshore drilling industry. Our lawsuit is another stand for the Gulf ecosystem, its nearby communities and all wildlife that continue to suffer at the hands of Big Oil.”

While efforts to put an end to fossil fuels development are certainly gaining ground, the oil and gas industry is still very much in the game and well-positioned to keep its spot in the future energy mix, especially natural gas, which is often seen as a bridge fuel to a carbon-free world. 

This does not mean that renewable energy is not making strides, as President Biden’s energy transition agenda entails a goal of bringing 30 GW of offshore wind to life by 2030. In line with this, one of Offshore Energy’s previous interviews flagged the U.S. offshore wind sector for growth.

However, the incoming 2024 presidential run in the U.S. may shake things up and bring changes to energy policies as it is shaping into a referendum of sorts on clean energy and net-zero aspirations, among other things.

While Democrats’ stance, led by Biden, indicates a further push for green energy, the Republicans, with Donald Trump in the front seat at the moment, are seeking to bring forth more fossil fuels with very few – if any – clean energy initiatives included in their energy agendas. 

With this at the forefront, Offshore Energy decided to get Bureau Veritas’ take on the future of clean energy in the United States by discussing the topic with Hiram K. Mechling III, P.E., PMP, Vice President of Offshore Wind at Bureau Veritas North America, who has a background in structural engineering and is focused on offshore wind energy.

• OE: As the 2024 presidential elections approach in the U.S., do you anticipate a stronger clean energy push from the Biden administration?

Hiram K. Mechling III, P.E., PMP: The Biden administration has put their full support behind the U.S. offshore wind industry. With the passage of the Inflation Reduction Act (IRA), this will enable growth in the burgeoning industry.

The Bureau of Ocean Energy Management (BOEM) has had a steady number of offshore wind auctions during the Biden administration. They plan to have three more in 2024 including in the Central Atlantic, offshore of Oregon, and the Gulf of Maine.

• OE: Depending on the winner of the upcoming elections not just in the U.S. but in Europe as well, what do you think is on the cards for the energy transition to green sources of supply? Do you expect oil and gas to make a comeback on the priority list if the right-wing politicians go on a winning streak or do you foresee a massive pivot to clean energy over the next few years if the left-wing politicians manage to win most of these elections?

Hiram K. Mechling III, P.E., PMP: During the Trump administration, the U.S. offshore wind industry had a rapid expansion. A lot of this had to do with the fact that the states stepped up and passed legislation for offtake agreements in their respective states. The industry has continued to build momentum during the Biden administration, and I see the same for the next few years.

There has been a considerable amount of investment from U.S. financial institutions and from oil giants such as BP, Shell, and Total. Like any industry, there will be ups and downs, but the offshore wind industry is now at a tipping point.

• OE: What are your expectations in 2024 for the clean energy industry?

Hiram K. Mechling III, P.E., PMP: Going back to my previous answers, I see continued growth not just in 2024, but beyond.

• OE: How can the current bottlenecks and red tape, which are impeding renewables’ growth, be tackled to secure a sustainable energy future in line with the Paris Agreement?

Hiram K. Mechling III, P.E., PMP: The U.S. offshore wind industry would like to see a U.S.-based supply chain. There has been some substantial investment into the U.S. supply chain, but we need more. As more sustainable offtake agreements are put in place, this will provide more confidence in the investment market.

• OE: COP28 ended with a call to all countries to come up with transition plans to move away from coal, oil, and gas and triple renewable energy power. Is net zero by 2050 achievable in the current energy and geopolitical context? How can nations make this happen?

Hiram K. Mechling III, P.E., PMP: Technology and innovation are developing so rapidly that anything is possible, especially with a 25-30-year time horizon. What is clear is that we need to keep moving in the right direction and stop digressing. If we continue with the fits and starts model, we will waste more time and money. The U.S. needs to stay consistent.

• OE: Will Europe continue to lead the transformation to a green future or will the U.S. take up the decarbonization torch, thanks to the Inflation Reduction Act (IRA) and similar laws?

Hiram K. Mechling III, P.E., PMP: On the onshore renewables side, I’d argue that the U.S. is a leader. On the offshore wind side, we have a way to go.

• OE: Which trends in the shift from fossil fuels to clean energy should we watch out for this decade on the global energy scene? 

Hiram K. Mechling III, P.E., PMP: As energy storage matures and becomes more efficient, I think this will open the possibilities for electricity usage powered by renewables.

---

ADVERTISE ON OFFSHORE ENERGY

𝐃𝐨 𝐲𝐨𝐮 𝐰𝐚𝐧𝐭 𝐭𝐨 𝐠𝐫𝐚𝐛 𝐭𝐡𝐞 𝐚𝐭𝐭𝐞𝐧𝐭𝐢𝐨𝐧 𝐨𝐟 𝐲𝐨𝐮𝐫 𝐭𝐚𝐫𝐠𝐞𝐭 𝐚𝐮𝐝𝐢𝐞𝐧𝐜𝐞 𝐢𝐧 𝐨𝐧𝐞 𝐦𝐨𝐯𝐞? 𝐋𝐨𝐨𝐤 𝐧𝐨 𝐟𝐮𝐫𝐭𝐡𝐞𝐫 𝐭𝐡𝐚𝐧 𝐎𝐟𝐟𝐬𝐡𝐨𝐫𝐞 𝐄𝐧𝐞𝐫𝐠𝐲! 𝐎𝐮𝐫 𝐜𝐨𝐧𝐭𝐞𝐧𝐭 𝐢𝐬 𝐫𝐞𝐚𝐝 𝐛𝐲 𝐭𝐡𝐨𝐮𝐬𝐚𝐧𝐝𝐬 𝐨𝐟 𝐩𝐫𝐨𝐟𝐞𝐬𝐬𝐢𝐨𝐧𝐚𝐥𝐬 𝐞𝐧𝐠𝐚𝐠𝐞𝐝 𝐢𝐧 𝐨𝐢𝐥 & 𝐠𝐚𝐬, 𝐦𝐚𝐫𝐢𝐭𝐢𝐦𝐞, 𝐨𝐟𝐟𝐬𝐡𝐨𝐫𝐞 𝐰𝐢𝐧𝐝, 𝐠𝐫𝐞𝐞𝐧 𝐦𝐚𝐫𝐢𝐧𝐞, 𝐡𝐲𝐝𝐫𝐨𝐠𝐞𝐧, 𝐬𝐮𝐛𝐬𝐞𝐚, 𝐦𝐚𝐫𝐢𝐧𝐞 𝐞𝐧𝐞𝐫𝐠𝐲, 𝐚𝐥𝐭𝐞𝐫𝐧𝐚𝐭𝐢𝐯𝐞 𝐟𝐮𝐞𝐥𝐬, 𝐬𝐡𝐢𝐩𝐩𝐢𝐧𝐠, 𝐚𝐧𝐝 𝐨𝐭𝐡𝐞𝐫 𝐢𝐧𝐝𝐮𝐬𝐭𝐫𝐢𝐞𝐬 𝐨𝐧 𝐚 𝐝𝐚𝐢𝐥𝐲 𝐛𝐚𝐬𝐢𝐬.

ADVERTISING OPTIONS

Follow Offshore Energy’s Fossil Energy market on social media channels: