News round-up, April, 13, 2023
Words from the editor…
Unfortunately, not all the news that has kept people awake over the past three years has been positive; the recent leak of the Pentagon Papers portends another year of pain and suffering for humanity.
The documents reveal profound concerns about the war’s trajectory and Kyiv’s capacity to wage a successful offensive against Russian forces. According to a Defense Intelligence Agency assessment of the leaked documents, “Negotiations to end the conflict are unlikely during 2023.”
The Washintong postAnd as if the future wasn't already unclear enough, I'll leave you with the words of energy historian and vice chair of S&P Global, Daniel Yergin:
“If China does start shipping weapons to Russia, we’ll see a strong reaction that can have quite a big impact on the world economy,” .
POLITICO.COMMost read…
No Russia-Ukraine peace talks expected this year, U.S. leak shows
The war is expected to spill into 2024 with neither side notching victory and both refusing to negotiate, U.S. intelligence officials surmise
TWP by John Hudson, April 12, 2023 Poland’s Morawiecki plays Europe’s anti-Macron in Washington
The Polish PM is stressing that Warsaw is Washington’s crucial European ally.
POLITICO.EU BY JAN CIENSKI, APRIL 13, 2023 Column: Peak emissions hopes to be tested as China & Europe crank output
Power emissions may worsen before they improve due to the synchronized recovery of economic activity in China and Europe this year, even though renewables are undoubtedly gaining market share at a record pace in every relevant power sector.
REUTERS By Gavin Maguire, editing by Germán & CoOil stable as market weighs tight supply against U.S. recession risk
However, the bank sector's stress, according to the minutes of the Fed's most recent policy meeting, might push the country into a recession, which would reduce demand for oil.
REUTERS By Rowena Edwards, editing by Germán & CoNatural gas exporters skirt Washington’s scrutiny of China
Lawmakers are eying links between the U.S. and China, but there’s little desire to curb U.S. gas shipments that are expected to help drive the industry’s domestic growth.
POLITICO.COM By BEN LEFEBVRE and ZACK COLMAN, 04/13/2023 
“We’re living in a volatile world…
it’s easy to get distracted by things like changeable commodity prices or a shortage of solar panels. But this wouldn’t be true to our purpose – we can’t allow ourselves to lose sight of our end goal; said Andres Gluski, CEO of energy and utility AES Corp
Today's events
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Today's events 〰️
Image: Germán & Co, Ukrainian President Volodymyr Zelensky by ShutterstockNo Russia-Ukraine peace talks expected this year, U.S. leak shows
The war is expected to spill into 2024 with neither side notching victory and both refusing to negotiate, U.S. intelligence officials surmise
TWP by John Hudson, April 12, 2023 Ukrainian President Volodymyr Zelensky speaks with the media during a joint news conference at the White House in December during a high-stakes visit to Washington. (Demetrius Freeman/The Washington Post)
The grinding war between Ukraine and Russia is expected to bleed into 2024 with neither side securing victory yet both refusing to negotiate an end to the conflict, according to a Defense Intelligence Agency assessment that is among the highly sensitive U.S. government materials leaked online and obtained by The Washington Post.
The analysis concludes that, even if Ukraine recaptures “significant” amounts of territory and inflicts “unsustainable losses on Russian forces,” an outcome U.S. intelligence finds unlikely, the nation’s gains would not lead to peace talks.
“Negotiations to end the conflict are unlikely during 2023 in all considered scenarios,” says the document, which has not been disclosed previously.
A leak of dozens of classified U.S. military documents has stunned U.S. officials and allies, and has led to a Justice Department investigation.
The assessment, based on close U.S. scrutiny of each side’s troop counts, weaponry and equipment, could galvanize the war’s critics who have called on major powers such as the United States and China to push for Kyiv and Moscow to reach a settlement and end a conflict that has displaced millions and left hundreds of thousands dead or wounded.
Asked about the DIA’s assessment, a U.S. official said the decision on when to negotiate is up to President Volodymyr Zelensky and the Ukrainian people, underscoring what has been a hands-off approach to mediation espoused by the administration since Russia’s full-scale invasion began in February 2022. The United States will continue to stand with Kyiv and provide it with the equipment and weapons that will bolster its position at the negotiating table, whenever that day comes, the official said.
What to know about the Discord leaks
Dozens of highly classified documents have been leaked online, revealing sensitive information intended for senior military and intelligence leaders. In an exclusive investigation, The Post also reviewed scores of additional secret documents, most of which have not been made public.
Where did they come from?
The top-secret documents appear to be — at least partly — from the Pentagon and many seem to have been prepared for senior military officials. Post reporting revealed that a man in his early to mid-20s allegedly shared them with members of an invitation-only Discord group.
What do the leaked documents reveal about Ukraine?
The documents reveal profound concerns about the war’s trajectory and Kyiv’s capacity to wage a successful offensive against Russian forces. According to a Defense Intelligence Agency assessment among the leaked documents, “Negotiations to end the conflict are unlikely during 2023.”
What else do they show?
The files include summaries of human intelligence on high-level conversations between world leaders, as well as information about advanced satellite technology the United States uses to spy. They also include intelligence on both allies and adversaries, including Iran and North Korea, as well as Britain, Canada, South Korea and Israel.
What happens now?
The leak has far-reaching implications for the United States and its allies. In addition to the Justice Department investigation, officials in several countries said they were assessing the damage from the leaks.
The document leak, which first came to authorities’ attention last week, has provided extensive insight into U.S. intelligence activities worldwide and exposed the national security establishment’s deep misgivings about the war’s trajectory. Many of the classified assessments that have surfaced thus far date to February and March, first appearing on the Discord messaging platform before spreading elsewhere online. Both the Pentagon, where many of the leaked materials appear to have originated earlier this year, and the Justice Department have said they are investigating the matter.
The Office of the Director of National Intelligence declined to comment. Spokespersons for the Russian and Ukrainian governments did not respond to requests for comment.
Beyond forecasting a costly open-ended conflict, the newly disclosed document also predicts how Ukrainian and Russian military leaders will respond to battlefield challenges, and it anticipates that the year will end with the two sides achieving only “marginal” territorial gains as a result of “insufficient troops and supplies for effective operations.”
Such a stalemate, where neither side achieves a decisive advantage, is described in the document as “the most likely scenario.”
For the Ukrainian side, an ongoing war of attrition will lead to frustration within the country and “criticism” about how the war is conducted, “making leadership changes more likely,” the document says.
It is unclear if the document is referring to leadership changes in a political or military context. Zelensky remains broadly popular in Ukraine, but tensions exist between his office and Gen. Valery Zaluzhny, head of Ukraine’s armed forces, whom some in Kyiv view as a political threat.
A stalemate also will result in Ukraine enacting the “full mobilization” of its remaining eligible population, the document predicts, sending more young men to the front lines. At the same time, Ukraine probably will intensify its reliance on strikes in Russian territory, the document says, a dynamic that has disquieted some U.S. officials fearful that such attacks could compel President Vladimir Putin to escalate the conflict or give China cause to begin providing lethal support to Russia.
Olena Maltsev weeps over the grave of her 20-year-old son, Vladyslav Maltsev, a Ukrainian soldier buried at the cemetery in Dnipro, Ukraine. (Heidi Levine for The Washington Post)
For the Russian side, the stalemate will force Moscow to employ “degraded reserves due to dwindling combat power,” the document says. The Kremlin also is likely to “accelerate” efforts to integrate captured territories into Russia.
“It’s always been a race to see who runs out of resources first,” said Heather Conley, a Europe scholar and president of the German Marshall Fund.
She said she agreed with the U.S. intelligence contention that negotiations would begin only after one side is “exhausted,” a prospect that appears far off.
Jeff Rathke, a scholar at Johns Hopkins University and former U.S. diplomat, said the assessment “reflects a sobriety about the likelihood of either side being able to mount or to mass decisive military power in places where it can achieve strategic effect.”
The newly disclosed document also analyzes what might result from Russia or Ukraine achieving a “decisive advantage” on the battlefield. In the event that Russia deals a significant blow against Ukraine and captures more territory, Moscow is likely to “posture forces to achieve further objectives, such as regime change” in Ukraine, it says.
Regime change appeared to be the goal of Russia’s invasion, but its forces were thwarted in their blundering attempt to sack the capital.
Russian President Vladimir Putin addresses a crowd at Luzhniki Stadium in Moscow on Feb. 22. (For The Washington Post)
In the scenario in which Ukraine gains a decisive advantage, however, U.S. intelligence believes that Kyiv is likely to “conduct riskier offensive operations for additional gains.” In response, Russia could be expected to “increase nonconventional attacks on Ukraine,” though, importantly, “nuclear use remains unlikely,” the document says. Officials predict that, rather than giving up, the Kremlin would opt to announce a “new national mobilization” to sustain further combat operations.
U.S. officials have cautioned that such analysis related to the war in Ukraine is fluid, and the materials that leaked may lack nuance the United States has gleaned in the days since they were drafted. The newly disclosed document acknowledges that the stalemate it describes as the most likely scenario by year’s send may not hold if there are “substantive improvements to Ukrainian or Russian military capabilities.”
Both sides are preparing for fighting to escalate as warmer weather arrives, though officials in Kyiv and personnel on the war’s front lines have complained about logistical backlogs responsible for slowing promised deliveries of Western arms. Several nations, including the United States, committed battle tanks and other armored vehicles to Ukraine over the winter while initiating new training pipelines aimed at teaching advanced combat tactics to thousands of Ukrainian soldiers.
All the while, what remains very consistent in the Biden administration’s position on Ukraine is its deep skepticism about peace negotiations. Secretary of State Antony Blinken has openly questioned the value of permanent or temporary armistice agreements, telling members of the U.N. Security Council in February that they “should not be fooled by calls for a temporary or unconditional cease-fire.” Russia, he said then, will use “any pause in fighting to consolidate control.”
Blinken has also criticized countries for urging both sides to negotiate, pointing out that Russia is the aggressor and Ukraine has every right to fight to regain its territory.
Publicly, neither Russia nor Ukraine has ruled out negotiations, but their demands are leagues apart.
The 10-point peace plan Zelensky released last year demands the full withdrawal of Russian troops “from the territory of Ukraine,” including Crimea, the peninsula Putin annexed illegally in 2014 that now serves to facilitate the resupply of his forces inside Ukraine.
Moscow, meanwhile, has insisted that Ukraine must acknowledge the new “territorial realities,” which has been interpreted to mean that Zelensky and his Western backers must recognize the regions of Zaporizhzhia and Kherson, which Russia does not even fully control, as Russian territory, a non-starter for Ukraine as well as the United States.
China proposed a 12-point peace plan for the conflict with criteria that few found objectionable, but it has gained little traction since it was introduced in February.
Samuel Oakford contributed to this report.
According to Poland’s PM Mateusz Morawiecki, Emmanuel Macron’s talks of distancing the EU from America “threatens to break up” the block | Ludovic Marin/AFP, editing by Germán & CoPoland’s Morawiecki plays Europe’s anti-Macron in Washington
The Polish PM is stressing that Warsaw is Washington’s crucial European ally.
POLITICO.EU BY JAN CIENSKI, APRIL 13, 2023 There’s an Emmanuel Macron-shaped shadow hovering over this week’s U.S. visit by Polish Prime Minister Mateusz Morawiecki.
In contrast to the French president — who in an interview with POLITICO tried to put some distance between the U.S. and Europe in any future confrontation with China over Taiwan and called for strengthening the Continent’s “strategic autonomy” — the Polish leader is underlining the critical importance of the alliance between America and Europe, not least because his country is one of Kyiv’s strongest allies in the war with Russia.
“Instead of building strategic autonomy from the United States, I propose a strategic partnership with the United States,” he said before flying to Washington.
In the U.S. capital, Morawiecki continued with his under-the-table kicks at the French president.
“I see no alternative, and we are absolutely on the same wavelength here, to building an even closer alliance with the Americans. If countries to the west of Poland understand this less, it is probably because of historical circumstances,” he said on Tuesday in Washington.
Unlike France, which has spent decades bristling at Europe’s reliance on the U.S. for its security, Poland is one of the Continent’s keenest American allies. Warsaw has pushed hard for years for U.S. troops to be stationed on its territory, and many of its recent arms contracts have gone to American companies. It signed a $1.4 billion deal earlier this year to buy a second batch of Abrams tanks, and has also agreed to spend $4.6 billion on advanced F-35 fighter jets.
“I am glad that this proposal for an even deeper strategic partnership is something that finds such fertile ground here in the United States, because we know that there are various concepts formulated by others in Europe, concepts that create more threats, more question marks, more unknowns,” Morawiecki said. “Poland is trying to maintain the most commonsense policy based on a close alliance with the United States within the framework of the European Union, and this is the best path for Poland.”
Fast friends
Poland has become one of Ukraine’s most important allies, and access to its roads, railways and airports is crucial in funneling weapons, ammunition and other aid to Ukraine.
That’s helped shift perceptions of Poland — seen before the war as an increasingly marginal member of the Western club thanks to its issues with violating the rule of law, into a key country of the NATO alliance.
Warsaw also sees the Russian attack on Ukraine as justifying its long-held suspicion of its historical foe, and it hasn’t been shy in pointing the finger at Paris and Berlin for being wrong about the threat posed by the Kremlin.
“Old Europe believed in an agreement with Russia, and old Europe failed,” Morawiecki said in a joint news conference with U.S. Vice President Kamala Harris. “But there is a new Europe — Europe that remembers what Russian communism was. And Poland is the leader of this new Europe.”
That’s why Macron’s comments have been seized on by Warsaw.
According to Poland’s PM Mateusz Morawiecki, Emmanuel Macron’s talks of distancing the EU from America “threatens to break up” the block | Ludovic Marin/AFP via Getty Images
“I absolutely don’t agree with President Macron. We believe that more America is needed in Europe … We want more cooperation with the U.S. on a partnership basis,” Marcin Przydacz, a foreign policy adviser to Polish President Andrzej Duda, told Poland’s Radio Zet, adding that the strategic autonomy idea pushed by Macron “has the goal of cutting links between Europe and the United States.”
While Poland is keen on European countries hitting NATO’s goal of spending at least 2 percent of gross domestic product on defense — a target that only seven alliance members, including Poland, but not France and Germany, are meeting — and has no problem with them building up military industries, it doesn’t want to weaken ties with the U.S., said Sławomir Dębski, head of the government-financed Polish Institute of International Affairs.
He warned that Macron’s talks of distancing Europe from America in the event of a conflict with China “threatens to break up the EU, which is against the interests not only of Poland, but also of most European countries.”
Seaboard: pioneers in power generation in the country
…Armando Rodríguez, vice-president and executive director of the company, talks to us about their projects in the DR, where they have been operating for 32 years.
More than 32 years ago, back in January 1990, Seaboard began operations as the first independent power producer (IPP) in the Dominican Republic. They became pioneers in the electricity market by way of the commercial operations of Estrella del Norte, a 40MW floating power generation plant and the first of three built for Seaboard by Wärtsilä.
The sun rises behind windmills at a wind farm in Palm Springs, California, February 9, 2011. REUTERS/Lucy Nicholson, editing by Germán & CoColumn: Peak emissions hopes to be tested as China & Europe crank output
Power emissions may worsen before they improve due to the synchronized recovery of economic activity in China and Europe this year, even though renewables are undoubtedly gaining market share at a record pace in every relevant power sector.
REUTERS By Gavin Maguire, editing by Germán & CoLITTLETON, Colorado, April 12 (Reuters) - An upbeat report this week by think tank Ember revealed that a record 12% of global electricity was generated by renewable sources in 2022, and declared that fossil fuel emissions may soon steadily decline as more renewable supply capacity emerges.
Climate trackers have cheered the report, which was based on deep dives into power generation trends across several major economies, and incorporated detailed solar and wind capacity development pipelines in all key regions.
Yet while there is no question that renewables are gaining market share at a record pace in every power sector that matters, power emissions may still get worse before they get better thanks to the synchronised revival of economic activity in China and Europe this year.
Industries in both regions were impaired in 2022 by repeated COVID-19 lockdowns in China and a power crisis in Europe, which resulted in sharp cuts to their combined industrial output.
Even so, China and Europe still lifted fossil fuel power emissions of carbon dioxide (CO2) to a record 5.99 billion tonnes in 2022, Ember data shows, which is a testament to their combined polluting heft even during times of economic distress.
Power sector emissions from fossil fuelsIn 2023, the economies of China and Europe are expected to return to growth paths as factories and production lines dial up output from the subdued levels of last year, resulting in higher overall energy use.
With global natural gas markets still disrupted following Russia's invasion of Ukraine last year, power producers in China and Europe are likely to struggle raising electricity generation totals without resorting to the increased use of coal.
That may lift emissions even higher, and confound expectations for drops in fossil fuel pollution levels going forward.
CLIPPED BY COVID
China's protracted lockdowns to stem the spread of COVID-19 resulted in the Chinese economy expanding by only 3% in 2022, which was well short of the government target of around 5.5% and the second-weakest growth rate since 1976.
Strict movement curbs and distancing requirements forced capacity reductions in factories, offices and industrial plants throughout the country, which in turn resulted in a decline in industrial energy demand in the world's top polluter.
However, that trend is expected to reverse in 2023 after Beijing eased movement restrictions and unveiled a slew of stimulus measures aimed at reviving economic activity.
Signs are emerging that the revival is already underway, with the latest domestic air travel volumes jumping to their highest since mid-2021, and international travel numbers to their highest since early 2020.
China air travel volumesOutput of a slew of key industrial inputs, including resins, acids and ethylene, have also risen sharply in China in anticipation of greater demand from manufacturers and other downstream users.
China output of industrial inputsTo help feed this widespread revival in activity, China's imports of thermal coal climbed to new highs in the first quarter, which suggests increased coal emissions are likely over the coming months as the economy gathers further momentum.
GERMANY DRIVES EUROPE'S RECOVERY
Data on German industrial activity is also showing growth in early 2023, and is likely indicative of a broader revival in Europe's industrial momentum.
German production of steel, chemicals and fertilizers have all climbed in early 2023 after having fallen precipitously during 2022 when power prices surged.
Output of key German industriesGerman production of new cars - a bellwether metric of the industrial health of Europe's largest economy - has also risen from last year's lows, although total car output remains well shy of previous peaks.
Germany new car productionEuropean governments are trying to aid the recovery through supportive fiscal and monetary policies, which should spur growth through other parts of the economy in due course.
However, the region's power producers are likely to struggle to lift power generation totals from non-emitting sources due to stunted hydro and nuclear output totals so far in 2023.
That suggests that as industrial momentum gathers further steam, power producers may need to increase fossil fuel use alongside the record deployment of renewable energy supplies to keep up with the rising energy demand.
Alongside the increased coal burning fuelling the industrial recovery in China, more fossil-based power generation in Europe is likely to steer overall power emissions to new highs in 2023, providing a wake up call to those who hope that power sector pollution is primed to head lower from now on.
The opinions expressed here are those of the author, a columnist for Reuters.
The sun is seen behind a crude oil pump jack in the Permian Basin in Loving County, Texas, U.S., November 22, 2019. REUTERS/Angus Mordant/File Photo/Editing by Germán & CoOil stable as market weighs tight supply against U.S. recession risk
However, the bank sector's stress, according to the minutes of the Fed's most recent policy meeting, might push the country into a recession, which would reduce demand for oil.
REUTERS By Rowena Edwards, editing by Germán & CoLONDON, April 13 (Reuters) - Oil prices were stable on Thursday as the market weighed the prospect of tight supply against possible recession in the United States, the world's largest oil consumer.
Brent crude fell 7 cents, or 0.08%, to $87.26 a barrel by 0935 GMT. U.S. West Texas Intermediate (WTI) was unchanged at $83.26.
Both benchmarks had risen 2% on Wednesday to their highest in more than a month as cooling U.S. inflation spurred hopes that the U.S. Federal Reserve will stop raising interest rates.
However, minutes from the Fed's last policy meeting indicated that banking sector stress could tip the economy into recession, which would weaken U.S. oil demand.
"Global economic growth is fragile and inflationary pressure could easily become elevated again," said Tamas Varga of oil broker PVM.
The market is still reeling from the shock decision by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, together known as OPEC+, to increase its production cut targets.
While the executive director of the International Energy Agency expects the move to tighten supply in the second half of the year and push oil prices higher, the International Monetary Fund on Tuesday highlighted the risk this poses to global economic expansion.
For every 10% rise in the price of oil, IMF models show a 0.1 percentage point reduction in growth and a 0.3 percentage point increase in inflation, said IMF chief economist Pierre-Olivier Gourinchas said.
Investors will be looking for direction from the OPEC monthly oil market report due at 1130 GMT on Thursday.
Markets on Wednesday shrugged off a small build in U.S. crude oil stocks, attributing it in part to a release of oil from the U.S. emergency reserve and lower exports at the start of the month.
The Biden administration plans to refill the U.S. Strategic Petroleum Reserve soon and hopes to do it at lower oil prices, U.S. Energy Secretary Jennifer Granholm said on Wednesday.
Image: Germán & CoCooperate with objective and ethical thinking…
More than 12 percent of seaborne liquefied natural gas cargoes out of the U.S. went to China in 2021, second only to South Korea, according to Energy Information Administration data. | Cliff Owen/AP PhotoNatural gas exporters skirt Washington’s scrutiny of China
Lawmakers are eying links between the U.S. and China, but there’s little desire to curb U.S. gas shipments that are expected to help drive the industry’s domestic growth.
POLITICO.COM By BEN LEFEBVRE and ZACK COLMAN, 04/13/2023 The United States’ booming natural gas export industry is trying to stay out of the fray of rising tensions between the U.S. and China. And it’s getting cover from an unusual quarter: some of Beijing’s critics in the GOP.
U.S. lawmakers of both parties are pursuing tough-on-China bills after a spate of conflicts involving spy balloons, TikTok and Chinese President Xi Jinping’s recent visit to Russia. But executives at companies that sell liquefied natural gas are going to Congress with a contrary message: If the United States wants more of its gas to flow overseas, Chinese yuan will have to be part of the equation.
One reason is that contracts with Chinese buyers are critical to the gas industry’s hopes of securing billions of dollars in bank financing for planned export facilities, industry analysts said. Lack of financing led to delays in construction of new gas projects that could export as much as 21 billion cubic feet a day, a volume that if completely built would triple current U.S. capacity, according to figures from the Energy Information Administration.
“Is China still critically important in signing long-term agreements to help secure funding for those projects?” said Charlie Riedl, executive director for the Center for Liquefied Natural Gas trade association. “The answer is absolutely yes.”
Representatives from the group have met with senators to make the case that China is a crucial market for U.S. energy shipments, Riedl said.
Some of the GOP’s biggest China hawks, like Sen. Ted Cruz (R-Texas), are holding their fire when it comes to the LNG trade.
Cruz told POLITICO that “China poses the greatest geopolitical threat” to the U.S. and touted the dozens of bills he’s filed to address the risks. On LNG trade, though, the Texas Republican sees less of an issue.
“Individuals and companies can do business with China. We are not boycotting the nation as a whole,” Cruz said.
For some Republicans, U.S. LNG exports represent an opportunity to exert influence.
“If you want to think of it geopolitically, why wouldn’t we want China dependent on our natural gas for their own economy?” House Speaker Kevin McCarthy said in a recent CNBC interview. “Would the world not be safer and would we not be stronger? Why wouldn’t we create more American jobs at the same time?”
But Sen. Marco Rubio, the Florida Republican who is a senior member on the Senate Foreign Relations Committee, has questioned whether the United States should be exporting so much of its gas to a geopolitical rival when tensions between the two countries are rising fast, according to industry executives who were not authorized to discuss the conversations with the media.
Rubio told POLITICO that his concerns about trade with China go beyond LNG, and the U.S. needed to think strategically about the fuel.
“We have to be able to provide for our own energy, and I think in our policies, if we’re going to engage geopolitics in it, it should ensure that we prioritize allies over adversaries,” he said.
Chinese companies have signed major U.S. supply contracts in recent years, including in February when China Gas Holdings agreed to two contracts for one million metric tons of gas a year each from LNG supplier Venture Global. One contract would take gas from the company’s existing export facility in Calcasieu Pass, La., and the second from another facility still under development.
China has become one of the largest buyers of U.S. natural gas. More than 12 percent of seaborne LNG cargoes out of the U.S. went to China in 2021, second only to South Korea, according to EIA data. China’s appetite for U.S. gas dropped sharply in 2022 as shipments were diverted to Europe and amid China’s domestic pandemic-driven lockdowns, but is expected to ramp back up as its economy restarts.
Rubio’s arguments have alarmed some industry officials. But so far he’s on his own — his Republican colleagues in the Senate don’t see a place for Congress or the federal government to step in and steer cargoes away from China when it has become a major financier facilitating U.S. natural gas production and exports.
Sen. Marco Rubio told POLITICO that his concerns about trade with China go beyond LNG, and the U.S. needed to think strategically about the fuel. | Francis Chung/POLITICO
That’s even as GOP lawmakers decry Chinese involvement in clean energy projects in the United States, including Rubio’s targeting of a battery factory Ford Motor Co. plans to build in Michigan that would have used some Chinese technology.
“It’s a free country. People can sell [gas] wherever they want to sell it,” Sen. Jim Risch (R-Idaho), the top Republican on the Senate Foreign Relations Committee, told POLITICO. “They’ll sell it to probably the person who pays the most for it. Free markets work wonderfully — as long as the government stays out.”
Sen. Bill Cassidy (R-La.) said in an interview that Chinese buyers are inking LNG contracts the same way others do — China gets guaranteed shipments at a certain price by providing upfront capital. That, in turn, helps U.S. companies build export terminals, which drives demand for more U.S. drilling in places like Louisiana and Texas.
“Right now China is a frenemy,” he said. “If they — just like India, South Korea, Japan, the EU — are purchasing or buying, helping to pay for the capitalization of LNG export terminals, well, that’s a good thing. That’s an international norm. I’m OK with that.”
So far, Rubio hasn’t offered specific legislative language that would limit energy exports to China, said one industry official who was granted anonymity to describe private discussions with lawmakers.
But the fact that Republicans and Democrats seem to be in a competition to prove their tough-on-China bonafides is worrying businesses, the industry official said.
“Every industry is sweating the growing bipartisan anti-China consensus,” the industry official said.
Cruz also said LNG would likely bring climate and environmental benefits to China by displacing coal.
China approved construction of 106 gigawatts of coal-fired power in 2022 — equivalent to more than half the entire U.S. coal-fired fleet — according to a recent report by research groups Global Energy Monitor and the Centre for Research on Energy and Clean Air.
Still, the industry remains concerned that the U.S.-China relationship could deteriorate further, particularly as the two remain far apart on issues such as Taiwan and Ukraine. If things get much worse, the global economic reaction could make demand for gas from anywhere start to crumble, said Daniel Yergin, an energy historian and vice chair of market analysis firm S&P Global.