Briefing: Department of Energy must take steps to prevent industry bias in updated LNG analyses

The Department of Energy (DOE) faces a monumental integrity test, as it proceeds with updating the economic and environmental analyses for liquefied natural gas (LNG) exports.

Since 2012, the DOE Office of Fossil Energy & Carbon Management (FECM) has repeatedly commissioned studies on LNG exports from consultants with clear industry bias, which have failed to provide an impartial basis for energy policy. The DOE now has the opportunity and responsibility to implement new guardrails that ensure the updated analyses underlying a Public Interest Determination are based on credible evidence and address fundamental flaws observed in previous DOE studies.

Behind DOE’s economic studies: Big Oil’s “go-to” economists

• DOE commissioned its most routinely cited economic studies, published in 2012 and 2018,¹ from NERA Economic Consulting, which has a long history of producing biased, pro-industry analyses including for the American Petroleum Institute (API) and the tobacco lobby. In between DOE publications, NERA even published a 2014 update to the same study that was paid for by Cheniere, the top U.S. LNG exporter.
• Study authors W. David Montgomery and Paul Bernstein were repeatedly hired by API in the 1990s to undermine climate policy. More recently, they co-authored a 2017 NERA report that Trump used to justify exiting the Paris Agreement. Dr. Benjamin Franta, an expert in oil & gas industry disinformation, has labeled Mongomery and Bernstein the industry’s “go-to” economists and featured them heavily in the peer-reviewed article “Weaponizing economics: Big Oil, economic consultants, and climate policy delay.”

• The NERA studies use incomplete models and problematic assumptions that are biased toward showing that any limitations on LNG exports hurt economic growth. For example, the studies ignore climate costs when assessing the net economic impact of LNG exports.
  • Moreover, in the 2018 study, NERA makes the absurd claim that the burden of higher energy costs for U.S. consumers would be offset by increased income from holding shares in LNG companies.²

Behind DOE’s 2019 environmental study: a revolving door of gas industry engineers

• In 2019, DOE issued an updated lifecycle emissions study of LNG that it commissioned from the National Energy Technology Laboratory (NETL), which sits beneath FECM. Four of the five study authors, however, were employees of the consultancy KeyLogic, and at least three were simultaneously performing commercial work for Cheniere and Saudi Aramco between 2017 and 2020.³
• Of the four authors from KeyLogic, the project lead had previously worked at EQT Corporation—a company that is actively opposing the current LNG pause—and the other three authors went on to full-time positions at Cheniere, Saudi Aramco Americas, and GTI Energy, a pro-gas think tank, after publishing the 2019 study.⁴
• The study systematically underestimates LNG’s true climate impact by using very low estimates of methane leakage in the LNG supply chain and failing to consider the manner in which increased LNG exports can drive up total fossil fuel use.⁵

How to ensure updated analyses reflect the public interest

It is reasonable to assume that this pattern of industry bias will continue unless stringent integrity and oversight measures are taken. Several additional factors heighten this risk:

• KeyLogic currently holds a $100 million, 5-year contract with NETL, which White House officials have stated will continue to be involved in the updated LNG studies, and appears to be staffing up the same lifecycle analysis team that supported the 2019 environmental study;⁶
• Multiple authors of DOE’s 2014 and 2019 environmental studies have a history of collaborating since the early 2010s and continue to hold positions at DOE FECM and KeyLogic;
• There is no publicly available information about the contracts under which NERA performed the 2012 and 2018 economic studies (possibly because KeyLogic was the support contractor through which DOE commissioned the 2018 study), which raises serious transparency concerns. Moreover, NERA currently holds a $247,777 contract with DOE.

To truly serve the public interest, DOE’s path forward on the updated analyses must involve the following actions:

• Implement and enforce stringent safeguards against conflicts of interest and industry influence as soon as possible in the updated LNG analysis process:

• • • Contractors supporting the updated analyses should be required to have no current financial or professional ties to the oil and gas industry;
    • In particular, NERA’s history of unethical practice should disqualify it from this project (and, indeed, any government-commissioned work);
    • DOE should appoint an inter-office task force with involvement from the Office of Energy Justice and Equity and the Office of State and Community Energy Programs to jointly manage the new analysis;

• Ensure the new analysis fully accounts for LNG’s broad climate, environmental justice, public health, and consumer impacts.⁷ In order to achieve this:

• • Facilitate an inclusive process with meaningful participation from environmental justice communities and experts, and other stakeholders outside the gas industry;
  • Evaluate gas exports against global and domestic climate goals within the context of existing and proposed LNG export facilities, as well as energy supply and demand pathways in climate mitigation scenarios;
  • Test for the effects that export approvals will have on U.S. consumers, especially low-income communities whose energy burden is typically higher.

 

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¹ See, for example, citations in Sabine Pass (2015), Freeport LNG (2016), Corpus Christi (2016), and Magnolia (2022).
² For detailed critiques of the NERA economic studies, see, for example, comments submitted by Oil Change International/Food & Water Watch (2018), Sierra Club (2018), and Sierra Club (2022).
³ Greenpeace USA reached this conclusion based on competing interest disclosures from a later project, information from LinkedIn, and a review of each authors’ professional history. Although the exact dates of this commercial work are unknown, our research indicates that it occurred between June 2017 and December 2020, a timeframe that fully overlaps with KeyLogic’s $300 million MESA contract DEFE0025912, under which it supported the 2019 DOE study.
⁴ See “Department of Energy used gas industry insiders and consultants to build the case for soaring LNG exports” for more about the revolving door between the KeyLogic authors and the gas industry.
⁵ See, for example, comments from Sierra Club (2019).
⁶ As of May 9, KeyLogic is advertising four open positions on its Life Cycle Analysis team at the Hybrid Pittsburgh location, including “Principal Scientist and Senior Thought Leader, Life Cycle Analysis.”
⁷ See “110 Organizations Thank Biden Administration & Urge Robust Review of LNG Exports & Deny Projects Not in the Public Interest” for a more detailed set of recommendations on this subject