The Market and Climate Implications of U.S. Lng Exports

33 Pages Posted: 11 Mar 2024

See all articles by James H. Stock

James H. Stock

Harvard University - Department of Economics; National Bureau of Economic Research (NBER); Harvard University - Harvard Kennedy School (HKS)

Matthew Zaragoza-Watkins

University of California, Davis

Date Written: March 2024

Abstract

From 2015 to 2023, the United States transformed from a net importer of natural gas to the world's largest liquified natural gas (LNG) exporter. We find that this surge in LNG exports has reconnected U.S. gas prices to world market prices, after a hiatus of “shut-in” fracked gas. We estimate that the domestic gas price effect of this recoupling is comparable to a $30/ton carbon tax. For coal prices, which are coupled to gas through competition in the power sector, this effect is comparable to a $20/ton carbon tax. Using the NREL ReEDS model, we estimate that this recoupling reduces U.S. 2030 power sector CO2 emissions by roughly 145 million metric tons. These domestic estimates contribute to estimating the overall climate impact of LNG exports.

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Suggested Citation

Stock, James H. and Zaragoza-Watkins, Matthew, The Market and Climate Implications of U.S. Lng Exports (March 2024). NBER Working Paper No. w32228, Available at SSRN: https://ssrn.com/abstract=4754773

James H. Stock (Contact Author)

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Matthew Zaragoza-Watkins

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