Biden Subsidies for Liquid Natural Gas Could Doom International Climate Goals

The liquid natural gas industry is angling for cash from the Biden administration to help green its image abroad. The grants and subsidies are aimed at reducing greenhouse gas emissions from industry infrastructure by helping LNG firms build out and modify planned export hubs using carbon capture technology — a controversial approach among climate experts, many of whom view it as “greenwashing,” putting an environmentally friendly patina on climatically dangerous energy efforts.
Critics say any federal supports that prop up the growing U.S. LNG industry will doom efforts to reach international goals to contain the climate crisis. Even with carbon capture attached, LNG remains a polluting fossil fuel. Recent research suggests that for the goals of the Paris climate agreement to be met, planned LNG terminals either must be canceled or must shut down before the end of the new facilities’ lives, leaving billions of dollars in stranded assets. Adding expensive carbon capture infrastructure would only add new financial and political incentives to allow the industry to continue shipping natural gas — imperiling the possibility of meeting the Paris goals.
“There is no amount of money that you can plow into these technologies where they’re actually going to contribute positively to addressing climate change.”
“There is no amount of money that you can plow into these technologies where they’re actually going to contribute positively to addressing climate change,” said Carroll Muffett, president of the Center for International Environmental Law, expressing skepticism about the industry’s claims that carbon capture would green LNG. “The danger here is those carbon capture and storage subsidies become backdoor subsidies for the fossil fuel industry as a whole and help make nonviable projects viable.”
“It’s dangerous because of its impacts on climate and because of what it means for front-line communities,” Muffett said. “And it also perpetuates this myth that you can go on producing and using fossil fuels and running dangerous petrochemical plants and somehow the emissions from that are going to magically disappear.”
If all 14 LNG export terminals currently approved for construction are completed, it will triple the number of operating export hubs. LNG exporters have struggled to find buyers for their product in part because U.S. natural gas is viewed as particularly dirty. President Donald Trump significantly slowed efforts to regulate natural gas flaring, the burning of unwanted gases at the extraction point. In turn, producers in West Texas continue to burn off a significant volume of excess gas, allowing climate-warming methane to escape into the atmosphere. Seven LNG projects along the Gulf Coast have announced plans to add carbon capture infrastructure to help sell their products to reluctant European markets.

A plan to add carbon capture to a proposed LNG export terminal is being met with local opposition. Members of the largely Latino community in and around Brownsville have long opposed the planned Rio Grande LNG terminal proposed by the energy firm NextDecade. Now the community is shifting its attention to the project’s new carbon capture plan. “The community sees it as farce. Rio Grande LNG is trying to label themselves as environmentally friendly, but we know it’s environmental injustice to our community,” said Bekah Hinojosa, an organizer with the Sierra Club’s Beyond Dirty Fuels campaign who lives in the area. “It’s still going to release toxic emissions into our communities. It’s still going to damage ecosystems, threatening our way of life, and public safety.” (NextDecade did not respond to a request for comment.)
The carbon capture projects will be all but impossible without federal subsidies, and President Joe Biden’s inner circle has already signaled support for the plans. A recent Department of Energy press release stated that the administration “is looking closely at carbon capture and sequestration technology, which would take emissions from LNG plants and other facilities, move them by pipeline and then inject them underground.”
With Biden betting his climate legacy on infrastructure legislation, the LNG industry may soon be poised to take advantage of new federal backing for its greenwashing marketing ploy — and at least one company is already vying for an existing Biden-backed subsidy.
Biden’s Infrastructure Bill
The Biden administration has touted upcoming federal infrastructure legislation, expected to advance in Congress in the next few weeks, as a vehicle for addressing climate change. How the final bill ends up, though, will be hammered out behind closed doors. Such scenarios are historically fertile terrain for carbon capture policy, which has flourished in part because of its position as a bipartisan climate approach that the fossil fuel industry supports.
Biden’s proposals for the legislation include a clean energy standard, investment in infrastructure to support electric vehicles, and the elimination of billions of dollars in fossil fuel subsidies — but also support for carbon capture and storage. Climate advocates note that the carbon capture proposals amount to new federal assistance to fossil fuel companies. “The Biden administration has put together a budget and policy priorities for the fiscal year 2022 that include massive subsidies for carbon capture and storage,” said Jim Walsh, senior energy policy analyst at Food & Water Watch.
Biden’s budget would extend a tax subsidy for companies that implement carbon capture, known as 45Q, moving the expiration dates back six years to 2031 and providing $6 billion in extra funding.
“We don’t want these LNG terminals to get any support from the federal government.”
Virtually the only market for captured carbon is oil companies, which pump the carbon gases into old, mostly depleted wells as a way of extracting every last drop of fuel. “So far, the per ton credit for captured CO2 has functioned overwhelmingly as a subsidy for enhanced oil recovery and has failed to spur the development of new technologies,” said Mahyar Sorour, the Sierra Club’s deputy legislative director. “Instead of putting oil and gas subsidies at the center of climate policy, the credit should be modified to exclude enhanced oil recovery and should not be further extended beyond its current expiration in 2025.”
The administration has expressed support for a clean energy standard that includes fossil fuel companies utilizing carbon capture and storage, leading 650 organizations to sign a letter to congressional leaders asking them to leave carbon capture out. Biden’s plan also describes support for “large-scale sequestration efforts” — capturing carbon emissions, so that they don’t end up in the atmosphere, and employing various methods for storage. The administration notes that this vision is in line with a bipartisan effort called the SCALE Act.
The SCALE Act would provide grants and low-interest loans for the pipelines and other infrastructure required to make carbon capture and storage viable. It would also provide money to help states create a market for captured carbon dioxide and to pay for more Department of Energy “Front-End Engineering Design” studies aimed at companies that are curious about carbon capture and interested in helping prove new technologies.
Those carbon capture proposals and others are not specifically aimed at LNG, but they don’t exclude it. Within the climate movement, some believe that carbon capture and storage might someday be meaningful for the climate if it’s attached to industrial facilities producing things like steel, but current carbon capture and sequestration policy is made for the fossil fuel industry too.
To Hinojosa, the issue is clear: Carbon capture should not be an avenue for fossil fuel industries to receive government assistance. She said, “We don’t want these LNG terminals to get any support from the federal government.”

Protesters with the Sunrise Movement protest in front of the White House against what they say is slow action on infrastructure legislation, job creation and addressing climate change, as well as against attempts to work with Senate Republicans in Washington, D.C. on, June 4, 2021.

Photo: Saul Loeb/AFP via Getty Images
The Front Line
The situation in Hinojosa’s community illustrates what’s at stake. If completed, the Rio Grande LNG project would liquify natural gas piped from Texas’s Permian Basin and then load up massive tanker ships bound for clients in Europe and around the world. The area where the project would be built is nothing like nearby industrialized Houston. The new LNG terminal, along with a second planned LNG facility, would be the first major fossil fuel infrastructure in the area, adjacent to two wildlife corridors that support fisheries and an ecotourism industry.
Companies like Rio Grande have long sold their projects with improbable claims that natural gas exports can serve as a strategy to confront the climate crisis, arguing that exported gas can help coal plants abroad shift to a purportedly cleaner fuel. The natural gas industry, and the politicians beholden to them, like the idea because it would mean that they could keep fracking even after most of the U.S. power sector has shifted to renewables. That kind of greenwashing, though, doesn’t make up for market conditions that leave U.S. LNG comparatively dirty and expensive — leading the companies to turn to carbon capture, to clean things up, and subsidies, to pay for it.

The reason projects like Rio Grande are turning to carbon capture is that they’re having trouble finding anyone to buy their product. For one, U.S. LNG is more expensive than gas from places like Qatar. It’s also considered too dirty for some buyers. Last fall the French government stepped in to stop a $7 billion deal between the French company Engie and the Rio Grande project, because of concerns about greenhouse gas emissions.
LNG carbon capture only deals with emissions at the liquefaction and export stage, not when gas is extracted from the earth or when it’s burned abroad, so the process does little to resolve the LNG climate conundrum. Even if the carbon capture and sequestration plans were enough to convince European buyers, those purchase agreements are unlikely to be enough to make carbon capture and storage worthwhile financially, said Ed Hirs, an energy fellow at the University of Houston.
And the question of what to do with the captured carbon remains: There’s not much of a market for it. “It doesn’t produce anything except a cost,” Hirs said, and LNG companies operate on margins too thin to make the marketing value of building a carbon capture plant pay off.
Over the last two decades, the Energy Department poured billions of dollars into carbon capture research. Despite all the money spent, the projects still don’t make financial sense for fossil fuel companies. According to Hirs, even existing subsidies are still unlikely to bring LNG companies’ plans to come to fruition.
It’s unclear that the companies’ announcements about the technology actually mean they will ever build carbon capture projects. “Carbon capture is clearly not viable economically or even technologically. Its main purpose is to serve as a prop in a political game,” said Lukas Ross, a program manager focused on the federal budget at the nonprofit Friends of the Earth. “It’s a rhetorical device Big Oil is using to delay its day of reckoning”
Money On the Table
NextDecade, the firm planning to build the Rio Grande LNG terminal, already has its sights set on the Biden administration’s climate-related spending. In May, the company approached the Cameron County, Texas, Commissioners Court — the local governing body — requesting that a resolution be passed in support of the new carbon capture project. The idea, apparently, was that local support would help NextDecade win money from the Energy Department to test carbon capture technology.
The Energy Department is offering a total of $39 million for up to 12 natural gas or industrial projects that want to develop carbon capture technology — the kind of research and development grants that Congress is considering creating more of. The Biden administration understands such research funding to be in line with one of the president’s first climate executive orders, the federal funding opportunity notice states. The carbon capture money “will enable the U.S. to achieve a carbon pollution-free power sector by 2035 and a net-zero carbon pollution economy by 2050.”
“The community has spoken up and said we don’t want LNG.”
For a company like NextDecade, the Energy Department grant is a relatively small amount of money. But if LNG companies manage to make their carbon capture dreams a reality, it will be a narrow win. According to Ross, “Any federal expenditure, whether it’s through grants or tax cuts, is going to make it easier for these companies to get credit that they probably shouldn’t.” Ross pointed out that an extension of the 45Q carbon capture tax credit subsidy under consideration could also give LNG facilities a narrative for investors even as implementation of the technology is a long way off. “Even if they become disasters, if there are cost overruns, or they never get built,” said Ross, “it’s still conceivable that having a longer extension of 45Q on the books will allow some of these facilities to obtain financing.”
For community members in the Brownsville area, the stakes in the fight against LNG’s new “green” agenda are high. “People here fish where the sites are proposed, and that’s how they feed their families. Our local economy is dependent on fishing, on ecotourism, on the shrimping community, on people traveling here to enjoy our pristine beach,”said Hinojosa. “The community has spoken up and said we don’t want LNG. This is a threat to our public health.”
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