It’s not quite such an egregious pig in a poke that Democrat Gov. John Bel Edwards wants to foist upon taxpayers this time, but it still likely will end up wasting tax dollars.
Last week, Edwards announced the firm Venture Global LNG would pump as much as $10 billion into a liquified natural gas facility in Cameron Parish. This actually was old news, as the company had signaled its intent months ago, so the recent reiteration just confirmed some numbers and that the state would kick in to see the thing built. Tossing about those numbers puts the state on the hook for nearly $1.5 million annually for as many as ten years through its Quality Jobs Incentive Program, plus perhaps over $100 million in construction rebates.
Expansion of natural gas export provision makes sense. Global demand for it continues to rise, especially from Asian countries where Louisiana has a competitive advantage. In fact, Venture Global’s largest customer, China, already has committed to a short-term increase in importation from Calcasieu Pass where the new facility will sit alongside others of the firm’s, as well as more extensively from another new company project in Plaquemines Parish, so the market seems there to sustain such lofty plans.
Except that ideology took precedence over economics in the planning. The firm also said it would attach carbon capture and sequestration technology to LNG production at the new Cameron site as well as at Plaquemines. This will increase dramatically the cost when these kick off in a few years.
CCS technology presently and for the foreseeable future is ruinously expensive. Astronomically high for direct air capture – as much as $340 per ton – capture and storage of natural gas processing is much lower, around $20/ton, and may go marginally lower for Cameron because of the nearby availability of storage caverns from already-extracted fuels. Still, the company estimates trying to remove a million tons a year, meaning an extra $20 million annually added to the price of its gas for export.
Naturally, climate alarmism drives this approach. Despite the high cost of CCS in processing – and this doesn’t include CCS to mitigate the actual burning of it, which is another $75/ton or so – alarmists allege, without credible scientific backing, that these costs must be paid to avoid catastrophic anthropogenic global warming. Because of the tremendous competitive disadvantage to using CCS, no producer willingly would employ it.
As a result, the only movement towards it has come through government regulatory regimes, principally in the European Union, that slap on a carbon tax. This has triggered a substantial increase in projects worldwide that intend to utilize CCS technology in LNG production, nearly doubling capacity over the next few years and with more proposed facilities that could inflate capacity by two-thirds over present levels.
This increased competition may make Venture Global’s prospects less rosy – and especially because the world’s largest gas users and carbon producers show no signs of plunging off the cliff with carbon taxation. The imploding chances of Democrats to hold Congress past 2022 and the White House past 2024 may sweep that idea off the table until 2032. China’s strategy is to give lip service to greenhouse gas control while not moderating its high production of it nor paying more for it, and India won’t do anything like that until economically developed states compensate it for doing so.
Thus, unless the company abandons its CCS strategy, it will price itself out the market, particularly with its prominent customer China (it is at a competitive disadvantage to European producers), and thereby bring far fewer economic benefits to the state. This will follow the pattern noted by the Legislative Auditor that Quality Jobs typically oversold benefits by nearly double, which will reduce lost taxpayer dollars, but the capital expenditures rebate loss won’t go down.
Just as with his unveiling earlier this fall of a new “blue” hydrogen plant, utilizing questionable economics bolstered only by unrealistic CAGW fears, that would cost taxpayers tens of millions of dollars, with this deal Edwards has forced his faith in climate alarmism into impoverishing taxpayers to no good end. The state’s citizenry has to hope reality intervenes to cut off giveaways to these projects before their costs to the people become greater than their benefits.
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