U.S. energy exports a lever in trade talks with China: Perry

By Timothy Gardner

WASHINGTON (Reuters) – Rapidly expanding exports of U.S. fossil fuels, including liquefied (LNG), serve as leverage in trade negotiations with China, Energy Secretary Rick Perry said on Monday.

“It’s part of the mix, it may not be the driver, but it’s always hanging out there as part of the matrix,” Perry said in an interview on CNBC. “America now has the ability to use that in a very positive way when it comes to trade negotiations.”

When asked if U.S. energy was a lever in the talks, Perry said, “Yeah, sure it is.” U.S. technology on renewable energy and small modular nuclear reactors is also part of what Washington can use as leverage, he said.

The United States is the world’s fastest-growing exporter of LNG and China is the fastest-growing importer of the fuel. Natural gas emits far less unhealthy pollution and carbon dioxide, the main greenhouse gas, when burned.

While the U.S. LNG business is booming, shipments are controlled by private companies. Perry did not explain how leverage could be used, but the Trump administration could conceivably prolong tariffs or take other measures if China, or other major buyers, place tariffs on U.S. oil or LNG exports or energy technology.

The governments of the world’s two largest economies have been locked in a tariff battle for months as Washington presses Beijing to address long-standing concerns over Chinese practices and policies around technology transfers, market access and intellectual property rights.

The countries are working to achieve a trade deal that matches the interests of both sides and the hopes of the world, including eliminating tit-for-tat tariffs, a senior Chinese official said over the weekend.

The trade war contributed to a 20 percent fall in U.S. shipments of LNG to China last year from the previous year. The shipments also slipped on weak demand for heating amid mild winter weather.

But Perry was confident about the power of U.S. energy abundance and China’s hunger for U.S. LNG, even if all of the more than a dozen U.S. LNG projects being developed were completed.

“As we look at India, as we look at China, these massive economies, we probably need more projects than we’ve got on the books today to be able to meet that demand,” Perry said.

Last month the Federal Energy Regulatory Commission, or FERC, approved Venture Global LNG Inc’s Calcasieu Pass LNG export plant in Louisiana. The company said it had binding 20-year sale and purchase agreements with Royal Dutch Shell (LON:) Plc and BP (LON:).

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