Opinion: Complex energy policy questions go beyond Alaska LNG legislation
The Legislature faces extremely complex policy questions around Alaska liquified natural gas, but it would be a mistake to limit policy debate to that single project. Instead, we should be boosting domestic supply of our most affordable energy resources, recognizing the multifaceted challenges of meeting both electric generation and heating needs for customers ranging from the smallest household to the most energy-intensive mine.
Since gas line legislation has consumed the most media attention, let’s address it first. After hearing for months that Glenfarne either would or would not develop the AKLNG project independent of legislative decisions, late in session the governor sent a bill to the Legislature and said the AKLNG project can only move forward if we cut taxes by 90%. We’ve heard other inconsistent information from Glenfarne about when a final investment decision might occur and when they’ll finish negotiating a project labor agreement to ensure skilled Alaskans go to work on this project.
But we can work on legislation even without complete information from Glenfarne. I’m proud of HB 381, the pro-AKLNG bill that we passed out of the House Resources Committee after weeks of in-depth hearings. Glenfarne and the governor attempted to reverse many provisions of that bill as a hostage-taking tactic around an unrelated pension bill, and I applaud my House colleagues for refusing to cave to that pressure.
As I write, our Finance Committee is taking HB 381 and doing the due diligence necessary to deliver a bill that both provides the stability and predictability the project needs to attract investment and defends our interests as Alaskans. Our interests are complex: We are resource owners and must get our fair share of revenue from any exports by maximizing the value of the gas that is exported. But we’re also gas consumers and should demand the lowest possible price for in-state energy. We also recognize that not every Alaskan in a state as big as ours will have access to the gas, and need to ensure the benefits of cheap energy in the Railbelt are shared across the state. To some extent, we do this through the Power Cost Equalization program already, but more can and should be done. We want to make energy more affordable for mines and other industrial consumers, but not at the expense of home and small-business owners. The Legislature’s work on AKLNG has been substantive and bipartisan, and that’s how it should be.
We also have to recognize that market forces will ultimately determine whether a gas line gets built at all and whether such a gas line has meaningful export volumes. There’s a very significant likelihood that we simply don’t have access to North Slope gas, or that the global economics delay or limit phase two of the gas line and leave the project primarily for in-state demand for an extended period of time. Those limited volumes flowing through a pipe sized for export would mean gas for Alaskans is extremely expensive, potentially more than twice as expensive as current gas prices from Cook Inlet. It’s also a reality that AKLNG may simply be uneconomic under any tax regime.
Therefore, we must continue aggressive development of our cheaper in-state energy sources. These include hydro generation from Dixon Diversion and corresponding transmission improvements. They include small-scale hydro, including great work by Chugach Electric Association and Seward’s electric utility, which are working on a half-dozen fish-friendly projects in our region. Solar and wind are an important part of the solution, including Chugach’s Beluga solar array and Golden Valley’s Delta Wind project. And we must drive down the price of Cook Inlet gas production. We need more renewables for affordable electricity and more Cook Inlet gas for affordable heating and electricity. I appreciate my legislative colleagues’ work to advance HB 271, my Cook Inlet gas development bill, through the Resources and Finance committees. Next year, it is imperative we get this or similar legislation to the governor’s desk. With ENSTAR contracts expiring soon, we have zero time to waste expanding Cook Inlet gas production.
Finally, as much discussion as there is about Railbelt energy needs, there’s an outright energy emergency in communities relying on diesel. Trump’s war has doubled prices, or more, for heating and electric. We need to massively accelerate renewables deployment to reduce exposure to prices of imported diesel. The state’s longstanding Renewable Energy Fund program has an outstanding track record, but in a time of stratospheric diesel prices, we have to accelerate projects with a greatly scaled-up Renewable Energy Fund.
The Legislature should do its due diligence to support AKLNG, but we cannot repeat Alaska’s past mistakes of solely relying on megaprojects whose fundamental economics are uncertain. Instead, we need a true all-of-the-above strategy: More Cook Inlet gas, more renewables statewide and support for any gas line legislation that both supports the project and defends our interests as resource owners.
Zack Fields, D-Anchorage, co-chairs the House Labor and Commerce Committee and serves on the Resources Committee.
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