U.S. LNG projects receive more than $21bn in tax exemptions: report
Gulf Coast communities are dealing with increasing storms from climate change and higher levels of pollution from U.S. LNG terminals. Those facilities are also heavily subsidised by local and state governments.
U.S. LNG projects receive billions of dollars’ worth of subsidies from local and state governments, while the communities that host them pick up the tab for the pollution they cause, according to a new report.
In Texas and Louisiana, it is common for LNG plants to obtain exemptions on property taxes. For instance, one programme in Louisiana, the Industrial Tax Exemption Program (ITEP), exempts industrial facilities from property taxes for ten years. A similar programme exists in Texas.
Property tax exemptions may seem minor, but they can add up to enormous sums. Nine proposed and existing LNG facilities in Texas and Louisiana are set to receive a combined $21.6 billion in property tax exemptions over ten years, according to a recent analysis from the Sierra Club.
The largest recipient is Cheniere Energy’s Sabine Pass LNG site, which will receive $4.9 billion under Louisiana’s ITEP programme, according to the analysis. Cameron LNG will receive $3.7 billion, and Calcasieu Pass will enjoy $2.9 billion in property tax exemptions. Venture Global’s CP2, an expansion of Calcasieu Pass, will access an additional $2.7 billion in exemptions.
All of those corporate tax incentives are money that could otherwise be put to good use along the Gulf Coast, which is already suffering from the worsening effects of climate change. The damage is particularly evident in southwest Louisiana, where hurricanes are ravaging the coastline. Repeated disasters have dealt successive blows to Cameron Parish, whose population is in the midst of a two-decade-long decline.
Even as people find it increasingly difficult to survive and rebuild, LNG sites on the Gulf Coast are fortifying themselves against sea level rise, with plans to build 26-foot walls to protect their facilities.
Gulf Coast communities also have to deal with the negative impacts of new U.S. LNG terminals themselves, which are largely built in areas inundated with existing toxic industries, such as pipelines, oil refineries, and petrochemical plants.
For instance, in 2022, Freeport LNG suffered a massive explosion, a grim reminder of the dangers to nearby communities from explosive gas. And yet, Freeport LNG is on track to enjoy $447 million in subsidies in the form of property tax exemptions.
“For communities situated near LNG export projects, there are few facets of life that are not negatively impacted by these facilities. Yet, local and state officials forgo vast sums of public money in tax giveaways, sacrificing everything from public health to local fishing and tourism industries, in exchange for inadequate promises of jobs or investment,” said Alison Kirsch, Sierra Club senior analyst and author of the report.
“This lopsided deal with the industry means that communities are left cleaning up the mess, literally and figuratively, without proper resources,” she added.
As Gas Outlook reported in early 2024 from Cameron, Louisiana, the proliferation of U.S. LNG plants has created an existential threat to the commercial fishing industry. Calcasieu Pass LNG has bought up and shut down boat launches, making it difficult for the dwindling number of shrimpers to access the water.
Fishermen have also noticed drops in fish and shrimp populations after the startup of the LNG site. One fisherman described the prospect of another LNG project — Venture Global’s CP2 — as the “nail in the coffin” for commercial fishing in southwest Louisiana.
The logic of property tax exemptions is that they will attract big investments, creating economic development and new jobs. But a 2022 report from the Institute of Energy Economics and Financial Analysis found that between 2000 and 2016, 97 percent of the projects seeking ITEP exemptions “had already been completed when their requests were filed,” indicating that Louisiana is subsidising industrial projects that likely would have been built even without the support. Only 4 percent of those exemptions went to new projects. The ITEP programme was “excessively generous,” the report concluded.
“The immense scale of tax breaks granted to billion-dollar LNG projects—millions of dollars per job—is mind-blowing. These deals essentially pay industry to inflict more suffering on already climate-ravaged communities by polluting the air and water while depriving Gulf Coast communities of vital revenue for schools, infrastructure, healthcare, emergency services, coastal restoration and protection,” said James Hiatt, Founder of For A Better Bayou, a Louisiana-based NGO.
“These tax exemptions are a burden to our communities, and bring absolutely no economic prosperity.”