Digital Press Briefing: Chris Wright, U.S. Secretary of Energy

MODERATOR: Good afternoon from the State Department's European Regional Media Center, or the Brussels Hub. I would like to welcome everyone joining us for today's virtual press briefing. We are very honored to be joined by the U.S. Secretary of Energy Chris Wright. Today, Secretary Wright will discuss the recently released joint exporter letter and explain our shared perspectives and concerns on the market risks due to the EU methane regulation.

The press secretary and chief spokesperson at the U.S. Department of Energy, Ben Dietderich, will also be moderating the questions on this call. Together, we will try to get to as many questions as possible in the time we have today. So again, please show your support and ask the questions you'd most like the Secretary to cover. And you can notify us of any technical difficulties at any time using this e-mail: [email protected].

Finally, a reminder that today's briefing is on the record. And with that, let's get started. Secretary Wright, thank you so much for joining us today, and I'll turn it over to you for your opening remarks.

SECRETARY WRIGHT: Bridget, thank you so much for hosting this. And again, I apologize to everyone on the call for the technical difficulties that led to the later start. Thank you for joining us today. We believe this is a critical issue and want to answer any questions you have about it. But first of all, look, the United States is a child of Europe. The relations between the U.S. and Europe - economically, culturally, strategically - are as long as we've been a nation. This is an absolutely critical relationship for the United States, and in my particular domain on energy, we have very tight, long historical ties on energy. More recently, the United States has stepped up to deliver natural gas supplies to the European nations after Russia invaded Ukraine to help displace all of Russian gas out of European business and industries. We are a significant supplier of oil and products to Europe as well. Of course, we buy energy products, refined gasoline from Europe as well. It's a two-way trade mechanism. We think it's essential for the United States; it's certainly essential for the nations of Europe, and we want nothing more but smooth and growing trade ties.

But recent regulations - CSDDD, CBAM, and particularly the EU methane rule - are going to make energy trade between the United States and Europe very risky. And in fact, if things stay as they are today, they're almost certain to reduce the energy flows from the United States to Europe. I think this leads to very significant problems in the EU, which already suffers from much higher than global average energy prices. This would just further exacerbate increases in energy price, dramatically raise the risk of blackout as you get to peak demand seasons next year after these rules go into effect. And we don't want to see that. I don't think any of the nations of Europe want to see that. Obviously, the businesses in the United States, the businesses in Qatar and Algeria and Nigeria, my co-signers of this letter, are doing everything we can to reduce methane emissions from our oil production, from our natural gas production. Of course, we sell that product. Why would we want to waste that product? You can read about technologies and individual companies in the United States - dramatic reductions in methane intensity. This is, together with economic efficiency and finding new resources, just a major focus of the industry.

So I think the big picture, everyone is aligned, but these particular regulations that have very specific compliant mechanisms that are designed in Brussels just simply don't reflect the reality on the ground of production of natural gas and oil across the United States, across Nigeria, across Algeria, across Qatar. And ultimately, these would make it so the vast majority of all the oil exported from the U.S. and Nigeria, Algeria, Qatar, again, into the EU would be non-compliant with these EU regulations. And the fines that are in this regulation are so severe, it just wouldn't make any sense for businesses to send that oil to Europe. Roughly half of the LNG going into Europe would be subject to the same problems. That is dramatic. The two largest sources of energy consumed in the European nations by far and away is natural gas and oil.

This is serious. This is - we want to work it out. We are recommending - there's a stop-the-clock mechanism. This is not ready to roll on January 1. We're recommending that there's a pause so that this can be resolved before this deadline of January 1, 2027 comes. We need to avoid a very easily avoidable train wreck. And again, to be totally candid, I think this is worse for the European nations, certainly, than it is for the United States. Our energy will flow elsewhere. But the European nations that are our partners and allies, we want to see free flow of trade. And certainly, we want to honor the trade deal that was signed between our two great regions not long ago that puts targets in there for magnitudes of energy trade flow.

But with that, I'll open it up for questions from anyone on the line. Again, thank you for joining us and thank you for covering this critical issue. There's a vote coming on Friday, so it's very timely. This problem can be solved, it's very solvable, but it is - if it is just ignored and kicked the can down the road, it will lead to very unfortunate things next year.

MODERATOR: Thanks so much, Secretary Wright. We're going to go ahead and start with questions. We're a little split for time today. So we'll start out with Bloomberg. If you have a question, go ahead.

Okay, great. We'll go to NHK. If you have a question, feel free to ask it.

QUESTION: No question at this time.

SECRETARY WRIGHT: Thank you for joining.

MODERATOR: Yeah, thank you so much for joining. We'll go and see if - does Al Jazeera, Lamia or Anvar, have a question?

Okay. And Eric from Energy Intel?

QUESTION: Not right now. Thank you.

MODERATOR: Okay. Does anybody else have a question that they would like to ask before we conclude today's call?

SECRETARY WRIGHT: We'll wait another few seconds here, but hopefully this is an indication that the letter that was written that I'm sure you've all seen - not long, but just simply laying out the issue and some proposed roads of action to prevent this problem from arising.

QUESTION: I have a question, if possible.

SECRETARY WRIGHT: Yes.

MODERATOR: Yes, sure, John.

QUESTION: Hi - yeah. John Ainger from Bloomberg. Secretary Wright, we saw each other very briefly at the event yesterday.

SECRETARY WRIGHT: Yes.

QUESTION: Just kind of coming back to what the next steps might be, obviously, EU Energy Commissioner Dan Jørgensen has rebuffed suggestions that they could open the - reopen the regulation and have preferred to just issue some guidance on fines and things like that. Obviously, that isn't going far enough from the U.S. perspective. I'm just wondering, kind of from a government-to-government perspective, what the next steps might be going forward to the end of the year if things don't change. Thanks.

SECRETARY WRIGHT: Look, our teams have been talking, Dan's team and the team at the Department of Energy and other agencies in the U.S., and of course a lot of our businesses have been in dialogue. So I think maybe there's just a difference in perception. I know Dan is trying to be constructive here, but if you say, hey, we're recommending people don't enforce fines and be softer on that, and I'm an energy supplier and I'm going to sign a 10-year contract, and right now they're recommending they don't enforce fines - like, that's a little soft. Wouldn't I rather sell that energy to Asia or Latin America or somewhere else in the world where I don't have a risk that if they decide to enforce a rule that's on the books, it has massive economic consequences for my business.

Look, I spent my whole career before government in business, and risk matters. You've got to understand what the rules of the game are and what compliance with them means to your business. These rules, if they're enforced, are just devastating to businesses that engage in energy trade. And that's - and saying not enforcement, that's better than doing it right away. But I think most parties would say that's just too great of a risk, I'm going to commit to export my product somewhere else. And that's, again, the very unfortunate circumstances we just want to avoid - we just want to avoid.

QUESTION: And just to follow up, if possible. You talk about the need to honor the trade deal. Is it your perception that if these rules stick as they are, that would not be honoring the trade deal struck at Turnberry?

SECRETARY WRIGHT: Well, look, certainly in our eyes, this is a very large non-tariff trade barrier, and quantitatively it's just going to lead to less trade, and it's going to lead to higher energy prices in Europe, increased affordability struggles across the European nations, and certainly a major risk to business expansion in Europe if you're not sure you have enough energy contracted to flow into the continent. So I think a lot of negative implications come from that. And of course, as those flow, they will also make it virtually impossible to hit the targets in the trade deal.

QUESTION: Thank you.

MODERATOR: Thank you all so much. With that, we are going to conclude today's call. We appreciate you taking the time to join us at the last minute.

MODERATOR: Thank you again, Secretary Wright. Thank you, Ben. And thank you to all the journalists who joined us. Shortly we'll send an audio recording of the briefing to all the participating journalists and provide a transcript as soon as it is available. We'd also love to hear your feedback, and you can contact us anytime at [email protected]. Thank you again for your participation and we hope you can join us for another Brussels Hub press briefing soon. This ends today's press briefing.