II 118th CONGRESS 1st Session S. 1720 IN THE SENATE OF THE UNITED STATES May 18, 2023 Mr. Sullivan (for himself and Mr. Hagerty ) introduced the following bill; which was read twice and referred to the Committee on Foreign Relations A BILL To provide support for energy infrastructure projects in the Indo-Pacific region, and for other purposes.

1. Short title This Act may be cited as the Indo-Pacific Strategic Energy Initiative Act . 2. Findings Congress makes the following findings: (1) The United States currently has an approximately 100-year supply of natural gas in proven reserves. (2) The Department of Energy projects global consumption of natural gas to increase through at least 2050, driven primarily by demand growth in Asia. (3) United States natural gas production increased by 91 percent from 2005 to 2021. At the same time, United States energy-related carbon dioxide emissions decreased by 18 percent. (4) The growth in domestic natural gas production has resulted in a change from the United States importing a net 566,000,000,000 cubic feet of liquified natural gas in 2005, to exporting a net 3,539,000,000 cubic feet in 2021. During that period, crude oil production in the United States more than doubled. (5) As a result of the revolution in oil and gas production technologies, the United States petroleum trade went from its peak net import volume of 12,549 barrels per day in 2005, to a net export of 62,000 barrels per day in 2021. At Brent crude prices, in nominal dollars, this reflects a trade deficit of about $250,000,000,000 in 2005, changing to a surplus of about $1,600,000,000 in 2021. (6) Demand for natural gas is rising in the Indo-Pacific region, particularly as countries look to make emissions reductions and transition from higher emissions fuel sources. (7) According to the International Energy Agency, The number of countries and territories with [liquefied natural gas] import terminals has grown from nine in 2000, to 42 in 2020. . Further, the International Energy Agency has found that transition[s] in Asian gas markets [are] even more important in the wider context of global clean energy transitions, where natural gas will be required to make a more flexible contribution . (8) Australia and the United States are both important global energy exporters and thus have a shared interest in supplying the growing energy demand in the Indo-Pacific region. (9) Japanese companies have long invested in United States liquefied natural gas projects and the Government of Japan has shifted from relying on liquefied natural gas from the Middle East to liquefied natural gas from the United States. (10) The People’s Republic of China currently is one of the largest financiers of overseas energy- and greenhouse gas-intensive projects and the expanding number of infrastructure projects in the Indo-Pacific region, carried out under the People’s Republic of China’s Belt and Road Initiative, is leading to higher emissions, coercive dependence, and environmental degradation in the region. (11) European Union demand for liquefied natural gas is expected to rise from about 72,000,000 tons per year in 2021, to more than 110,000,000 tons per year until at least 2030. (12) United States-produced oil and natural gas has one of the lowest lifecycle emissions profiles in the world. A 2019 analysis by the Department of Energy found that natural gas pipelined from the Russian Federation to Europe’s electricity sector has 41 percent higher lifecycle greenhouse gas emissions than United States liquefied natural gas shipped to Europe. The World Bank estimates that the flaring intensity of United States oil and gas production in 2021 was 69 percent lower than in the Russian Federation. (13) Between 2009 and 2019, use of United States natural gas as a feedstock for hydrogen production increased from 143,004,000 cubic feet to 199,050,000 cubic feet, or a 39.2 percent increase. According to the Department of Energy, 95 percent of the hydrogen produced in the United States is made by natural gas reforming in large central plants. That is an important technology pathway for near-term hydrogen production and reducing global emissions. 3. Sense of Congress It is the sense of Congress that— (1) the United States reaffirms its commitment to quadrilateral cooperation with Japan, India, and Australia (collectively, with the United States, known as the Quad ), and that the United States should continue to pursue strengthening cooperation in the energy sector in light of the global threats and challenges facing all 4 countries, including through upstream investments in energy infrastructure and other investments across the natural gas value chain to enhance energy security; (2) the Association of Southeast Asian Nations (commonly referred to as ASEAN ) and its 10 members (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam) have worked with the United States toward stability, prosperity, and peace in Southeast Asia, and ASEAN will continue to remain a strong, reliable, and active economic and strategic partner in the Indo-Pacific region; (3) the United States and the Republic of Korea enjoy a comprehensive alliance partnership, founded on shared strategic interests and cemented by a commitment to democratic values, which includes recognizing the important role of energy cooperation through the United States-Republic of Korea Energy Security Dialogue; (4) the United States and Japan also enjoy a comprehensive alliance partnership, which is founded on shared strategic interests and cemented by a commitment to democratic values, including recognizing the important role of energy cooperation and maintaining an enabling regulatory environment to facilitate continued and increasing liquefied natural gas supplies through the United States-Japan Energy Security Dialogue; (5) the United States has economic, national security, and domestic interests in assisting allies and partners in Indo-Pacific countries to reduce greenhouse gas emissions and achieve energy security through diversification of their energy sources and supply routes; (6) the Group of Seven (G7), which includes both the United States and Japan, recognized the important role of energy cooperation and that investment in the gas sector can be appropriate to help address potential market shortfalls through the G7 Climate, Energy and Environment Ministers’ Communiqué; and (7) the United States should not create unnecessary domestic obstacles to exporting liquefied natural gas and impose restrictions on the international financing of liquefied natural gas infrastructure abroad. 4. Statement of policy It is the policy of the United States— (1) to advance United States foreign policy and development goals by assisting allies and partners of the United States in the Indo-Pacific region to decrease their dependence on energy resources from countries that use energy dependence to coerce, intimidate, and influence other countries; (2) to develop strategies to counter competition from the Russian Federation and the People's Republic of China to protect the energy and national security of the United States and the energy and national security of allies and partners of the United States in the Indo-Pacific region; (3) to support free and open trade in clean energy products and promote the continued development of lower-emissions energy fuels and technologies in the Indo-Pacific region; (4) to improve free, fair, and reciprocal energy trading relationships with allies and partners of the United States in the Indo-Pacific region; (5) to promote the energy security of allies and partners of the United States in the Indo-Pacific region by encouraging the development of energy infrastructure and accessible, transparent, and competitive energy markets that provide diversified sources, types, and routes of energy; (6) to encourage public and private sector investment in energy infrastructure projects in the Indo-Pacific region; (7) to engage and lead on international emissions reductions through the export of United States-produced fuels and emission-reduction technologies and provide access to modern and reliable energy services that promote economic development; (8) to help facilitate the export of United States energy resources, technology, and expertise to global markets in a way that benefits the energy security of allies and partners of the United States in the Indo-Pacific region; and (9) to supply countries that rely on higher-emitting fuel sources with abundant alternatives that have lower lifecycle emissions profiles. 5. Energy infrastructure project support (a) In general The Secretary, in consultation with the Secretary of Energy, the heads of other relevant United States agencies, and energy-importing allies and partners of the United States, shall, as appropriate, prioritize and expedite the efforts of the Department of State, the Department of Energy, and such other agencies in supporting the governments of like-minded Indo-Pacific countries to increase their energy security and reduce energy emissions, including through— (1) providing diplomatic and political support to those governments, as necessary— (A) to facilitate international negotiations concerning cross-border infrastructure; (B) to enhance the regulatory environment with respect to energy projects in the Indo-Pacific region; and (C) to develop accessible, transparent, and competitive energy markets supplied by diverse sources, types, and routes of energy; and (2) providing support— (A) to improve energy markets in the Indo-Pacific region, including early-stage project support and late-stage project support for the construction or improvement of energy projects and related infrastructure; (B) to diversify the energy sources and supply routes of Indo-Pacific countries to strengthen energy security; (C) to enhance energy market integration across the region; and (D) through— (i) investments in infrastructure to support the importation of liquefied natural gas and other clean energy products by Indo-Pacific countries; (ii) energy-related international technical assistance; (iii) energy technology collaboration; (iv) commercial engagement; and (v) any other mode of energy infrastructure support the Secretary considers appropriate. (b) Project selection (1) Identification The Secretary, the Secretary of Commerce, and the Secretary of Energy shall identify energy infrastructure projects that would be appropriate for United States assistance under this section. (2) Eligibility A project is eligible for United States assistance under this section if the project— (A) has been identified by the Secretary, the Secretary of Commerce, and the Secretary of Energy as promoting energy security in the Indo-Pacific region or the country in which the project is located; (B) promotes the use of liquefied natural gas and other clean energy products and related energy infrastructure; (C) has the potential to use goods and services produced in the United States or an Indo-Pacific country during project implementation; and (D) is located in an Indo-Pacific country. (3) Preference In selecting projects for United States assistance under this section, the Secretary, the Secretary of Commerce, and the Secretary of Energy shall give preference to projects that are expected to enhance energy market integration; (4) Equal consideration In carrying out the requirements of this subsection, the Secretary, the Secretary of Commerce, and the Secretary of Energy shall give equal consideration to each type of eligible project, without regard to the type of clean energy product or related energy infrastructure involved. (c) Priority report required (1) In general Not later than 180 days after the date of the enactment of this Act, and annually thereafter for 10 years, the Secretary shall submit to the appropriate congressional committees a report describing how the Secretary will prioritize the selection of projects that promote the export of liquefied natural gas and other clean energy products and development of related energy infrastructure under subsection (b), taking into consideration— (A) the ability of the project to provide resilient and reliable energy to the Indo-Pacific country in which the project would be located; (B) geostrategic imperatives and the national security interests of— (i) the United States; and (ii) the Indo-Pacific country in which the project would be located; (C) the development goals of the Indo-Pacific country in which the project would be located; and (D) potential reductions in global emissions, including the abatement of methane emissions. (2) Consultations In developing the report required by paragraph (1), the Secretary shall consult with— (A) the Secretary of Commerce; (B) the Secretary of Energy; (C) the Assistant Secretary of State for Energy Resources; (D) the Director of the Trade and Development Agency; (E) with respect to projects described in section 1455 of the Better Utilization of Investments Leading to Development Act of 2018 (as added by section 6(a)), the Chief Executive Officer of the United States International Development Finance Corporation; and (F) with respect to projects described in section 16 of the Export-Import Bank Act of 1945 (as added by section 6(b)), the President of the Export-Import Bank of the United States. (d) Diplomatic and political support The Secretary shall provide diplomatic and political support to the governments of like-minded Indo-Pacific countries, as necessary, including by using the diplomatic and political influence and expertise of the Department of State to build the capacity of those countries to resolve any impediments to the development of projects selected under subsection (b). (e) Project support The Director of the Trade and Development Agency shall provide early-stage project support with respect to projects selected under subsection (b). (f) Accountability Not later than 30 days before providing any diplomatic or political support under this section with respect to a project in an Indo-Pacific country, the Secretary shall certify, in writing, to the appropriate congressional committees that, except in the case of an extraordinary event, there is no foreseeable risk that the project identified or selected for support by the United States will be taken over, either through the use of force, hostile acquisition, or other commercial engagement, by a country that is an adversary of, or is not an ally of, the United States. 6. Strategic energy infrastructure funding (a) Support for energy infrastructure by the united states international development finance corporation Title V of the Better Utilization of Investments Leading to Development Act of 2018 ( 22 U.S.C. 9671 et seq. ) is amended by adding at the end the following: 1455. Strategic energy infrastructure The Corporation— (1) may, notwithstanding any other provision of this division, provide support under title II for projects related to importation of liquefied natural gas and other clean energy products (as defined in section 9 of the Indo-Pacific Strategic Energy Initiative Act ), including for such projects of entities owned or controlled by the government of a foreign country, if the Secretary of State, acting through the Assistant Secretary of State for East Asian and Pacific Affairs, certifies to the appropriate congressional committees that such support— (A) furthers the national economic or foreign policy interests of the United States; and (B) is necessary to preempt or counter efforts by a strategic competitor of the United States to secure significant political or economic leverage or acquire national security-sensitive technologies or infrastructure in an Indo-Pacific country that is an ally or partner of the United States; (2) shall provide equal consideration to each such project, without regard to the type of the energy involved; and (3) should, in providing support authorized by paragraph (1), coordinate with the Japan Bank for International Cooperation and the Government of Australia pursuant to the trilateral memorandum of understanding on development finance signed on November 12, 2018. . (b) Promotion of energy exports by export-Import bank of the united states The Export-Import Bank Act of 1945 ( 12 U.S.C. 635 et seq. ) is amended by adding at the end the following: 16. Strategic energy infrastructure (a) In general The Bank shall establish a balanced strategic energy portfolio focused on providing financing (including loans, guarantees, and insurance) for projects described in subsection (b) that may facilitate— (1) increases in exports of United States energy commodities; or (2) the export of United States equipment, materials, and technology. (b) Projects described A project described in this subsection is a project related to— (1) construction of liquefied natural gas import terminals; (2) commercialization of carbon capture, utilization, and storage; (3) development of blue hydrogen infrastructure; or (4) other low emission energy infrastructure. (c) Equal consideration In carrying out this section, the Bank shall provide equal consideration to each project described in subsection (b), without regard to the type of the energy involved. . (c) Private and foreign public sector investment (1) Private sector investment The Secretary of Commerce and the Secretary shall promote the funding of projects selected under section 5 among United States energy producers and exporters. (2) Foreign public sector investment The heads of the agencies described in section 5(a) may, for the purposes of this Act, partner and coordinate with public and multilateral financial institutions and export credit agencies of Indo-Pacific countries. 7. Prohibitions on limitation on funding based on type of energy product In carrying out the provisions of and amendments made by this Act, no limitation may be imposed on the amount of funding or support provided for a project based on the type of clean energy product that the project would support. 8. Reporting Not later than one year after the date of the enactment of this Act, and annually thereafter, the President shall submit to the appropriate congressional committees a report on progress made in providing assistance for projects under this Act or the amendments made by this Act that includes— (1) a description of the energy infrastructure projects the United States has identified for such assistance; and (2) for each such project— (A) a description of the role of the United States in the project, including in early-stage project support and late-stage project support; (B) the amount and form of any debt financing and insurance provided by the United States Government for the project as well as any coordination with foreign public financial institutions or export credit agencies; (C) the amount and form of any debt financing and insurance provided by foreign public financial institutions or export credit agencies; (D) the amount and form of any early-stage project support; and (E) an update on the progress made on the project as of the date of the report. 9. Definitions In this Act: (1) Appropriate congressional committees The term appropriate congressional committees means— (A) the Committee on Foreign Relations, the Committee on Energy and Natural Resources, and the Committee on Environment and Public Works of the Senate; (B) the Committee on Foreign Affairs, the Committee on Energy and Commerce, and the Committee on Natural Resources of the House of Representatives; and (C) any other committee of the Senate or House of Representatives that the President considers appropriate. (2) Clean energy product The term clean energy product means— (A) a product that— (i) is produced or refined in the United States; and (ii) can be used by an Indo-Pacific country— (I) as a fuel or feedstock; or (II) for the generation of low emission electricity; and (B) includes— (i) liquefied natural gas; or (ii) any other clean energy product with a lifecycle emissions profile lower than that of a comparable product produced or refined in a country that is an adversary of, or is not an ally of, the United States. (3) Indo-Pacific country The term Indo-Pacific country — (A) includes— (i) Australia; (ii) India; (iii) Japan; (iv) the Republic of Korea; and (v) any other country, including a Pacific island country, that is— (I) a member country of Association of Southeast Asian Nations (commonly referred to as ASEAN ); or (II) located in or adjacent to the tropical waters of the Indian Ocean, the western and central Pacific Ocean, or the seas connecting the Indian Ocean and the Pacific Ocean, including Taiwan; and (B) does not include any that is prohibited from receiving support from the United States International Development Finance Corporation under section 1454 of the Better Utilization of Investments Leading to Development Act of 2018 ( 22 U.S.C. 9673 ). (4) Related energy infrastructure The term related energy infrastructure means— (A) liquefied natural gas import terminals; (B) carbon capture, utilization, and storage infrastructure; (C) blue hydrogen infrastructure; or (D) other low emission energy infrastructure. (5) Secretary The term Secretary means the Secretary of State, acting through the Assistant Secretary of State for East Asian and Pacific Affairs.