U.S. LNG has been a hot button topic in recent weeks as the Biden administration announced it would be reassessing the Department of Energy’s LNG permit approval process last week, followed on Friday with an announcement that it is temporarily pausing pending decisions on LNG exports to non-FTA countries.
While the administration is publicly describing the move as a “pause” while DOE studies its LNG permitting process, the White House issued an official press release quoting “praise” from environmental activists including Climate Defiance, Fossil Free Media’s Jamie Henn, and Bill McKibben who heralded the decision as a step towards the end of natural gas.
Complicating things for the White House and the activists cheering the administration on, the reality is that allied countries in Europe are counting on the Biden administration to fulfill its commitment to supply U.S. LNG to countries impacted by acute energy supply disruption.
While the Biden administration’s announcement includes assurances that “through existing LNG production and export infrastructure, the U.S. has – and will continue – to deliver for our allies,” the administration’s new position on LNG is a major, worrisome shift from just under two years ago when President Biden committed significant amounts of U.S. LNG to allies following Russia’s invasion of Ukraine.
As American Petroleum Institute President and CEO Mike Sommers said in response to Friday’s announcement, “It’s bad for consumers, it’s bad for American national security, and it’s certainly bad for American allies.”
The President & CEO of @APIenergy Mike Sommers responds to the Biden administration’s plan to pause LNG export approvals. “It’s bad for consumers, it’s bad for American national security and it’s certainly bad for American allies,” he says. pic.twitter.com/qg1fZHRDAB
— Squawk Box (@SquawkCNBC) January 29, 2024
Similar sentiments were expressed by stakeholders in Europe earlier this month, Politico reports:
“’This LNG has been a relief for Europe and contributed to the stabilisation of gas and electricity prices in Europe for consumers, after a long period of record high prices caused by the Russian supply drop,’ Didier Holleaux, president of trade association EuroGas, said in a statement. A lack of additional U.S. gas-export capacity ‘would risk increasing and prolonging the global supply imbalance,’ Holleaux continued.” (emphasis added)
And as former Sen. Mary Landrieu (D-LA) said on CNBC last week, these decisions could have significant impacts domestically, too:
“This is completely contrary to the President’s own climate goals… He’s breaking his promise to our Democratic allies during a time when he’s asking Republicans in Congress to support money to the Ukraine and he’s pulling the rug out from under the Ukraine.
“It doesn’t make any sense… This will affect all the projects in the United States. It will affect all of our manufacturing base. It makes no sense to me, Brian. People realize natural gas supports our industrial reshoring bringing steel plants, manufacturing back to United States which is a stated goal of President Biden. This undermines his industrial policy. I don’t know what’s going on.” (emphasis added)
These broad impacts were also emphasized by the Independent Petroleum Association, API and other trade associations across the country in a letter to Secretary Granholm and senior administration officials last week, writing:
“Our nation’s abundant supply of natural gas is an impactful geopolitical tool, helping insulate American consumers from increasing global instability while advancing American national interests and ensuring the energy security of key U.S. allies. Moving forward with a pause on new U.S. LNG export approvals would only bolster Russian influence and undercut President Biden’s own commitment to supply our allies with reliable energy, undermining American credibility and threatening American jobs.” (emphasis added)
Bipartisan Lawmakers Share Concerns About National Security
Members of Congress from both parties had mixed reactions to President Biden’s announcement, ranging from measured skepticism to outright disapproval.
In comments to Politico, Sen. John Hickenlooper (D-CO) warned the Department of Energy against “creating needless levels of what ends up becoming red tape.” Sen. Chris Coons (D-DE), Co-Chair of the Senate’s bipartisan Climate Solutions Caucus, urged the administration to balance environmental impacts against commitment to allies’ security:
“[Climate considerations should be] balanced with critical national security interests in terms of ensuring our vital allies and partners in Europe in the middle of Russia’s ongoing aggression are not abruptly cut off from gas supplies.”
House Speaker Mike Johnson (R-LA) took a stronger line, calling the Biden administration’s decision to pause LNG exports “subversive”:
“This announcement by President Biden is as outrageous as it is subversive. Stalling LNG export terminals, like Calcasieu Pass 2 in Louisiana, not only prevents America’s economic growth, it empowers our adversaries like Vladimir Putin.
“Since Russia’s invasion of Ukraine began, American petroleum producers have increased LNG shipments to our partners in Europe to prevent a catastrophic, continent-wide energy crisis and to provide an alternative to Russian energy exports.”
Taking things a step further, on Friday Senator Joe Manchin (D-WV) announced an investigation into the White House’s pause on LNG exports, arguing that the decision was based on political motivations rather than “indisputable facts.”
Allies Count on Long-Term U.S. LNG Export Capacity
There’s broad consensus across the European bloc that European economies will rely on U.S. LNG exports for “decades” to come. France’s Minister Delegate for Foreign Trade, Olivier Becht, recently spoke to the importance of U.S. natural gas, saying:
“What’s certain is that in the current geopolitical environment, we’re counting a lot on American gas.”
Leading up to the White House’s decision to “pause” new LNG export approvals, German and Japanese companies sent letters to the U.S. Federal Energy Regulatory Commission urging the agency to provide the necessary approvals for the CP2 LNG project. The German state-owned company, Securing Energy for Europe GmbH (SEFE), laid out the need for the project’s approval explaining:
“SEFE’s long-term LNG purchased from CP2 LNG will now be vital to Germany’s energy security in the new environment where gas pipeline supplies from Russia have stopped.”
Echoing these comments, the president of BusinessEurope, the continent’s largest business group, told the New York Times last week that restrictions on gas supplies from the U.S. would be “a huge concern.”
Still, the White House appeared to weigh the guidance of environmental activists over that of allied government officials and trade partners, suggesting that the decision was politically driven. Comments from James Watson, Secretary General of Europe’s leading gas industry group, to S&P Global revealed that allies view President Biden’s decision as a politically-motivated election-year gambit:
“Of course once the election is over we expect that LNG export licenses should once again be granted providing projects meet the new criteria.” (emphasis added)
The White House’s LNG “pause” looks even worse when upon taking a closer look at the data and science used to justify the decision. One particular forthcoming research paper on the relative climate impacts of LNG exports has been widely cited by lawmakers and activists. The paper, which draws conclusions that are dubious at best and blatantly false at worst, is authored by Robert Howarth, a notoriously biased researcher with a history of shoddy scholarship; has yet to be peer-reviewed or published; and has quietly undergone significant revisions over the last month that should call its methodology and conclusions into question.
The activists’ favored research is an outlier amongst numerous similar studies which continue to demonstrate the relative emissions reduction benefits of natural gas and LNG when compared to coal. Howarth’s findings were so abnormal that a spokesperson for the Department of Energy responded to the study in comments to E&E News, telling the outlet that two previous DOE studies show that LNG exports are not associated with increased lifecycle GHG emissions.
It is a fact that increased U.S. natural gas has helped drive global and domestic reductions in CO2 emissions, both domestically and abroad. Wall Street Journal touched on this in a recent editorial denouncing the White House’s shift in posture on LNG:
“If new U.S. LNG projects are blocked, Europe and Asia will have to import gas from elsewhere to meet their growing demand. Most won’t come from America’s friends. Yet the climate lobby says new LNG projects will lock in higher CO2 emissions for decades. They’re apparently less worried by the 305 coal-fired power plants that China has announced or has in the works.”
Bottom Line: The facts remain that the world relies on U.S. LNG for energy security and that it is already – and will continue – to play a critical role in reducing emissions. As the trade associations’ letter concludes:
“Our industry is proud to support our allies and global emissions goals, but the geopolitical and climate benefits of American energy exports cannot be maintained with a regulatory regime that moves at the whims of political pressure.”
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