Biden Administration Pauses New LNG Export Approvals
On Friday, January 26, the Biden administration temporarily paused pending decisions on exports of Liquefied Natural Gas (LNG) to non-free trade agreement (FTA) countries until the Department of Energy (DOE) can update its underlying analyses for authorization. This measure will likely disrupt plans for billions of dollars in natural gas projects.
According to the announcement from the White House, the current economic and environmental frameworks that underpin the DOE's LNG export authorizations are five years old and no longer adequately account for considerations such as energy cost increases for domestic consumers, increases in greenhouse gas emissions, and other climate change concerns. The White House has specified that this pause is subject to expectation for unanticipated national security emergencies and that the Biden administration remains committed to supporting its allies worldwide.
The Biden administration's announcement comes as environmentalists have seized on projects, including Venture Global LNG Inc.'s CP2 export terminal planned for the Gulf Coast to test Biden's commitment to climate change. The decision to halt these resources will not affect previously granted authorizations nor will it immediately demote the US as the worlds to LNG exporter. This could have implications for several new proposals awaiting review at the Department of Energy, though Senior officials who briefed reporters on the plan did not specify any particular timeline for its implementation or when it will be available for public comment.
It has not just been environmentalists who have urged the Biden administration to hold LNG exports, but Democratic lawmakers as well. In December, when Biden announced plans for a potential expansion of natural gas exports, Democrats called on the administration to stop investing in gas plants abroad. The most notable group speaking up against US LNG expansion has been the Europeans. In an official statement, members wrote, "Europe should not be used as an excuse to expand [liquified natural gas, or LNG] exports that threaten our shared climate and have dire impacts on US communities." Groups like the American Petroleum Institute have said that LNG exports are essential to provide support to American allies, especially during Russia's aggression against Ukraine and the energy security issues that accompany it.
Republican and Public Response
In the White House announcement, the Biden administration took a swipe at Republicans in Congress, saying they "continue to deny the very existence of climate change while attempting to strip their constituents of the economic, environmental and health benefits of the administration's historic climate investments.
Some Republicans, including former President Donald Trump, have said that Biden making climate change his priority has come at the grave expense of domestic jobs and other economic concerns. Senator McConnell said that limiting LNG exports would affect the US's ability to combat Russia's influence as a global gas supplier.
Marty Durbin, president of the US Chamber of Commerce's Global Energy Institute, said, "The administration's decision to freeze review of new LNG terminals is deeply disturbing and raises significant risks around the globe. It betrays our allies at a time of geopolitical instability and could slow the energy transition."
How Much LNG was Going to Europe?
The US is the number one exporter of LNG worldwide, with the Biden administration expecting exports to double by the end of the decade. Last year, roughly half of US LNG exports went to Europe, according to the White House. In 2022, the European Union and the US pledged to work together to ensure additional LNG volumes for the EU market, and the US has exceeded its delivery targets to the EU for the last two years.
According to the American Petroleum Institute, in 2022, the US surged more than 800 LNG cargoes to Europe. This represented roughly two-thirds of its total LNG cargo and an overall 141% increase from the previous year. This was done in an effort to reduce European reliance on Russian natural gas in light of the Russian-Ukraine war.
The Hill reported that Public Citizen and two environmental NGOs found that less than a fifth of exports from eight LNG terminals were actually going to Europe. Public Citizen reported that more than half of the exports were going to commodity traders. Regardless of the amounts given to Europe in previous years, European lawmakers have made clear that their need for large amounts of LNG has passed. This is partially because Europe's structural need for LNG is declining. According to data from the International Energy Agency, Europe will need a fifth less gas in 2026 than they needed before the Ukraine war began.
Next Steps
Senate Energy and Natural Resources Chair Joe Manchin announced that he will hold a hearing about the "true state of play" of the Biden administration's freeze on new export permits. He said, "If the Administration has the facts to prove that additional [liquefied natural gas] export capacity would hurt Americans, they must make that information public and clear, but if this pause is just another political ploy to pander to keep-it-in-the-ground climate activists at the expense of American workers, businesses, and our allies in need, I will do everything in my power to end this pause immediately." So far, the White House has not announced when the review will be public or a comment period.