Biden Bets Against American LNG [GGP]
On January 26, President Joe Biden announced a “pause” on federal approval for new liquefied natural gas (LNG)–export terminals. While the Department of Energy’s indefinite suspension and order for new environmental analyses may keep the president’s reelection hopes above water, it will harm America’s long-term economic and geopolitical interests. Further, the policy may not even serve its ostensible purpose of reducing greenhouse-gas emissions.
Ten months from Election Day, the president’s campaign likely thinks that renewed attention on his climate agenda will rouse support among progressive Democrats, who have drifted from Biden in recent months. By rallying his political coalition, however, the president is alienating a successful American industry and its commercial partners abroad, many of them crucial allies.
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The U.S. currently has seven operating LNG export terminals, with another five under construction. Because so many new projects have already been green-lighted, the repercussions of Biden’s pause, which puts the brakes on at least four approval-seeking projects, will not be evident for years. If the policy results in a sustained project-approval delay and global demand for natural gas remains high in the coming decades, the president’s decision will limit future administrations’ ability to use a potent economic, geopolitical, and environmental tool.
Not long ago, the American energy industry’s global preeminence was unimaginable. In fact, in the early 2000s, energy analysts forecast that the U.S. would become the world’s largest importer of LNG by 2015. But America’s widespread use of hydraulic fracturing and horizontal drilling quickly turned this prediction on its head. In 2012, the U.S. surpassed Russia as the world’s largest producer of natural gas; in 2016, the first LNG cargo exported from the Lower 48 set sail from Louisiana. The Federal Reserve Bank’s research division attributes 10 percent of the United States’ GDP increase from 2010 to 2015 to the shale boom.
In the 2020s, LNG has demonstrated its geopolitical value. As Europe rapidly reduced imports of Russian natural gas in response to Vladimir Putin’s 2022 invasion of Ukraine, the continent’s demand for LNG imports rose 60 percent. American LNG exporters delivered nearly half of Europe’s LNG imports in 2022, helping to avert an economic catastrophe. In 2023, U.S. terminals shipped a record 88.9 million metric tons of LNG, overtaking Australia and Qatar as the world’s largest exporter. Unlike Qatar and Russia, where government officials have a hand in the destination and price of LNG exports, United States exporters offer market flexibility. In effect, American LNG frees global importers from having to rely heavily on actors like Qatar and Russia.
The environmental case for LNG, meanwhile, rests on a comparison with the alternative—usually coal. Natural-gas combustion causes less local air pollution and emits less greenhouse gas than does coal. From 2005 to 2020, coal-to-gas switching was responsible for as much as 61 percent of the United States’s sizeable decline in total greenhouse-gas emissions. Liquefied natural gas still produces emissions and is an imperfect climate solution, but it has a proven track record of displacing dirtier power-generation alternatives.
By pausing LNG export-facility approval, President Biden is preventing American natural gas from bringing similar environmental benefits to other countries. These dynamics are most evident in the Asia-Pacific, where coal accounts for 60 percent of power generation. The U.S. Department of Energy reports that American LNG is up to 54 percent cleaner than existing coal generation in the region. Yet the administration enacted the pause even as trusted allies like Japan, potential partners like Vietnam, and vital actors like India and Taiwan all depend heavily on coal.
Delaying the construction of new export terminals will limit future U.S. supply to global markets, but it will not curb future LNG demand, which S&P Global projects to rise more than 50 percent by 2035. Qatar and Russia, the third- and fourth-largest exporters today, will gladly capture this demand increase—and can fetch a higher price with U.S. supply artificially constrained. Those higher prices will also cast a more favorable light on Chinese exports in the solar, wind, and battery sectors. While cheap Chinese renewables are a boon for the climate, trading allies’ and partners’ energy dependence on Russia for energy dependence on China would be a pyrrhic victory for the United States.
Pausing LNG approvals will thus hamper the U.S. domestic energy industry, leave our allies and partners in the lurch, and unnecessarily prolong the global use of coal, a more environmentally damaging fuel. Despite the pause, the United States’s LNG export capacity is still expected to double by the end of the 2020s, as previously approved projects come online. The White House emphasized that “through existing LNG production and export infrastructure,” the U.S. will “continue supplying LNG to our allies in the near-term.”
As Europe learned when Russia invaded Ukraine, however, energy policy must be judged over the long term—in decades, not in election cycles.
Orignally published by City Journal.
Quill Robinson is an associate fellow at the Center for Strategic and International Studies and a senior advisor at ConservAmerica. Jordan McGillis is the economics editor of City Journal.
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