The Biden administration’s “pause” on future approvals for the export of U.S. liquefied natural gas (LNG) has enraged Republicans, spooked overseas allies that are increasingly reliant on affordable U.S. energy, and raised questions about the long-term future of the world’s newest energy powerhouse.
The Biden administration’s “pause” on future approvals for the export of U.S. liquefied natural gas (LNG) has enraged Republicans, spooked overseas allies that are increasingly reliant on affordable U.S. energy, and raised questions about the long-term future of the world’s newest energy powerhouse.
Late last month, the Biden administration announced that it would pause regulatory approvals for LNG export projects still in the planning pipeline, though the measure won’t affect terminals already under construction. For the world’s largest exporter of LNG, the regulatory about-face was sharp: Previously, by law, all projects were approved unless there were compelling reasons to block them.
The administration highlighted two main reasons for the move. First, there were lingering fears that shipping huge quantities of cheap U.S. gas overseas could erode America’s competitive advantage of cheap energy, which is especially useful for energy-intensive industries such as steelmaking and petrochemicals. Second, and more importantly, the administration listened to environmental activists, such as the Sunrise Movement and the Vessel Project of Louisiana, who have come to believe, with much-disputed evidence, that while natural gas burns cleaner than coal, the whole process of drilling the stuff, piping it across the country, superfreezing it, and loading it on tankers to be sent around the world actually has a total climate change footprint not much cleaner than coal. The move was widely seen as a political play to galvanize young Democratic voters, many of whom rank climate change as a top voting issue, ahead of a close 2024 presidential election.
“This pause on new LNG approvals sees the climate crisis for what it is: the existential threat of our time,” Biden said in a statement announcing the move.
The reason a tweak to U.S. regulatory procedures ruffled so many feathers is that little more than a decade after starting gas exports, the United States has become the biggest source of the fuel in the world. For years, exports of U.S. natural gas have helped countries in Asia and Europe wean off coal and diversify their energy supplies; that has been especially important in the last two years in Europe, where Russia’s war on Ukraine forced the continent to reckon with the sudden loss of its biggest source of imported energy.
And though the pause won’t affect any projects in the short term—and could even be undone under a new administration next year—it has provoked consternation around the world. Business leaders in Asia and Europe protested the pause, saying it could threaten their ability to find alternative sources of energy. Buyers in those regions are especially worried; Japan, which is almost wholly reliant on imported energy including LNG, already announced that it will start looking for new suppliers given uncertainty over the future U.S. export role.
Calling it a “gift to [Russian President Vladimir] Putin,” Republicans on the House energy committee railed against the move, which they see as threatening to the security of U.S. allies. “Biden’s LNG export pause weakens global energy security and undercuts our efforts to help Europe reduce its reliance on Russian energy,” the committee said. It plans to hold a hearing next week to dissect the economic and security impacts of the pause. (Even some Democratic lawmakers have said they plan to push Biden to reverse the pause, citing concerns over the job impacts in energy-producing states such as Pennsylvania.)
“Every leader has to play politics, but there are certain things that are too important to be touched,” said Brenda Shaffer, an energy expert at the U.S. Naval Postgraduate School. “It is so critical for the economic viability of Asia and Europe and the national security of Europe. It’s like Thelma and Louise driving off the cliff—it makes no sense to reduce supply.”
Despite heated reactions to the move, it’s not clear that it will have such catastrophic impacts. The pause only affects a handful of future projects, not the gusher of U.S. export capacity that is already baked in. And with plenty of LNG export capacity coming online around the world, it’s not even clear that there will be excessive unmet appetite for huge quantities of natural gas by the end of the decade. Some forecasts suggest a global easing in demand for gas, while most expect growing economies, especially in Asia, to match or even exceed the amount of gas currently in the pipeline.
The focus of concern in Congress—what the pause could do to Europe’s ability to replace its historic dependence on Russian energy—is one big question, with the war in Ukraine far from resolved. For decades before Russia invaded Ukraine in 2022, Moscow was the biggest source of gas for Europe, but that became a toxic option with the onset of war. Europe halved its imports of pipeline Russian gas in 2022 and halved them again in 2023. Much of the difference was made up by a jump in imports of U.S. LNG, making Europe the biggest importer last year—and making the United States the critical component in Europe’s ability to withstand Russian economic pressure.
Given the built-in growth of U.S. energy exports already, some experts are sanguine about any risks to global or European energy security due to the pause.
“For the short term, the medium term, I don’t see any impact on the LNG market or more specifically on European energy security,” said Lukas Trakimavicius, who covers energy geopolitics at the European Union Institute for Security Studies. “People fail to understand that this is just a pause.”
The concern over Europe’s energy security and historical memories of Russian strong-arming overlook the dramatic transformations that have taken place in the European energy sector in the last two years. Not only are imports from Russia down, but natural gas use as a whole is also down sharply, by about 13 percent just last year. At the same time, the Russia-driven energy crisis has jump-started Europe, after years of dithering, to move faster on its transition to clean and renewable technologies, with huge growth in solar power and wind energy since the war began.
For decades, Russia under Putin used the energy cudgel to cow Europe. He hoped to do the same this time, expecting to freeze Ukraine and Europe into acceding to his territorial demands. But his own overreach in Ukraine, and a robust response from Europe and alternative suppliers such as the United States, appears to have finally blunted his energy weapon, potentially removing one of the Kremlin’s most powerful tools of economic statecraft.
“It was one of those things that was frightening until he pulled the trigger, but then he pulled the trigger, and nothing really happened,” said Steven Pifer, a former U.S. ambassador to Ukraine now at Stanford University. “Now, the alternative gas supplies are out there.”
Trakimavicius pointed to the growth of alternative gas supplies and even novel technologies such as heat pumps to underscore the weakening of Russian leverage.
“I guess the big question is whether at some point in the very distant future there would be interest in buying Russian gas. I think all bridges have been burned. I don’t think there’s a [Russian] energy weapon anymore,” he said.
That’s not to say the regulatory upheaval in the United States is just a tempest in a teapot. Since the beginning of the U.S. export boom, the government has had a say in how big and how fast that industry develops, keeping consuming nations on edge.
“The real issues have to do with signaling rather than with specific projects,” said Kevin Book, the managing director of ClearView Energy Partners, an energy consultancy. “If it comes with a whole new set of criteria, a new hard look … the difference between ‘later’ and ‘no’ is a pretty big difference. This is what allies are worried about.”
It’s not so much a question of what happens with energy exports through the end of this decade, Book said, but over the longer term.
“In the next 20 years, this source of supply is going to be just as important for the rest of the world. Energy security is existential for many nations.”
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