Biden administration slows LNG export expansion: Climate versus commercial interests

The Biden administration has paused approvals for new LNG terminal projects, citing environmental concerns and a reassessment of the need for additional liquefied natural gas (LNG) export capacity. Despite criticism from Republican opponents and business groups, Biden’s move reflects his commitment to climate goals and signals a potential shift away from fossil fuel expansion, reports OilPrice.com.

After a year of increasing LNG exports, the Biden administration responded to calls to halt new mega-projects for LNG exports in line with its climate commitments. Environmentalists have repeatedly said it is hypocritical to make ambitious climate commitments and call for a green transition while accelerating the massive expansion of LNG production and exports in the US. The question now is whether this pause will block new projects or whether expansion will continue.

Natural gas is considered a transition fuel that will help countries around the world move away from more polluting oil and coal and gradually transition to sustainable alternatives. Dependence on natural gas supplies also became evident after Russia invaded Ukraine. Shortages led, particularly in Europe, to a search for alternative sources of gas, with countries such as Norway and the US increasing production to meet demand. Scientists and climate groups, however, fear that oil companies may use this as a pretext to develop new gas projects.

The influence of the presidential campaign

In January, the Biden administration paused its decision on whether to approve the largest natural gas export terminal project in the United States, Calcasieu Pass 2 (CP2), planned for Louisiana. The project includes 18 liquefaction trains, each with a capacity of around 1.1 million tonnes of LNG per year, four LNG storage tanks and two marine loading berths. The terminal will be adjacent to the existing Calcasieu Pass terminal. It is also just one of 17 other terminals proposed by oil and gas companies.

The project’s suspension could lead to a major delay, extending beyond the US presidential election in November. Its approval depends on findings by the US Department of Energy, which has been tasked with evaluating projects in terms of their impacts on climate change, the economy and national security. The department has yet to reject any natural gas export project on the basis of its projected environmental impact.

Having adopted ambitious climate commitments and policies, and facing pressure from voters who are aware of the impacts of climate change, the Biden administration is carefully examining the potential environmental impacts of new gas projects, as well as their implications for President Biden’s chances of re-election. His bold climate pledges during the 2020 election campaign won the support of many young voters, but in recent years he has faced criticism from the same group for failing to take effective action to curb fossil fuel production and for approving several new oil and gas projects, including the controversial Willow oil drilling project in Alaska.

One of the main criticisms of expanding gas production capacity and export terminals, beyond environmental concerns, is whether more LNG is needed in the United States and the rest of the world. In 2023, the US exported 86 million tonnes of LNG and currently has seven export terminals, with five more under construction.

While Biden justifies his decision on environmental grounds, several Republican opponents and businesses have criticized the move, seeing it as detrimental to US energy security. Business groups around the world have urged Biden to reverse the decision to suspend approvals for new licenses for LNG export facilities, fearing it could lead to further gas shortages.

 “With numerous forecasts predicting that global demand for natural gas will grow over the next decade, additional LNG supplies will be needed to supply world markets. We know this demand can be met in a way that continues to reduce emissions,” said the US Chamber of Commerce, BusinessEurope and Japan’s Keidanren in a joint letter.

In 2023, the United States became the world’s leading LNG exporter. However, a slowdown in the expansion of LNG terminal construction should not affect the level of US exports to Europe over the next two to three years.

Opposition lawmakers in the US have threatened to introduce legislation that would strip the Department of Energy of its authority to approve gas exports. The White House responded in a statement that it strongly opposes the legislation, as it would undermine the US’s ability to ensure that LNG exports are consistent with its economic, energy, foreign policy and environmental interests. While it is unclear whether the pause will lead to LNG project licenses being denied, the decision is consistent with Biden’s climate commitments and will help avoid any hasty decision based on potentially unfounded concerns about fossil fuel shortages.