“Natural gas is one of the mainstays of global energy. Where it replaces more polluting fuels, it improves air quality and limits emissions of carbon dioxide.”
-Faith Birol, Executive Director, International Energy Agency
On January 26, the White House announced a “temporary pause” on pending approvals for liquefied natural gas exports to non-free trade agreement countries until the US Department of Energy (DOE) can update the underlying analyses for authorizations. Despite stating in 2023 that the current analysis was sufficient, and after pressure from anti-energy activists, DOE now says the current economic and environmental analyses DOE uses to underpin its LNG export authorizations are five years old and must be updated to apply more stringent criteria for climate and economic impacts. This could have devastating implications for U.S. LNG moving forward – hurting our economy and our allies, while empowering our adversaries and increasing global emissions.
The Need for U.S. LNG:
The World Needs More Energy and More Natural Gas: Driven by population growth and increases in global standards of living, the Energy Information Agency (“EIA”) projects global primary energy consumption to increase through 2050 by somewhere between 16% and 57%. Coinciding with global demand growth, demand for oil and natural gas will increase through 2050 across EIA projections. According to the International Energy Agency (“IEA”), global demand for natural gas will increase by 41% by 2050. Also, according to IEA, an additional 240 bcm per year of LNG export capacity is needed by 2050 above what currently exists or is under construction.1
The United States is currently the largest producer and exporter of natural gas. After the U.S., the next largest producers of natural gas are Russia and Iran. Reducing the amount of U.S. LNG in the world will not reduce emissions, but it will empower Russia and Iran and
U.S. LNG plays a critical role in geopolitical stability:
In March 2022, the Biden Administration recognized the importance of U.S. LNG exports as a geopolitical tool to help our European allies reduce their reliance on Russian energy and strengthen European energy security.2 In November of 2022, the United States and the European Union renewed their energy security commitments, with Europe indicating that it would seek up to 147 bcm of LNG imports in 2023.3
American Natural Gas Abundance:
The U.S. has a sufficient natural gas supply to keep domestic prices low while meeting growing global demand: As the world’s largest natural gas producer, the U.S. is well positioned to meet the dual challenge of supplying the world with affordable, clean, and reliable energy- all while reducing global emissions. According to EIA, the United States, exported more LNG than any other country in the first half of 2023 and is poised to continue as the key swing supplier of spot LNG for the foreseeable future.4 Despite debunked/misleading claims of fossil fuel opponents that LNG exports will hurt American consumers, the United States, as a result of the shale gas revolution, has more than enough natural gas to meet domestic demand and serve as the international LNG swing supplier. Plentiful U.S. supply has kept natural gas cheap for American consumers. For example, in 2023, when the U.S. became the world leader in U.S. LNG exports, domestic natural gas prices averaged $2.57, well below the 2010-2015 average of $3.64 before the U.S. started exporting LNG.5 Multiple studies have also shown that projected future increases in exports will not meaningfully increase prices.6
Restricting U.S. LNG Exports Hampers Global Emissions Reductions:
Global coal use is at an all-time high and increasing as millions of people in the developing world seek access to affordable, reliable sources of energy. Coal is the single largest source of emission in the world, accounting for nearly half of all global emissions. Natural gas emits half as much as coal when combusted. Because of coal-to-gas switching in the US, America leads the world in emissions reductions. Approximately 60% of all emission reductions have been from coal-to-gas-switching—more than from deployment of all renewables combined. Less LNG in the global marketplace means countries will turn to other, likely higher emitting sources of energy like coal, and world emissions will continue to grow, especially in places like Asia.
U.S. LNG is Needed to Provide Energy Where It’s Needed Most in the World:
Most current US LNG is sold under contracts that allow buyers to resell cargoes or divert ships to others willing to pay more. In an environment where the US is not able to increase LNG export supply, countries will compete for the existing capacity and drive-up prices. The effect of this in 2022 was that about two-thirds of cargo that otherwise would have gone to Asia went to Europe instead. For Asian countries – including allies like Japan, South Korea, India, and Indonesia – this led to energy insecurity, unaffordable prices, and a turn toward other higher-emitting sources, such as coal or Russian gas. 7 Additional U.S. LNG means that more countries will have access to cleaner natural gas, as opposed to coal, at cheaper prices to meet their rising energy demands.
Headlines Snapshot: Across The Board Criticism & Concern
- “Joe Biden’s limits on LNG exports won’t help the climate” (The Economist, 2/1/24)
- “Even Democrats say Biden’s pause on LNG is like ‘throwing a match in a bale of hay'” (Washington Examiner, 1/31/2024)
- “Biden’s LNG Pause Has Asian Fuel Buyers Hunting for Other Options” (Bloomberg, 1/30/24)
- “Business groups from US, Europe and Japan push back on Biden LNG permit pause” (Fox Business, 1/30/24)
- “Biden’s LNG decision is a win for political symbolism, not the climate” (The Washington Post editorial board, 1/29/24)
- Biden’s LNG ‘Pause’ Will Hurt the Environment” (Chris Barnard of the American Conservation Coalition in The Wall Street Journal, 1/26/24)
- “Biden and the TikTok Anti-LNG Crusade”
- “His ‘pause’ on export permits may be his most destructive climate act—damaging to the economy at home and U.S. influence abroad.” (The Wall Street Journal editorial board, 1/26/24)
- “Fmr. Sen. Mary Landrieu: LNG export delays ‘completely contrary’ to President Biden’s climate goals” (CNBC, 1/25/24)
[1] “Outlook for Gas Markets and Investment: A Report for the G7,” International Energy Agency (May 2023).
[2] “FACT SHEET: United States and European Commission Announce Task Force to Reduce Europe’s Dependence on Russian Fossil Fuels,” The White House (March 25, 2022).
[3] “Joint Readout of U.S.-EU Task Force Meeting on Energy Security,” The White House (November 7, 2022).
[4] “Global LNG Supplies and Natural Gas Stocks Will Likely Meet Demand This Winter 2023-24, But Risks Remain,” U.S. Energy Information Administration (November 6, 2023).
[5] “U.S. Henry Hub Natural Gas Prices in 2023 Were Lowest Since mid-2020,” U.S. Energy Information Administration (January 4, 2024).
[6] “Analysis of U.S. Natural Gas Market Price Impacts from Increasing Natural Gas Supply Accessibility for Different Natural Gas Demand Outlooks,” American Council on Capital Formation (May 2023).
[7] “U.S. LNG Export Boom: Defining National Interest,” Center for Strategic & International Studies (January 11, 2024).