In the last week of January, the Biden-Harris Administration temporarily paused pending decisions regarding liquid natural gas exports. This hold requires the Department of Energy (DOE) to reevaluate the impact of these exports on climate change, energy costs, and security.
While the White House was quick to claim the pause as a win for the energy transition, the Administration received backlash and mixed responses from Democrats and Republicans. Most view LNG as a cleaner alternative to coal and oil, so the president’s decision seems to break his well-known climate goals.
White House Serves DOE Directive to Broaden Review of LNG Exports
In yet another bold move in the name of the climate, the Biden-Harris Administration issued a directive to the Department of Energy to “broaden the review” of the environmental impact of liquified natural gas. During this LNG review, future export decisions regarding cleaner energy sources will be paused indefinitely.
At first glance, this may seem like a natural move to maintain the American supply of natural energy sources. However, the pause could have some major repercussions in the long run.
The White House directive claims “ the current economic and environmental analyses DOE uses is more than five years old and no longer adequately account for considerations like potential energy cost increase for American consumers and manufacturers beyond current authorizations or the latest assessment of the impact of greenhouse gas emissions.”
The United States is the number one exporter of LNG and holds a trajectory to double that by 2030. While the administration claims this hold on future decisions will not impact our allies abroad, diminishing exports could hamper global supply, especially with our European allies during the Ukrainian-Russian conflict.
Current agreements and exploitation deals are still on the table, so the impact will not affect short-term exports. However, with an indefinite pause, future outlooks could be grim for our overseas allies relying on American LNG supply.
Some Praise the Decision
Some tout the president’s decision as a bold way for climate change efforts. Margie Alt, director of the Climate Action Campaign, said, “President Biden met this moment on climate, delivering on his promise to slash climate pollution and take measurable steps to protect our environment and future.”
Former president Al Gore and the Climate Reality Project founder said, “World leaders agreed to transition away from fossil fuels at the COP28 climate negotiations last year, and President Biden’s decision today to pause new permits for LNG exports shows that he is taking that pledge seriously.”
The White House announcement provided multiple accounts of those favoring the president’s decision. Those offering their approval consistently claim the move as a victory for climate and American energy.
Opposition to the President’s Pause
Only some people are optimistic about pausing future export decisions on LNG. Several Democrats and Republicans have expressed their disdain over the issue. The Senate has yet to vote on the controversial decision to determine whether the DOE will have the authority to make LNG export decisions for future projects.
The primary concerns of those opposing President Biden’s decision stem from a reluctance to move away from cleaner liquid and natural gas. Although the Administration has clarified its stance on oil, LNG has been seen as a cleaner alternative energy source, with far fewer emissions than other fossil fuels.
Concerns have been raised about the message it sends to our allies. If America pauses LNG exportation, our allies could view it as a devastating loss to their cleaner energy supply.
16 States Sue Fed Over LNG Approvals Ban
In response to Biden’s LNG decision, 16 US states, including Texas, Louisiana, and Florida, have filed a lawsuit to challenge the federal government’s authority to ban export applications. The lawsuit, filed in the federal court of Lake Charles, Louisiana, claims a pause on LNG exports would devastate the economy and undermine efforts to supply foreign allies with a cleaner energy source.
The states suing the federal government claim the presidential ban on future LNG export applications oversteps the Department of Energy’s authority under the Natural Gas Act. The allied Attorney Generals claim the Natural Gas Act states that projects must be proven to be inconsistent with public interest before denying applications. This massive lawsuit could potentially overturn the president’s decision by revoking the application ban.
Naturally, participating states in the lawsuit against the federal government are concerned with the economic impact a ban would entail. Many of the states have a vested interest in the expansion of LNG exports, as they promote cleaner energy sources for foreign allies and economic stimulation for American citizens.
Before the lawsuit was filed, Republicans in Congress made attempts to strip the DOE of the power to approve the exports and interest that ability with the Federal Energy Regulatory Commission. While this motion was passed by the House of Representatives, it has yet to pass through the Democratic-controlled Senate.
Venture Global LNG Responds
One of the largest LNG processors, Venture Global, responded with a statement saying, “It appears that individuals within the White House are trying to force policy making through leaks to the media” and that such an action “would shock the global energy market. This continues to create uncertainty about whether our allies can rely on US LNG for their energy security.”
Where the World Will Turn for LNG
If American LNG exports decrease in the future, a significant concern remains where other nations will turn. The first and natural alternative is coal, which produces more than twice as much CO2 emissions as LNG when producing electricity. Halting LNG exports “only encourages countries all over the world to use more coal, which is twice as dirty and uses twice as many harmful emissions.” Says former Louisiana Senator Mary Landrieu.
Another potential outcome could push nations to look to Russia for LNG supply. A turn to Russian LNG exports would ultimately boost the Russian economy and fund their war against Ukraine. At a critical political moment, when the president asked Democratic allies to help fund Ukrainian efforts, pushing nations towards Russian exports, scenes were contradictory at best.
Former senator Landrieu claims the president is breaking his promise to his allies and fellow Democrats by pulling the rug out from underneath Ukraine with the LNG export delays. The former Louisiana senator says she’s not sure who the president thinks he’s appeasing by pausing liquid natural gas exports.
Landrieu continues to say this is not a politically astute move for the president, especially during an election year. The former senator’s strong opposition to President Biden’s proposed policy shows that even some Democrats are not all on board with the Administration’s actions.
“Killing the Goose that Lays the Golden Egg”
Another aspect to consider is funding from interested investors. As uncertainty grows with the future of liquid natural gas, potential buyers may be hesitant to enter new deals for exporting the energy source from American suppliers. A decision to pause exports could result in future catastrophe or reluctance to opt into an uncertain market.
Former senator and CNBC contributor Heidi Heitkamp claims the controversial move could kill the goose that lays the golden egg regarding climate change. Heitkamp says we can’t achieve our climate goals without liquid natural gas and nuclear power as cleaner alternatives to fossil fuel resources. She also states climate activists must agree with LNG and nuclear power moving forward.
The former South Dakota senator calls the president’s actions a clear political move, not a climate progression. Americans should move towards LNG to aid in the energy transition, not away from it as a pause would dictate. While attempting to galvanize support during the election year, the president’s move may very well backfire with an inverse effect.
Environmental Concerns
While the White House may claim ceasing natural gas exploitation is a climate win, without the sustainability and cleaner energy LNG provides, many fear an increased use of coal, a far more polluting alternative.
Turning back to coal-reliance would be considered a step back in the eyes of many climate activists. Unfortunately, coal is the natural alternative to liquid natural gas in terms of abundance and availability.
Economic Ramifications
Liquid natural gas is a known proponent of the American industry restructuring process. LNG plays a significant role in bringing steel and manufacturing back to the United States. The president’s decision goes against the Administration’s industrial policy, which is built on bringing industry back to American soil.
Furthermore, the economic impact spans across the United States, with massive injury to primary swing states’ economies.
About the author: Jess Henley began his career in client relations for a large manufacturer in Huntsville, Alabama. With several years of leadership under his belt, Jess made the leap to brand communications with Bizwrite, LLC. As a senior copywriter, Jess crafts compelling marketing and PR content with a particular emphasis on global energy markets and professional services.
Subscribe to Shale
Shale magazine remains your trusted guide for impactful insight into industry, energy, and finances. We drill down deep to find the hidden story behind the facade and fanfare. You can rely on our team to tell you the truth about what’s happening in our society. Subscribe to Shale Magazine to stay informed on the energy transition and the economic impacts therein.
Need something to listen to on your commute? Check out our renowned podcast, In the Oil Patch, where we interview the top of minds and the most exciting thought leaders. Every episode brings new insight and robust conversations about investment, energy, and political happenings.
