The Biden administration, in a significant move towards environmental considerations, is set to pause the review of applications for exporting natural gas abroad. This decision, expected to be announced on Friday, marks a pivotal change in the U.S.’s approach to natural gas exports and reflects a growing concern over the long-term climate impacts of expanded Liquefied Natural Gas (LNG) exports.
This halt on reviews, although temporary, is poised to stall several projects in development, including those of Commonwealth LNG, Energy Transfer LP, and Venture Global LNG Inc. in Louisiana. The aim is to allow the Energy Department time to reassess how these exports align with broader environmental goals and the public interest, a legal threshold for such exports under federal law.
The Biden administration’s approach responds to escalating demands from climate activists. They argue that additional LNG export approvals would only prolong the world’s reliance on natural gas, thereby hampering investment in cleaner, emission-free alternatives. This issue gained prominence following a global consensus at a recent climate summit that underscored the need for a transition away from fossil fuels.
This decision does not affect the United States’ position as the leading LNG exporter globally. However, it introduces a new dynamic into the natural gas market. The multibillion-dollar facilities involved in liquefying natural gas for global export take years to build, and developers must navigate multiple federal government reviews before commencing operations. The current pause applies only to applications that are pending review at the Energy Department.
The move has sparked debate between natural gas advocates and environmentalists. Advocates argue that delaying LNG export approvals could impede the development of projects, potentially affecting future shipments to European allies and undermining short-term environmental benefits gained by displacing coal. On the other hand, environmentalists contend that the U.S.’s LNG exports are hampering the growth of clean energy alternatives and overstate Europe’s need for U.S. LNG, projecting a decline in its gas demand.
The Department of Energy is preparing to launch a review of its assessment process for LNG export projects, focusing on the global carbon emissions impact. This review, potentially extending into 2025, follows months of pressure to freeze the development of major LNG projects, especially in the wake of commitments made at international climate summits to reduce reliance on fossil fuels.
In summary, President Biden’s decision to halt LNG export approvals reflects a significant shift in U.S. energy policy, balancing economic interests with environmental considerations. This move, while potentially impacting the LNG export market in the short term, underscores the administration’s commitment to addressing climate change and the environmental impacts of fossil fuel use