The Biden administration will indefinitely pause approvals for new liquefied natural gas export terminals along the US coastline, dealing a blow to a booming industry and giving a win to climate campaigners.
The US is the world’s biggest exporter of LNG, with the number of cargoes shipped growing rapidly since the first set sail from Louisiana in 2016. The European energy crisis triggered by Moscow’s full-scale invasion of Ukraine bolstered demand as countries searched to replace gas piped in from Russia.
But the US industry’s multibillion-dollar liquefaction plants have become a target for climate activists who argue that the rapidly expanding infrastructure will lock in reliance on fossil fuels for decades to come.
The pause from the Department of Energy will temporarily halt pending applications from 17 projects awaiting approval to proceed.
The move comes as President Joe Biden enters an election year keen to secure the support of younger and climate-conscious voters who helped him win his first term. Many felt let down after the administration gave a greenlight to ConocoPhillips’ Willow oil project on federal land in Alaska last year.
“During this period, we will take a hard look at the effects of LNG exports on energy costs, America’s energy security, and our environment,” Biden said. “This pause on new LNG approvals sees the climate crisis for what it is: the existential threat of our time.”
The European Commission was informed about the US announcement in advance, an EU energy official said. It was told the review entailed a temporary pause in approvals of future exports and an exemption for immediate national security emergencies. “Therefore, this pause will not have any short-to-medium term impacts on the EU’s security of supply,” the official said.
“The EU and the US have built a solid energy partnership: we are fully committed to ensure energy security while also forging ahead on domestic and global climate action,” the official added.
US energy secretary Jennifer Granholm told reporters that as US LNG exports surged it was “critical” for her department to “remain a responsible actor” as it looked at whether the additional volumes were “in the public interest”, a determination required under federal law.
“The pause will not affect already-authorised exports, nor will it impact our ability to supply our allies in Europe, Asia or other recipients of already-authorised exports,” she said.
Although natural gas is cleaner than other fossil fuel alternatives, it still releases substantial amounts of carbon dioxide — the most prevalent greenhouse gas — when burnt. Methane, the main component of natural gas, has more heat-trapping power than CO? when it leaks into the atmosphere.
The White House said the energy department’s current economic and environmental models were roughly five years old and no longer adequately accounted for the effects on domestic energy costs or the latest assessments of emissions.
The administration added that it wanted to guard against pollution risks for communities living near new export facilities.
“One of the questions we have to ask is — what is the impact of all this additional LNG on reducing greenhouse gas emissions in countries that might fuel switch from coal to LNG?” said a senior US official, speaking about the energy department’s review of its approval process.
“What is the impact of creating permanent infrastructure in countries that have said they might move away from fossil fuels altogether? This is an important question to look at, what are the implications globally for this level of export.”
The US last year surpassed Qatar and Australia to become the world’s leading supplier of LNG, which is natural gas supercooled and condensed so that it can be economically carried on ships. Its seven operating terminals can produce as much as 87mn tonnes a year — enough to satisfy the combined gas needs of Germany and France.
Five more projects that are already approved and under construction will add another 63mn tonnes of capacity a year. They are being developed by companies including New York-listed Cheniere Energy and NextDecade as well as a joint venture of QatarEnergy and ExxonMobil.
Projects later in the queue now appear stalled unless the energy department restarts approvals. These include Venture Global’s CP2 in Louisiana, which attracted extra scrutiny from campaigners as the single largest LNG project proposed to date.
German companies have been among Venture Global’s biggest customers as the country increases its capacity to import LNG since Russia’s invasion of Ukraine. State-backed Securing Energy for Europe, the German successor company to Russia’s Gazprom subsidiary, signed a 20-year contract for supplies from CP2 last June.
The German ministry for the economy and climate said the country’s current security of supply would not be interrupted by Biden’s announcement.
Questions have nevertheless been raised about what the halt might mean for plans to significantly increase LNG imports in future. “We are closely monitoring the situation in the USA,” the ministry said. “We can’t make any assessments yet because we don’t speculate.”
Venture Global earlier this week warned that a halt to project approvals would “shock the global energy market, having the impact of an economic sanction, and send a devastating signal to our allies that they can no longer rely on the United States”.
John Cornyn, a Republican senator from the oil and gas-producing state of Texas, blasted the project review as a form of “climate wokeism”.
“As multiple wars rage and global threats continue to emerge, this bureaucratic decision abandons our friends and allies, jeopardises our national security, and threatens our energy industry,” he said.
Additional reporting by Sam Jones in Berlin
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