The Biden administration’s “pause” on new export approvals for liquefied natural gas (LNG) will, even if it becomes permanent, have little or no effect on the climate.
As noted in an editorial on NRO today:
According to the EPA’s own methodology, which is more prone to overstate climate effects than other approaches, canceling all U.S. LNG exports forever would reduce global temperatures by 0.013°C by 2100. That tiny effect would be for a far more draconian policy than the Biden administration has pursued. LNG exports simply aren’t contributing to climate change in any significant way.
The editors go on to write this:
Here’s reality: LNG is going to be produced. It is going to be sold on the global market. It is going to be used. Those things will happen whether new export terminals are built or not.
So which other countries are exporters of LNG? According to this chart (which shows the position as of October 2023), Australia follows the U.S., and then Qatar follows Australia. Qatar is currently massively expanding its capacity. And which country comes after Qatar, admittedly a long way behind? Russia. Ah.
Reuters (January 2, 2024; my emphasis added):
Russian exports of liquefied natural gas (LNG) to Europe fell 1.9% to 15.8 million metric tons in 2023, and LNG exports to Asia fell 11% to 14.9 million tons, LSEG data showed on Tuesday.
Europe increased purchases of LNG from global producers in 2023 while sharply cutting its imports of Russian pipeline gas in response to the conflict in Ukraine.
Overall LNG exports from Russia were down 6% last year to 31 million tons due to planned repairs at plants during the summer. But in December 2023, Russian LNG exports reached a record level of 3.2 million tons, of which 1.9 million tons were from Yamal LNG.
The Saudis are also interested in LNG. Note how Bloomberg, with a few exceptions a climate-fundamentalist Pravda, describes the Saudi plans (my emphasis added) in a report from October:
The world’s biggest oil producer is finally moving to grab a piece of the booming natural gas market, the latest proof that the industry expects the fuel to play a significant part in the energy transition.
In a strategic shift, Saudi Aramco agreed to buy a stake in MidOcean Energy, marking its first investment in liquefied natural gas. MidOcean is in the process of acquiring interests in four Australian LNG projects and is also part of a consortium to buy Sydney-based Origin Energy Ltd. . . .
While oil is still a vital part of the Saudi economy, gas is becoming a major part of its investment plans. The reason is obvious: Compared to oil and coal, the future of LNG looks pretty bright in the global energy transition.
Wood Mackenzie expects demand for the alternative fuel to grow by 70% through 2050 under a base scenario. Unlike oil, it isn’t seen peaking for the foreseeable future as the drop in Russian pipeline gas deliveries to Europe is forcing the continent to rely more on LNG.
After a dramatic expansion of production in recent years, the U.S. is now the world’s largest exporter of LNG. That creates jobs in the U.S., contributes to lower energy costs globally, and, as I noted here, provides an essential lifeline to Europe as it weans itself off Russian gas (but note that it is still buying LNG from Russia, a far from desirable state of affairs), a lifeline that has played an important part in Europe’s ability to stand behind Ukraine.
Even though the administration’s permit pause will not have any short-term effect on the amount of American LNG that goes to Europe (new LNG facilities take a long time to build), it risks damaging the credibility of the U.S. as an ally at a critical time. It also sends a clear (negative) signal to American companies thinking of investing the billions needed to build new facilities, or investing more generally in LNG production.
The Kremlin will have every reason to celebrate the administration’s “pause.”
Mercifully, Joe Manchin seems to be taking a different view.
Senate Energy Committee Chair Joe Manchin (D-W.Va.), one of the Biden administration’s most vocal intraparty critics on energy issues, vowed an investigation into the newly announced pause on liquefied natural gas (LNG) export approvals.
In a statement Friday morning, Manchin implied the decision to implement the pause was based on political considerations rather than “indisputable facts,” citing LNG production’s economic benefits and the role of American exports in isolating the Russian energy sector after Russia’s invasion of Ukraine.
”I have always said that our first concern must be protecting American consumers and growing American businesses, and we need a safety valve in place to ensure Americans aren’t unnecessarily stuck paying a premium for the abundant resources we’re blessed to have,” Manchin said. “But as the superpower of the world, we also have a responsibility to our allies and trading partners who, in our absence, may have no other choice but to turn to countries that don’t share our values. That’s been made abundantly clear in the last two years as we have been able to step in to replace Russian natural gas to cut off funds for Putin’s bombs and bullets.”
Manchin, who is not seeking reelection this year, said he will hold hearings of the energy committee on the decision to “unveil the facts about the true state of play in the markets, this Administration’s motivations, and their implications.”
The hearings will, I suspect, be both depressing and entertaining.