Biden Administration Temporarily Pauses LNG Project Approvals

No pending or new liquefied natural gas (LNG) exporting projects will be approved as President Biden has ordered the Department of Energy (DOE) to temporarily halt the review process for export applications.

A press release from the White House explains that the pause on application determinations allows the DOE to review the economic and environmental analyses used by the agency. The current analyses were last updated in 2018, and do not adequately address considerations such as the “potential energy increases for American consumers… or the latest assessment of the impact of greenhouse gas emissions”, according to the same press release.

In a statement, President Biden discussed the moratorium, noting that the federal government will review the state of the country’s LNG exporting operations and current facilities, specifically analyzing the “impacts of LNG exports on energy costs, America’s energy security, and our environment”. The timeline for this review could take several months, according to a statement by Secretary of Energy Jennifer Granholm reported by Reuters.

The decision comes at an interesting time, as the United States committed in 2022 to increase exports of LNG to countries in the European Union as a means of decreasing their reliance on Russian fossil fuels. The Biden Administration acknowledges this agreement in their release, ensuring that the halt will “not impact (the United States’) ability to continue supplying LNG to our allies in the near term” and that existing LNG infrastructure will be able to meet the demand.

The pause specifically affects applications to export LNG to other countries where the United States does not have a Free Trade Agreement (FTA). However, the U.S. does not have a standing FTA with any individual country within the EU.

According to Reuters, four projects will be affected by the decision, one of which being the Calcasieu Pass 2 (CP2) export terminal facility in Louisiana, which currently has half of its capacity contracted to be shipped to Germany.

Currently, the U.S. is the largest exporter of LNG, boasting an exporting capacity of approximately 11.4 billion cubic feet per day (Bcf/d), which is expected to continue to rise over the rest of the decade. Recent estimates from the Energy Information Administration (EIA) expect total capacity to double by 2027, reaching 24.3 Bcf/d. These estimates were made before the President’s decision and considered upcoming LNG exporting projects which will now be delayed or possibly rejected entirely.

While the pause was enacted in part to consider the climate impacts of increasing LNG exports, some gas producers argue that more natural gas use allows other countries to reduce their use of coal for generating electricity. Coal emits significantly more carbon dioxide than natural gas. The Marcellus Shale Coalition and some of its member companies recently sent a letter to the Secretary of Energy and other administration officials, arguing that LNG from the Marcellus region will help countries meet environmental and economic goals while strengthening national security to prevent hostile nations from using energy as a bargaining chip.