Unfortunately for the world, when President Vladimir Putin invaded Ukraine with an army financed with proceeds from Russian gas exports, Europe found itself disappointed. Russia produces most of it. Fortunately for the world, the United States has emerged as the largest exporter of supercooled gas known as liquefied natural gas (LNG). Indeed, after Russia began its full-scale invasion of Ukraine, the Biden administration launched efforts to help allies use U.S. LNG transported by ship instead of Russian gas delivered by pipeline. It started and was a great success. “The United States now plays a key balancing role in the global LNG market, adding supply and flexibility to strengthen global energy security,” a recent report from the Center for Strategic and International Studies says. Says.
But on Friday, the same Biden administration ordered an effective halt to approvals of new facilities for resource exports to countries with which the United States does not have free trade agreements, a category that includes all of Europe. This is an election-year maneuver against climate change activists that will do far more to undermine key U.S. alliances than save the planet.
At issue was federal permits for LNG projects planned for the Gulf Coast. One of his projects, known as Calcasieu Pass 2 (CP2), has already secured financing and the company that owns the Louisiana facility has signed a 20-year contract to supply Germany. I was there. But under the new Biden administration’s policies, approval could be delayed until the November election as regulators closely monitor the impact on carbon emissions and domestic energy costs.
Indeed, the eight LNG export projects currently underway will remain unaffected, as will the ten projects already approved and under construction. In the short term, there will be little disruption to the European economy or, for that matter, markets around the world, which are generally well-supplied. The question is what will happen beyond that, say in the next quarter century. Eurogas, a trade association for the European natural gas industry, warned, “If the US does not add LNG export capacity, there is a risk that global supply imbalances will widen and become protracted.” “This will inevitably prolong the period of price fluctuations in Europe, leading to higher prices and, as a result, potentially affecting economic disruption and social consequences.”
Main short term The damage done by the administration’s clearly political decisions is to tarnish America’s reputation for rational, fact-based policymaking and for judiciously considering climate control from a geopolitical perspective. You cannot change energy demand by destroying supply. If the US were to actually cut back on her LNG exports, it would only push customers into the hands of competitors such as Australia, Qatar, Algeria, and, of course, Russia. Perhaps some potential customers will choose to meet their needs with coal instead.
In any case, liquefying and transporting natural gas is an energy-intensive process that, even if climate activists’ claims that it increases the fuel’s carbon footprint is true, will contribute to global carbon emissions. The impact will probably be small. (Incidentally, that impact has been somewhat mitigated in the United States by the Biden administration’s emissions regulations.) Another ostensible concern behind Biden’s policies is that gas prices will rise in the United States due to gas shipments overseas. , exaggerated. Despite LNG exports surging from zero in 2015 to 86 million tons in 2023, U.S. gas prices are on the decline.
It all seems like a replay of the political drama surrounding the Keystone XL pipeline, which President Biden canceled despite a lengthy and rigorous environmental and economic process. analysis. The move also showed disdain for Canada, a U.S. ally, whose crude oil would have been shipped to U.S. refineries via pipelines. Canada appears to have conquered Keystone XL. And European countries have so far publicly downplayed friction with the Biden administration, despite long-term concerns. There is still time to devise a smarter, more sustainable approach in his next presidential term. Such an approach would recognize that the United States needs to protect the planet from the twin threats of climate change and authoritarian regimes that use energy as a geopolitical weapon.