Implications of Biden’s Temporary Pause on Planned LNG Projects

LNG has become an integral part of US foreign policy and national security. President Biden knows that pretty well.

On January 26, the Biden Administration announced a temporary pause on “pending decisions on exports of Liquefied Natural Gas (LNG) to non-FTA countries until the Department of Energy can update the underlying analyses for authorizations”. Typically, projects need to receive two major sets of regulatory approvals to move forward: approval for LNG exports from the Department of Energy (DOE), environmental/construction approval from the Federal Energy Regulatory Commission (FERC) for onshore projects, and approval from the US Maritime Administration (MARAD) for offshore projects. If a project is fully approved by both FERC and DOE, it can reach the final investment decision stage to be ready for construction works.

The White House has taken this decision to allow the DOE to review the economic and environmental impact of pending and new LNG projects seeking approval to export the super-chilled fuel to the global markets. The entire cycle of the review process is expected to take several months (after the US presidential election on November 5) to reassess the impact of LNG exports on energy costs, as well as on US energy security and environment, before making the results available for public comment. The last DOE review of LNG export projects was updated in 2018.

The administration's decision comes as a positive response to calm environmental concerns regarding various LNG projects, such as Venture Global LNG’s CP2 proposed export terminal. In this regard, the US president’s decision is considered as an indicator of his administration’s dedication to address climate change.

US as Largest LNG Supplier to Europe

Although the decision to pause pending approvals of LNG exports is temporary, it could have consequences for both the US and its allies in Asia and Europe.  

Since Russia’s invasion of Ukraine, the European Union has taken concrete measures to diversify its gas supply sources to end dependence on gas from Moscow. For its part, the US administration pledged to increase LNG shipments to help Europe switch away from Russian gas, and as a result, US exports to Europe (EU+UK) significantly increased by 162% in 2022 compared with that of 2021, reaching 48 million tons (mt). US exports further increased by 13.6% year-on-year in 2023, reaching 54.25 mt, as per the EOA’s calculations using ship tracking data (Figure 1).