Biden’s Liquefied Gas Export Ban Pleases Greens at Expense of Jobs at Home, Influence Abroad

COMMENTARY Energy

Biden’s Liquefied Gas Export Ban Pleases Greens at Expense of Jobs at Home, Influence Abroad

Feb 5, 2024 3 min read
COMMENTARY BY
Victoria Coates, PhD

Vice President, Kathryn and Shelby Cullom Davis Institute

Victoria is Vice President of Heritage’s Kathryn and Shelby Cullom Davis Institute for National Security and Foreign Policy.
A protest against Xcel Energy's plan to build new natural gas plants took place in front of Colorado State Capitol building in Denver, Colorado on November 15, 2023. Hyoung Chang / The Denver Post / Getty Images

Key Takeaways

As part of his effort to subjugate the continent, Vladimir Putin cut off the natural gas on which the European Union’s biggest economy had come to rely.

If another such spike in global demand occurs, and if President Biden’s policy is implemented, there will be no fresh American surge of gas for partners and allies.

The impetus behind this misguided policy recommendation is the radical climate lobby, which has concluded that natural gas is just another fossil fuel.

As Russia‘s war in Ukraine dragged into fall 2022, fears of an energy crisis in Europe became acute. As part of his effort to subjugate the continent, Vladimir Putin cut off the natural gas on which the European Union’s biggest economy had come to rely.

The crisis didn’t come, however, largely because U.S. natural gas production was surging at just the right moment, and could fill the gap with increased exports.

But now the Biden administration is considering banning further exports to forestall development of new liquefied natural gas facilities. That would mean other allies who might want or need more gas from the United States, notably Japan and India, would have to look elsewhere.

The first step toward this disastrous policy was implemented last week when the Department of Energy announced it is delaying its decision to approve LNG export licenses for some 17 new export projects in Louisiana so their potential environmental impact can be measured more closely.

This action will indefinitely delay production that markets had been expecting such as Venture Global LNG’s Calcasieu Pass 2 in Louisiana, which would be the world’s largest such facility.

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The Biden administration is making this catastrophic decision just as the strategic benefits of the previous administration’s gas-permitting policy were becoming concrete. The 14 permits for new facilities former President Donald Trump issued resulted in a roughly 9% increase in U.S. natural gas exports, which came online just as the Russian gas came off.

If another such spike in global demand occurs, and if President Biden’s policy is implemented, there will be no fresh American surge of gas for partners and allies. This will be particularly bad news for the European Union, which has traded dependence on imports from Russia for more benign imports from the U.S. while resolutely refusing to develop its own resources in the Irish and North seas.

Japan and India present two more such scenarios in which a lack of U.S. product could be both a strategic and environmental blow to America.

Japan is the world’s third-largest importer of LNG (after China and the EU), and while its overall imports are declining due to the civil nuclear plants coming back online after the Fukushima disaster, imports from the U.S. rose 34% last year to 5.5 million tons, compared with 6.1 million tons from Russia and 6 million from the Middle East.

So these two sources, while shrinking, still account for more than two-thirds of Japan’s imports, and either could be disrupted by further sanctions against Russian gas, or by an emboldened and belligerent Iran closing the Strait of Hormuz.

But if the Biden export ban comes to pass, without the added supply out of Louisiana, there would be no fresh surge of natural gas to offer a critical ally that might be facing a military challenge from China in its backyard.

India is one of the world’s three largest polluters, primarily because of its reliance on coal, and air quality has become a major public health issue. For environmental reasons, India might, as Prime Minister Narendra Modi reportedly explored while in Washington last summer, seek to increase natural gas imports from the U.S. as conversion of these coal plants to gas would reduce their emissions by more than half.

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India’s natural gas imports could more than triple by the end of this decade, placing a significant new demand on global supply. The CP2 gas, for example, could be contracted to fuel 35 of these plants annually.

But if there are no permits to export this additional gas from the stalled Louisiana projects, India would likely turn to Russia for supplies, which would not only enrich Mr. Putin but also reduce the environmental benefit due to Russian gas being dirtier. Perhaps not coincidentally, Russia has a large new LNG-export facility scheduled to come online this year.

The impetus behind this misguided policy recommendation is the radical climate lobby, which has concluded that natural gas is just another fossil fuel, and so as undesirable to them as coal.

Bill McKibben, the primary anti-gas lobbyist, referred to the Biden delay as a “massive win” that negated the need for his planned sit-in next month at the Department of Energy. But even for those who prioritize the environment above all other issues, this policy will carry a massive cost measured in lost American revenue, jobs and strategic influence.

This piece originally appeared in The Washington Times