FIRM NEWS
FIRM NEWS
Biden Administration Pauses Liquefied Natural Gas (LNG) Export Permits: What You Need to Know

On January 26, 2024, the Biden Administration continued its scattershot, but clear attack against hydrocarbons and the nation’s energy dominance—this time on the export of liquefied natural gas (LNG) from the United States.  The administration declared a temporary halt on pending decisions for permits to export LNG to non-free trade agreement countries.  The pause is slated to endure for who knows how long: more specifically, until the United States Department of Energy “can conduct a thorough update of the underlying analyses for authorizations.”

To deflect attention, the Administration is emphasizing that this move is not tantamount to a ban on LNG exports; rather, it signifies “a deliberate pause” to scrutinize pending projects currently in the queue.  At least for now, existing authorizations will remain unaffected by this review.  Don’t expect a quick review: it’s anticipated that the entire process will extend well beyond the upcoming November 5 presidential election.

Ali Zaidi, White House National Climate Advisor, suggested that the government’s existing analysis was outdated and failed to incorporate evolving information about methane, the primary component of natural gas, and its potential effect on warming the atmosphere.  The reviews of new export proposals are normally conducted on a case-by-case basis to determine their alignment with the public interest, as mandated by federal law.  However, the assumptions used in these evaluations have not been updated since 2018.

The temporary moratorium puts a halt to over a dozen proposals currently awaiting review at the Energy Department.  Notable among these are projects in Louisiana by Commonwealth LNG and Energy Transfer LP.  These ventures, along with others, will now undergo “a more rigorous analysis” to ensure that they align with current administration’s environmental considerations.

To no surprise, opinions are split on this. The usual groups are praising the Biden administration for its steps towards phasing out fossil fuels and confront the climate crisis.  But many note that the Biden administration’s pause in LNG permitting poses environmental and geopolitical risks.  Among other things, this pause may inadvertently push countries to seek LNG from nations with more polluting practices or incentivize them to turn to increased coal usage.  So ironically, the Biden administration’s green push may end up having the opposite ultimate effect.

The House of Representatives is set to vote on a measure to overturn the moratorium in the upcoming weeks.

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