Biden moves to stall gas export projects that Trump promises to boost

The Biden administration on Tuesday released a long-awaited analysis of the dangers that liquefied natural gas exports pose to the environment and the economy, raising a potential hurdle to a central part of President-elect Donald Trump’s energy agenda.

The Energy Department study could undermine Trump’s plans to immediately issue permits for billions of dollars’ worth of facilities that export liquefied natural gas, or LNG. Environmentalists plan to cite the analysis in future lawsuits over the Trump administration’s approvals of these projects, which some have called “climate bombs” because of their enormous environmental footprints.

The incoming administration “clearly wants to take a different approach and start approving permits as fast as they can. But the study’s findings could complicate that approach,” said Ben Cahill, an energy scholar at the University of Texas at Austin.

The Biden administration in January paused the approval of LNG export projects while studying their effects on climate change, the economy and national security. Trump has promised to end the pause on his “very first day back” in the White House, saying it has stifled investments and jobs in the domestic gas industry.

The Trump administration is expected to rebut the study and replace it with more industry-friendly findings. But that process could take “anywhere from several months to several calendar quarters,” analysts with the firm ClearView Energy Partners wrote in a recent note to clients.

LNG is a form of natural gas that has been cooled to a liquid state, allowing it to be easily stored or shipped overseas in specially designed tankers. The United States ranks as the world’s biggest LNG exporter, and its shipments played a crucial role in helping European countries break free of their reliance on Russian gas at the outset of the war in Ukraine.

The gas projects already approved and under construction are expected to double the potential volume of U.S. LNG exports by 2028. The question of approving additional gas exports has enormous environmental and political stakes: Allowing these facilities could lock in dependence on fossil fuels for decades to come, while pausing them could cede a future market to rivals and raise anxieties about global energy security.

The study, which was conducted by the Energy Department’s national laboratories, found that allowing further U.S. LNG exports would cause an additional 1.5 gigatons of planet-warming greenhouse gases to enter the atmosphere by 2050. That increase is equivalent to about a quarter of the country’s total annual emissions.

The analysis also found that sending more gas overseas would leave less gas available at home, raising wholesale domestic natural gas prices by roughly 31%. That would raise energy costs for American consumers by more than $100 per year by 2050, according to the findings.

“For some wealthier Americans, $100 per year is not a huge deal. But for those who are really in challenging financial situations, $100 per year is a big deal,” said a senior Biden administration official who spoke on the condition of anonymity because he was not authorized to comment publicly.

In addition, the study found that LNG export facilities tend to be concentrated in disadvantaged communities along the Gulf Coast. Most of these projects are in an industrial region straddling Louisiana and Texas that is already home to hulking petrochemical plants.

“Communities that are living in the shadows of LNG export projects already live among significant industrial development and would be subject to even higher levels of methane” and other harmful pollution, Energy Secretary Jennifer Granholm said on a Tuesday call with reporters.

“Those are the facts, and the final decision, of course, is now in the hands of the next administration,” Granholm added. “We hope that they’ll take these facts into account to determine whether additional LNG exports are truly in the best interest of the American people.”

The study comes amid deep uncertainty over long-term demand for LNG. Some analysts expect annual demand to grow from roughly 400 million tons last year to almost 600 million tons by 2030, a trend driven by rising energy consumption in Southeast Asia. But other analysts caution that the coming expansion of U.S. LNG exports could cause a major glut in the global market.

The study found that the gas projects already approved would meet global demand for LNG by 2050. Most of the new demand would come from China, a global adversary, it said.

Yet if the United States stops approving new LNG projects, other rivals - such as Qatar and Canada - could ramp up their own exports, said Daniel Yergin, a Pulitzer Prize-winning author and energy expert.

“This is a competitive global marketplace, and if there is a gap from the U.S., others will happily fill it,” said Yergin, the vice chairman of the financial data company S&P Global, which released its own study Tuesday on the economic benefits of the U.S. LNG industry.

Toby Rice, president and CEO of EQT, the country’s largest natural gas producer, said this month that Biden officials appear to be ashamed of the pause on approving new LNG facilities.

“I think Democrats wish they’d never done it. They never talk about it,” Rice said at the North American Gas Forum, an industry conference in Washington. “If it was a bold action you never talk about, that is probably a sign that you wish it never happened. But this was going to get overturned, regardless of the election.”

The day after Rice’s remarks, a top Energy Department official defended the administration’s handling of gas exports during a contentious hearing held by the House Committee on Oversight and Accountability.

“Across presidential administrations, DOE has been respected as one of the most significant scientific and technical organizations in the world, and when the study comes out mid-December, I think you will agree that this study is very consistent with that tradition,” said Brad Crabtree, assistant secretary in the Energy Department’s Office of Fossil Energy and Carbon Management.

Rep. August Pfluger (R-Texas) responded that “the reason that this hearing is probably being held today is because that science seems to have been departed from.”

Energy executive Chris Wright, Trump’s pick to lead the Energy Department, has argued that U.S. gas exports provide other countries an alternative to coal, a dirtier fossil fuel.

“Think of the climate movement - this is what they want, right?” Wright said in a February interview with CNBC. “You want to displace coal with natural gas if you want to lower not just pollutants but greenhouse gases. And this is going to slow that a bit.”

Though gas generates fewer carbon dioxide emissions than coal when burned, U.S. gas operations leak enormous amounts of methane, another powerful planet-warming pollutant. And while U.S. LNG exports have historically displaced coal, they are poised to displace more renewable energy than coal in the coming years, the study found.

Under the Natural Gas Act, two federal agencies are responsible for approving permits for LNG projects. The Federal Energy Regulatory Commission must decide whether to authorize the siting and construction of projects, and the Energy Department must determine whether it’s in the “public interest” to export gas to countries with which the United States lacks a free-trade agreement.

Even before the Energy Department unveiled the study, FERC last month had tossed out a prior approval for part of a mammoth LNG project on the Louisiana coast known as Calcasieu Pass 2, or CP2. The commission said its earlier analysis of the project’s air pollution was flawed and it would conduct a fresh review in the coming months.

A spokeswoman for the project’s owner, Venture Global, said in an email that the project “unquestionably meets or exceeds all required environmental air standards,” adding that the fresh review “is unnecessary and we remain ready to commence on-site construction as soon as we receive a Notice to Proceed.”

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Evan Halper contributed to this report.