Biden's DoE LNG Export Study Tepid on New Permits

The administration of U.S. President Joe Biden released a long-awaited study on the economic and environmental impacts of liquefied natural gas exports on Tuesday, saying the results underscored the need for a cautious approach to new permits.

Biden in January had paused the Department of Energy's approvals of U.S. LNG exports to big consumers in Asia and Europe so that his administration could conduct the review, triggering complaints from the oil and gas industry.

"The main takeaway is that a business-as-usual approach is neither sustainable nor advisable," Energy Secretary Jennifer Granholm told reporters ahead of the release of the study. Granholm said in a letter about the study's findings that rising LNG exports risk dramatically raising greenhouse gas emissions and could also trigger price hikes for U.S. energy consumers.

Incoming President Donald Trump, a climate-change skeptic and a big supporter of fossil fuel development, has promised to immediately end the moratorium on new LNG export permits when he returns to the White House on Jan. 20.

The study is meant to inform Energy Department decisions on new permits to export the gas. The department is required by law to determine whether exports are in the public interest.

Liquefied natural gas is natural gas that has been super-cooled to a liquid state, reducing its volume and allowing it to be transported to places pipelines do not reach.

When asked if the results of the study would give LNG opponents legal grounds to challenge new LNG export permits in court, a DOE official, speaking on condition of anonymity, told reporters that it should first be a consideration for any U.S. energy secretary. The official added that proponents of being cautious on LNG have a variety of recourses in Congress and in the courts, which the study could inform.

The study contained various scenarios of the impacts of LNG exports depending on domestic and international climate policies, technologies and resource availability.

Granholm highlighted several key findings:

The pace of growth of U.S. natural gas exports in recent years is truly astounding and many analysts say continued growth on this trajectory will quickly outpace global demand.

In four of five modeling scenarios included in the study, the amounts that have already been approved will be more than sufficient to meet global demand for U.S. LNG for decades to come.

While these dramatically increasing LNG exports generate wealth for the owners of export facilities and create jobs across the natural gas supply chain, the study found that a wide range of domestic consumers of natural gas – from households to farmers to heavy industry – would face higher prices from increased exports. Unfettered exports of LNG would increase wholesale domestic natural gas prices by over 30%. Unconstrained exports of LNG would increase costs for the average American household by well over $100 more per year by 2050.

While some tout LNG as a means to reduce the use of coal overseas (and to date that has been the case with some importing countries), the study shows a world in which additional U.S. LNG exports displace more renewables than coal globally.

However, National Ocean Industries Association President Erik Milito said: "Outdated arguments against LNG no longer align with today's energy reality. U.S. energy performance has repeatedly proven critics wrong on the global stage. The Administration is recycling the same old, tired political talking points from a decade ago, which have been shown to be completely inaccurate.

"U.S. households currently enjoy some of the world's most competitive residential natural gas prices. Remarkably, even as U.S. LNG exports hit record levels in 2023, domestic prices saw a significant 62% reduction, proving the industry's capability to cater to escalating global demands while maintaining a favorable domestic market for American households and energy consumers.

"U.S. LNG has become indispensable to global energy security, particularly in Europe, yet billions are still spent on Russian LNG imports. This financial flow could instead bolster American jobs, stimulate our economy, and fortify energy security for our allies. Lifting the permitting pause is crucial to halt this dependency and ensure affordable, stable energy supplies around the globe.

"Moreover, ending the pause would mark a significant step towards reducing emissions. Carnegie Mellon University research indicates that converting all U.S. coal plants to natural gas could substantially decrease sulfur dioxide and nitrogen oxide emissions, potentially saving $20–50 billion in healthcare costs annually due to improved air quality. By exporting LNG, we can extend these environmental benefits globally, aiding in the shift away from coal to cleaner energy alternatives.”

(Reuters Reporting by Timothy Gardner; Writing by Richard Valdmanis; Editing by Leslie Adler) (Additional reporting by Wendy Laursen)