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bne February 2024 Companies & Markets I 29
President Biden has frozen four LNG export licences ahead of this autumn elections to address the climate concerns of his supporters. / bne IntelliNews
Energy Secretary Jennifer Granholm told reporters on January 26. The entire process is likely to push any final decision on restarting export licences to beyond the November 5 presidential poll.
Biden said in a statement: "During this period, we will take a hard look at the impacts of LNG exports on energy costs, America's energy security, and our environment...The pause "sees the climate crisis for what it is: the existential threat of our time," Biden added.
“This pause will not have any short- to medium-term impacts on the EU's security of supply”
The decision could reshape the energy landscape in the months leading up to the US presidential election slated
for November. Since the war in Ukraine started, global energy markets have been dramatically remade and the newly commoditised LNG exports have come to play a crucial role
in the redirected energy supply routes. However, as a young industry, global production of LNG is still not enough to completely meet the new demand from the missing piped gas.
Biden officials said despite the freeze, the decision would not hurt partners, as it has an exemption for national security should partners need more LNG.
“The US is already the number one exporter of LNG worldwide – with US LNG exports expected to double by the end of this decade. At the same time, the US remains unwavering in our commitment to supporting our allies around the world. Today’s announcement will not impact our ability to continue supplying LNG to our allies in the near term,” the White House said.
Europe and Japan are both heavily dependent on LNG imports and have both complained that the US decision to freeze exports growth
will affect their economies. After the destruction of the Nord Stream 1 & 2 pipelines last year, Europe has replaced most of the 150bn cubic metres of imported Russian gas with 130 bcm of imported LNG in 2022. And Europe and Asia are increasingly in competition for the limited supplies of the supercooled gas supplies.
Last year, roughly half of US LNG exports went to Europe, and the US has worked with the EU to successfully economise consumption and manage its storage to ensure that “unprovoked acts of aggression cannot threaten its supply”, according to the White House.
In 2022, the EU and US pledged “to work toward the goal of ensuring additional LNG volumes for the EU market – with the US exceeding our annual delivery targets to the EU in each of the past two years,” the White House said in its statement.
A spokesperson for the European Commission highlighted the exemptions built into the order and told Reuters: "This pause will not have any short- to medium-term impacts on the EU's security of supply." The Biden administration said the strategic moratorium will allow the government ample time to evaluate the broader implications of increasing LNG exports on the nation's economy and its environmental commitments. Analysts say it is also a crowd-pleaser ahead of this autumn’s poll, burnishing Biden’s green credentials.
The move comes as the US was planning to significantly expand its LNG production; it recently overtook Qatar to become the world’s biggest exporter of LNG. Qatar is also planning a major increase in LNG projection with the planned North Field expansion that could come online in 2025.
The US decision to freeze the issue of export licences could last for several months, Bloomberg reports, while the election race is on and is part of Biden's broader energy platform, addressing the growing concerns of climate-conscious voters whose support is deemed crucial for the administration's aspirations for a second term in office.
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