Biden’s gas export review has uncertain consequences

President Biden’s pause on gas export projects may not have significant impacts by itself, energy analysts say. But the changes he’s making to underlying gas project reviews could have implications for global gas supply and climate change, depending on whether gas projects face higher risks of being rejected.

The Biden administration announced Friday it would pause approvals for new natural gas export projects as it weighs new climate and other criteria for evaluating them.

The administration said four projects — two large and two small — were expected to see immediate impacts. Projects that have already been approved or are exporting liquified natural gas (LNG) are not expected to be affected.

Biden said in a statement that the break would allow agencies to “take a hard look at the impacts of LNG exports on energy costs, America’s energy security, and our environment.”

“This pause on new LNG approvals sees the climate crisis for what it is: the existential threat of our time,” he added.

Analysts told The Hill that the pause itself may not have significant impacts on climate or energy markets, especially in the short-term. 

Individual projects “will definitely be put on hold” but “given that we have so much export capacity already approved under construction, I don’t see immediate or near-term impacts,” said Joseph Majkut, director of the Center for Strategic and International Studies’s energy security and climate change program. 

Analysts with research firm Wood Mackenzie said the pause on new approvals could have some long-term effects, but that depends on how long it lasts.

“Investment delays limited to 18-24 months could still be absorbed by the global LNG market given the amount of LNG currently under construction,” analysts said in commentary shared by a Wood Mackenzie spokesperson. 

“However, longer delays and continued uncertainties around the potential for US LNG would have long-lasting implications for the global LNG market, possibly jeopardizing the role that gas can play in the energy transition,” they added.

It is not exactly clear how long the pause will last, with officials saying last week that updating the assessment process could take a few months and would be followed by a comment period before any changes become final.

It is also not clear what the outcome will be — whether it will lead to criteria that requires more serious climate safeguards or even result in some projects being blocked entirely. 

“The questions around ‘What are the climate impacts?’ [and] ‘What are the geopolitical impacts’ are really going to come down to what the [Energy Department] ends up deciding in terms of how it wants to approve LNG facilities going forward,” Majkut said. 

He and others said requiring stricter climate mitigation measures could ultimately result in lowered emissions.

“I think it’s most important that all of the existing LNG facilities and any future ones are operated under the best conditions possible so that the whole industry has as minimal a climate impact or as positive a climate benefit as we can muster,” Majkut said. 

Doug Vine, director of energy analysis at the Center for Climate and Energy Solutions, also said that requiring measures that would make U.S.-produced gas cleaner would be “very climate positive.”

But analysts warned that blocking gas export projects outright might just lead to that gas being replaced with supplies from other countries.

Makjut said that if the U.S. makes it more difficult to approve natural gas export projects, it would “make the U.S. LNG industry less competitive compared to peers” such as Qatar and Russia. 

Analysts also said that for some countries, cutting off access to U.S.-produced gas could extend their reliance on coal, which contributes even more to climate change when burned than gas does.

“If this pause becomes longer and there’s some kind of policy initiative around limiting LNG exports, then I think the whole world goes into a situation where the energy transition slows in pace,” said Ademiju Allen, a senior analyst at Rystad Energy.

“As it sits right now, it would definitely be more of a shift towards coal” rather than renewables, since coal is cheaper internationally, he added.