- In 2023 the US was both the world’s largest producer of natural gas and its largest exporter of LNG, with exports that year totalling 86 million tons.
- On January 26, Biden announced a temporary pause on approvals of pending LNG projects until a review could be completed.
- Biden has not stopped exports from existing projects or construction work on future ones, whether or not they have the necessary approvals.
- The spotlight on US LNG exports is at least a chance to question whether gas should have a place in the energy transition.
Freedom LNG
- The Trump administration described US LNG exports as “molecules of freedom” in 2019 that could reduce Europe’s reliance on Russian gas.
- The traditional LNG model tied producers and consumers into long-term contracts with destination clauses that constrained where LNG could be sold.
- Instead, US LNG is sold free on board, meaning buyers (other oil and gas companies, utility companies and traders) take ownership at the export terminal, arrange shipping and sell the LNG wherever they wish.
- Industry and energy thinktank analysis suggests that the liquidity of the global LNG market will be untouched by the pause.
US LNG exports to Europe are secure for now, but Europe has pledged to significantly reduce how much gas it burns. And so, there is a lot of uncertainty around gas demand in the 2030s and beyond.
Time to take our foot off the gas?
- If countries meet future energy demand with gas instead of coal, emissions will fall.
- However, other analyses highlight the methane that leaks from pipelines and suggest that gas may actually be worse for the climate than coal.
- If this happens, the LNG industry could be building production capacity for which there is no market.
Michael Bradshaw receives funding from the UK Energy System Research Programme and EPSRC in relation to his role as Co-Director for the UK Energy Research Centre (UKERC). He also advises the government, thinktanks and companies on energy matters.