Biden Administration's Plan to Freeze New Natural Gas Export Projects

The Biden administration is set to review new natural gas export terminals, a process that could halt the development of new projects for up to 15 months, according to sources familiar with the matter. The review aims to assess the impact of the rapid expansion of the natural gas industry on climate change and the environment, as well as its effects on local communities. This move could significantly impact the future of the natural gas export business, potentially conflicting with some of the administration's foreign policy objectives.

Freezing New Projects

The review is expected to put a hold on the development of CP2, a large-scale export project planned for coastal Louisiana by Venture Global LNG. Environmental groups have urged the administration to block this project, citing concerns about its potential to perpetuate the use of fossil fuels and exacerbate climate change.

Impact on Global Energy Market

The United States has become the world's largest producer of natural gas, with its exports playing a crucial role in helping Europe reduce its reliance on Russian supplies. Despite the oil and gas industry's opposition to the review, administration officials are confident that the moratorium on new export permits will not disrupt the existing U.S. natural gas shipments, as well as the projects currently under construction.

Environmental and Economic Considerations

The review, which involves key figures such as Energy Secretary Jennifer Granholm, White House clean energy advisor John Podesta, climate advisor Ali Zaidi, and energy security advisor Amos Hochstein, seeks to update the criteria used by the Department of Energy (DOE) for evaluating new LNG export applications. It aims to incorporate factors such as climate change, environmental justice, and domestic economic impacts when assessing applications to export LNG to non-free trade agreement countries.

Industry and Government Response

Venture Global LNG criticized the potential moratorium on new permits, warning that such an action could have significant repercussions on the global energy market and signal a lack of reliability from the United States. However, a White House spokesperson declined to comment on the matter.

Implications for the Future

The review would not affect the eight existing LNG export plants or the 10 projects currently under construction that already hold DOE export permits. However, it would pause the approval of new permits for an additional 10 projects that have applied for DOE permits but have not yet received them, potentially doubling the amount of U.S. LNG going to market by 2028.

The decision to delay approvals for new LNG export permits until after the November election could serve to appease environmental groups while also aligning with the administration's climate and environmental objectives. Despite concerns from industry stakeholders, the review underscores the Biden administration's commitment to reevaluating the impact of natural gas exports on a global and domestic scale.