Biden Administration Pauses New LNG Approvals

The Biden administration has paused new Department of Energy (DOE) approvals of proposed liquefied natural gas (LNG) export projects. This decision will not affect current export projects or those under construction. But proposed projects waiting for permits will now be indefinitely halted, probably until 2025. During the pause, the DOE will review how it evaluates proposed projects as consistent with public interest.

Q1: What is this pause?

A1: The Biden administration announced a “temporary pause” on pending DOE authorizations for exports to countries without a free trade agreement with the United States (non-FTA countries). These DOE authorizations, in addition to Federal Energy Regulatory Commission (FERC) permits for the siting and construction of LNG export facilities, are the two key approvals that all major export projects must win before taking a final investment decision. Under the Natural Gas Act, the DOE is required to approve such authorizations unless it finds that doing so would not be in the public interest. The Biden administration now plans to reassess the way the DOE conducts these public interest reviews, especially to account for climate considerations, domestic energy costs, and U.S. energy security.

Q2: What drove this decision?

A2: Environmental campaigners have focused on this issue for months, arguing that the U.S. LNG export boom is incompatible with U.S. climate commitments. These groups argue that such exports will lock in fossil fuel consumption to the detriment of renewable energy sources. They also allege—citing questionable analysis—that lifecycle emissions of U.S. natural gas exports are worse than coal. Effective campaigning and public pressure had a major impact, and in November, more than 60 lawmakers requested changes to the way the DOE examines the public interest associated with LNG export projects. Today’s White House statement and fact sheet suggested the DOE will now update the way it conducts the economic and environmental analysis that underpins its export authorizations, with an emphasis on climate impacts. Previous studies done by the DOE between 2012 and 2018 examined the potential impact of U.S. LNG exports on the domestic economy and energy prices. Those studies generally found that LNG exports would create net public benefits and would have a limited impact on domestic natural gas prices.

Q3: How will this affect U.S. LNG supplies?

A3: Current LNG exports and projects under construction will not be affected. The United States is already the world’s largest LNG exporter, surpassing Australia and Qatar last year. Five major LNG export projects under construction will nearly double U.S. LNG export capacity by the end of the decade. This pause affects future projects, including several proposed projects that are awaiting DOE authorizations and hoped to reach final investment decision this year. Although today’s statement is about prospective projects, it will have commercial ramifications. It is possible that LNG buyers will turn their attention from projects now in limbo to those that are already fully permitted by FERC and the DOE. The decision could also aid other LNG suppliers, such as Qatar, that are seeking to lock up their own commercial deals.

Q4: How will U.S. allies and trade partners react?

A4: U.S. LNG exports have been a critical source of global energy security in the past two years. Without substantial, flexible LNG supplies from the United States, it is difficult to imagine how Europe could have adjusted to the dramatic drop in pipeline gas supplies from Russia. European LNG demand soared by 60 percent in 2022, and U.S. LNG met much of this demand. The Biden administration has presumably been engaged in extensive conversations with policymakers in Europe and Asia to explain this decision and reassure them that exports will not be affected. But LNG-importing countries will be concerned about the policy climate in Washington. One concern will be that future supply constraints in the United States will make it harder for Europe to depend on non-Russian gas supplies over the medium to long term (Russia still supplied about 13 percent of European LNG imports in 2023, according to Kpler data). Japan and South Korea, two of the world’s largest LNG importers, also tend to be quite concerned about security of supply, and both countries value the flexibility, commercial benefits, and diversification of supply provided by U.S. LNG.

Ben Cahill is a senior fellow with the Energy Security and Climate Change Program at the Center for Strategic and International Studies (CSIS) in Washington, D.C. Joseph Majkut is director of the Energy Security and Climate Change Program at CSIS.

Ben Cahill
Senior Fellow, Energy Security and Climate Change Program
Joseph Majkut
Director, Energy Security and Climate Change Program