The U.S. LNG pause continues to cause uncertainty

The unnecessary and concerning pause on U.S. LNG export authorizations imposed by the current administration has now dragged on for almost half a year.? It’s deeply unfortunate, but not surprising to me as executive director of the Center for LNG, that this decision is already showing tangible negative effects on U.S. LNG projects and the broader energy market, despite the recent injunction.

Since the pause began, we have already witnessed delays in several large export projects, a potential impact of approximately 12 billion cubic feet per day (Bcf/d) of natural gas. These projects were on the brink of reaching Final Investment Decisions (FID) in 2024. The delay has also introduced uncertainty in the market, causing hesitation among investors and jeopardizing the timely completion of critical infrastructure needed to maintain U.S. leadership in global energy markets.

The U.S. has been a global leader in LNG exports, not just as a commodity but as a strategic tool for reducing global emissions, creating jobs, ensuring economic stability and strengthening diplomatic ties, especially with our allies in Europe and Asia. The administration's pause on authorizations, which began in January of this year, undermines these significant benefits and calls into question the reliability of energy agreements with the United States.

Sixteen states have sued the federal government over the pause, resulting in a U.S. District Court injunction to strike it down, stating that it is “completely without reason or logic.” While the injunction is a welcome development, it does not compel DOE to approve any of the projects that currently have their other permits and are seeking commercial activity. This in effect means that the pause continues in all but name, further exacerbating the negative outcomes of the pause. ?

Impact on Global Climate Goals and Energy Security

Natural gas, including LNG, has played a crucial role in reducing CO2 emissions in the power sector to 25-year lows due to its lower carbon content compared to dirtier fuels. LNG exports from the U.S. help replicate this success globally, particularly in regions transitioning from coal to cleaner energy sources. The International Energy Agency (IEA) forecasts continued growth in natural gas demand in Africa, the Middle East, and developing Asian markets through 2050, emphasizing the need for additional LNG export capacity to meet energy demands and clean energy goals.

The U.S. commitment to supply additional LNG to our allies in the European Union by 2030 is also at risk. This commitment is vital for reducing Europe's reliance on Russian energy and ensuring energy security for our allies. When Russia invaded Ukraine, U.S. LNG helped support European countries with more than 2 trillion cubic feet of natural gas in the first nine months of 2023 alone. These actions demonstrated our commitment to global energy security while underscoring the importance of U.S. LNG in maintaining our European allies’ energy security. The pause on LNG exports threatens this promise and could weaken U.S. relationships with key trading partners at a critical time.

Economic and Strategic Importance

LNG exports have a proven track record of benefiting the U.S. economy. Studies commissioned by the Department of Energy (DOE) have consistently demonstrated that higher levels of LNG exports lead to increased U.S. consumer spending power, natural gas supply increases, higher economic output and substantial job creation across the supply chain. These benefits extend beyond the direct employment provided by the LNG industry to thousands of jobs during construction and tens of thousands throughout the supply chain during operations.

It is unclear when the latest study will be completed, but what is clear is that each month it drags on has negative economic, environmental and energy security consequences.? For example, the pause in LNG export authorizations will significantly impact the U.S. trade balance. LNG exports have directly reduced the trade deficit by over $30 billion per year — about 1% of the U.S.'s trade balance. By 2030, with a projected 11 LNG export plants in operation, the combined value of exported LNG is expected to reach $100 billion, equivalent to 3% of the U.S. trade balance.

The pause on LNG export authorizations is a short-sighted policy that fails to consider the broader environmental, economic, and geopolitical benefits of U.S. LNG exports. It introduces uncertainty in the market, delays critical infrastructure projects and investments and undermines our strategic position as a global energy leader.

We urge the administration to lift this pause and allow LNG projects to proceed, ensuring that the United States continues to lead in providing reliable, clean and affordable energy to the world.

The study that is being conducted should use the volumes of existing economic and environmental data from nearly a decade of U.S. LNG exports that show that LNG provides a net positive benefit to the United States and the world with increased economic growth at home and lower global emissions.

CLNG remains committed to advocating for policies that support the continued growth and success of the U.S. LNG industry, benefiting both our domestic economy and our global partners. It is crucial to recognize that the path to a cleaner and more secure energy future includes a robust role for LNG.