Concerns over Europe’s Energy Security
European Union (EU) energy officials and industry representatives are clashing over the long-term impact of the Biden administration’s pause on liquefied natural gas (LNG) exports. The US, which has become the largest exporter of LNG to Europe, has implemented the pause to review new LNG export projects. While the European Commission believes the pause will not have immediate consequences for the EU’s gas supply security, industry groups warn that it could pose a threat in the future if LNG exports fail to meet demand.
Alarm Bells Ring in Germany
Uniper, Germany’s largest gas trader, expressed concerns over the pause, stating that it could lead to price increases and volume shortages in the gas market, jeopardizing Germany’s and Europe’s energy security. One of the LNG projects affected by the pause, Venture Global LNG’s Calcasieu Pass 2 plant, was set to serve as an LNG source for a German gas importer, SEFE, as well as Japan’s top LNG buyer, JERA.
International Gas Union Raises Concerns
The International Gas Union, representing over 150 members, voiced worries about the US decision, highlighting that it could harm global energy security and emission reduction efforts. The pause on new LNG export authorizations has led to questions about whether countries in need of natural gas would turn to Russia or coal if US supply fails to meet rising demand.
Industry Group Calls for Market Decisions
US industry group LNG Allies has urged the Biden administration to allow the market to determine which LNG projects proceed in the future. The group argues that global demand for LNG is expected to continue growing, and if the US fails to increase supply, countries may be forced to turn to Russia or coal.
Europe’s Declining Gas Consumption
While Europe’s gas consumption is projected to decline in the long term as countries transition away from fossil fuels to combat climate change, strong demand growth in other parts of the world will sustain the LNG market. Researchers at Columbia University’s Center on Global Energy Policy foresee a progressive decline in Europe’s LNG demand, particularly after 2030. This makes the Biden administration’s decision crucial for that period.
DOE Implements Pause on New LNG Export Authorizations
The Biden administration, through the Department of Energy (DOE), has implemented a pause on new LNG export authorization requests. The pause aims to assess whether exports to non-free trade agreement (FTA) countries, including the European Union and Japan, align with the public interest. Existing export applications will not be affected, and the US currently has the capacity to export 14 billion cubic feet of LNG per day.
Biden Administration’s Commitments
Secretary of Energy Jennifer Granholm emphasized the administration’s commitment to affordable energy, economic opportunities, energy security, climate change mitigation, and clean energy. The pause allows for responsible decision-making based on up-to-date economic and environmental analyses.
US Becomes World’s Largest LNG Exporter
In 2023, the US surpassed Australia and Qatar as the world’s biggest LNG exporter. Europe emerged as the largest importer, followed by Asian countries. Japan, the second-largest LNG importer, saw a 34% increase in imports from the US compared to the previous year, while imports from the Middle East and Russia declined by 12% and 11%, respectively.