One of the world’s leading natural gas trade groups on Tuesday joined a growing chorus of stakeholders denouncing President Biden’s decision to pause U.S. LNG export permits, saying the move would derail global energy security and jeopardize decarbonization.
The International Gas Union (IGU), which represents more than 150 members across the value chain in 80 countries that cover 90% of the global gas market, said America’s role as the world’s largest liquefied natural gas exporter has revolutionized the global gas market.
The country’s flexible contracts that allow LNG to be delivered anywhere in the world helped keep the global energy system afloat after Russia cut off natural gas supplies to Europe beginning in late 2021, the group argued.
The IGU said preserving that flexibility is “imperative to ensuring the success of the global energy transition and safeguarding international energy security, while markets provide the best counterbalance to the politicization of energy supply.”
The Biden administration temporarily paused new federal LNG project authorizations last week while the U.S. Department of Energy (DOE) reviews policies to determine whether more exports are in the public interest.
DOE said it would update its project reviews to include how LNG projects impact the environment, energy security and domestic prices. At least 17 LNG projects have pending authorizations before the DOE.
The decision, which was praised by environmental groups, comes as Biden faces a reelection challenge in November and increasing calls to take a harder line on climate change.
But IGU argued that LNG is playing a key role in keeping global emissions in check. It has “unmatched scalability and flexibility,” the group said. The surge of renewable energy supplies would also only intensify the need for more responsive, dispatchable energy, IGU added.
“The current dynamic we are seeing unfold is highly worrying,” said IGU Secretary General Menelaos Ydreos. “It is eroding these fundamental market principles and will harm global energy security and emission reduction.”
The group also warned that despite falling gas prices in Asia and Europe, the energy crisis caused by Russia’s decision to cut off supplies to Europe is far from over. Limiting U.S. natural gas exports in any way would only push prices higher in the future and prompt gas-to-coal switching, IGU said.
Ahead of last week’s announcement, Biden was expected to pause project reviews as he works to court climate voters.
ClearView Energy Partners LLC said in a note to clients on Tuesday it views the administration’s decision “as a bid to revive support in six ‘swing’ states from young voters who could, at the margin, decide the election.”
IGU has been echoed by others across the world in recent days that have decried the decision. Over the weekend, the U.S. Chamber of Commerce, BusinessEurope and the Keidanren Japan Business Federation sent a joint letter to the White House expressing concerns with the pause on export authorizations.
“Ensuring the world’s leading democracies have access to stable and secure supplies of energy is a geopolitical and economic imperative,” the groups wrote.
