The White House freeze on issuing key LNG export permits for new projects is creating doubt for Europeans about the country's long-term role in helping the continent achieve its goal of becoming independent of Russian gas by 2027, a representative of industry group Eurogas told a US Senate panel Feb. 8.
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Register NowEurogas Secretary General James Watson described the Biden administration's permitting pause as "strange" and questioned the timing in testimony before the Senate Energy and Natural Resources Committee, saying "no country in Europe has welcomed this decision."
"This pause is relatively damaging because it's about how you do business with a new partner on long-term contract fronts," Watson said. "It reduces the confidence that EU industry has in the partnership that we are trying to build with the US."
Committee Chairman Joe Manchin, Democrat-West Virginia, called on the administration to reverse the pause immediately in comments to a top US Department of Energy official, Deputy Secretary David Turk.
"All we're asking for is to consider removing the pause until we do the facts," Manchin said. "We're not there. We don't have that information. I don't want to scare the bejesus out of our friends."
The Biden administration announced the freeze on pending export applications to non-Free Trade Agreement nations Jan. 26, saying it would last until the DOE can update how it considers impacts of LNG exports on climate change, the US economy, and national security. Turk defended the move as necessary given the increase in US LNG exports since the DOE's last policy assessments in 2018 and 2019.
"We're going to do it as quickly as we possibly can," Turk told the Senate panel. "Months, not years."
The pause primarily affects new projects that have yet to advance to construction, meaning the near-term impacts are limited despite the longer-term uncertainty about the global market share of US LNG.
US role
The European Commission and the White House in March 2022 issued a joint statement pledging to "ensure stable demand and supply" for at least 50 Bcm of additional US LNG until 2030. Watson cited the pledge during the hearing, saying Europe only saw a 40 Bcm increase in 2023.
"Is the United States going to honor its commitments?" Watson said. "Is the outcome of the review going to be not just a pause but a total stop? Where then shall we source our gas?"
The Biden administration's commitment to help Europe replace Russian gas "underscores the strategic value of these exports," Charlie Riedl of the Center for Liquefied Natural Gas testified. But the new pause "contradicts that commitment" and risks undermining diplomatic relationships, he said.
Asian market buyers are asking the same questions as buyers in Europe, Riedl said.
"The unknown of how long this pause takes while they conduct this study is enormously problematic in trying to answer not only to the market but to the investors who are lined up to make large-sum investments in these projects," Riedl said.
Turk multiple times during the hearing downplayed the need from key allies for more US LNG going out to 2030 than has already been approved.
"Europe's demand is going down 20%; Japan has already peaked their natural gas and their LNG use... Korea's is going to peak by 2030," Turk said. "The country who's not peaked, in fact, will increase their LNG appetite is China," he said estimating a 60% rise in China's LNG demand to 2030.
Asked by Senator Angus King, Independent-Maine, whether the US risks exporting its economic advantage of lower-priced energy to China, Turk said that is one reason it is important to update the analysis.
Republican countermeasures
Republican lawmakers in the House have lined up behind legislation that would strip the DOE of its role reviewing LNG exports, but backers will need to find some Democratic support to move the needle on the policy.
Senator John Barrasso, Republican-Wyoming, Feb. 8 said there would be an attempt to block the pause on national security funding legislation on the Senate floor.
"If it is truly open for amendment," Barrasso said he would propose one "eliminating what the president has done."
The pause may also face challenges in court. The attorneys general of 23 Republican-led states laid out legal claims in a Feb. 6 letter to the White House and DOE.
"We feel very comfortable of our legal position here, and frankly, I think it would be irresponsible if we weren't taking a step back and doing this kind of rigorous analysis," Turk said.
But lawmakers, including Manchin and Senator Lisa Murkowski, Republican-Alaska, questioned why the DOE needed to put pending applications on hold while it updates its policy.
"We're in a little bit of a mess right now in sending a clear and concise message that the United States is going to be there for our friends and our allies," Murkowski said.