API: The Biden administration's freeze on LNG projects is a gift to Putin
Today in Fortune, API President and CEO Mike Sommers outlines what's at stake under the Biden administration's LNG permit freeze and warns of the real-world consequences for U.S. allies, American jobs and climate progress.
President Joe Biden’s decision to freeze pending and future American liquefied natural gas (LNG) projects is a shortsighted political gimmick with real-world consequences. Not only is it a mistake that could impact the security of America and its allies, U.S. jobs and economic growth, and environmental progress, but it’s also a clear win for Russia and all the countries that want to see America and its friends lose.
Curtailing reliable future U.S. LNG supply to Europe, while Russia continues to weaponize energy against nations opposed to its war in Ukraine, is a blow to America’s security and a gift to Moscow. As energy historian Daniel Yergin said, “No one hates U.S. LNG more than Vladimir Putin.”
The decision ultimately diminishes U.S. global leadership. As Europe committed to moving away from Russian pipeline natural gas in 2022, America’s natural gas producers stepped into the breach, sending more than 800 LNG cargoes to Europe, a 141% increase from 2021, which helped Europe avert the worst of an energy crisis. No matter how he spins it, President Biden’s March 2022 pledge to significantly increase U.S. LNG supplies to our allies overseas through 2030 now looks like a broken promise.
The president’s decision has raised concern on both sides of the aisle. To name two of many examples, Sen. John Hickenlooper (D-CO) fears “needless levels of what ends up becoming red tape” and House Majority Leader Steve Scalise (R-LA) sees it as “an outrageous attack on American energy” from within.
Europe is alarmed by this energy misstep. EuroGas President Didier Holleaux said U.S. LNG has been a “relief” and contributed to the “stabilization of gas and electricity prices in Europe for consumers.” Asian importers are equally concerned. Both continents know they face significant long-term supply needs, as projections show. America can meet those needs.
But America as an LNG supplier is much more than a matter of aiding allies. LNG demand spurs domestic production–and our domestic supply remains robust. U.S. natural gas prices remain among the lowest in the world, according to the International Energy Agency. While U.S. LNG supplies reached record highs in 2023, domestic prices declined 62% as U.S. natural gas production also surged to record levels–demonstrating America’s ability to meet rising global demand for natural gas while maintaining a well-supplied domestic market.
Recent research commissioned by the American Petroleum Institute and conducted by ICF quantified the domestic benefits of LNG by projecting the jobs and economic contributions that could result from fulfilling the president’s pledge to Europe: an average of 71,500 U.S. jobs from 2025 to 2030, $63.1 billion in capital expenditures for projects throughout the supply chain, and a total of $46 billion to the U.S. economy over the same period.
Despite those numbers, LNG project reviews are taking 11 months on average, a permitting process that took seven weeks during the previous administration. The president’s latest misstep will delay an already glacial bureaucratic process.
Ironically, the activists who have pressured the administration to halt U.S. LNG approvals hurt their own cause, because science repeatedly has shown that LNG can accelerate global emissions reductions by displacing higher-emitting fuels. The U.S. Energy Department’s own research–under both Democratic and Republican administrations–has shown this. And America has proven it. Switching to natural gas from coal in the U.S. power sector is a key reason our carbon dioxide (CO2) emissions from that sector are at generational lows. Natural gas accounted for more than 60% of the CO2 reductions from the U.S. power sector from 2005 to 2021.
Yet, around the world, coal use is rising–and likely set a record in 2023, according to the International Energy Agency (IEA).
The administration appears to be playing election-year politics by prolonging the LNG permitting process as a sop to activists. Too much is at stake to put the red light on projects in a bid to secure a specific bloc of votes. U.S. energy policy should not be candy doled out for political reasons.
There is no additional review needed to understand the clear national security, economic, and climate benefits of U.S. LNG. The de facto freeze on natural gas projects is a decision that should not stand.
