The U.S. government has announced a temporary halt on new gas export projects pending a thorough evaluation of their economic and environmental implications. The decision, outlined in a statement by President Joe Biden on Jan. 26, is aimed at scrutinizing the impact of liquefied natural gas (LNG) exports on energy costs, national security, and the environment.
“During this period, we will take a hard look at the impacts of LNG exports on energy costs, America’s energy security, and our environment,” President Biden said.
The pause will impact four pending projects concerning exports to countries lacking free trade agreements with the United States. Senior administration officials estimate that the assessment process for each project may extend over several months.
According to a White House fact sheet released with President Biden’s statement, the Department of Energy’s approval process for LNG projects has not been updated for five years, prompting the need for a comprehensive revamp.
It said that the goal is to better evaluate how gas exports might impact consumer costs in the U.S. and account for the greenhouse gas emissions associated with each project. Methane, the primary component of natural gas, is identified as a potent greenhouse gas that often escapes from gas infrastructure.
Despite being the world’s leading gas producer and exporter, President Biden is facing increasing pressure to reduce U.S. gas development and demonstrate commitment to addressing climate change.
The recent surge in LNG exports to Europe following Russia’s invasion of Ukraine has added complexity to the situation. Reports outline that a letter from 60 members of the European Parliament urged President Biden not to exploit Europe as a reason to expand LNG exports. Approximately half of U.S. LNG exports went to Europe last year, according to the White House fact sheet.
The news has been met with criticism from industry leaders. Mike Sommers, Chief Executive Officer (CEO) of the American Petroleum Institute (API), expressed concern before President Biden’s confirmation. Lorenzo Simonelli, Chairman and CEO of Baker Hughes, voiced disappointment following the announcement, stating, “Policies that create rather than alleviate uncertainty for long-lead, strategic energy projects are counter-productive for the U.S., its global partners, and ultimately for energy development of all kinds. We strongly oppose this moratorium and call on the Administration to approve pending export applications with no further delays.”