US President Joe Biden has directed a temporary halt on liquefied natural gas (LNG) exports from new American projects, asserting concerns over their potential impact on climate change. This decision, while aiming to address environmental considerations, comes amid a Europe grappling with an ongoing energy crisis.
Biden’s pause on LNG exports is intended to allow the US Department of Energy (DOE) to reevaluate the economic and environmental criteria used in approving new export licenses. The suspension is expected to last for several months. In his statement on Friday, Biden emphasized the need to assess the impacts of LNG exports on energy costs, national energy security, and the environment, framing the move as a response to the pressing climate crisis.
Approximately half of the American LNG exports last year were directed to Western Europe, with the US exceeding its annual delivery targets to the European Union for the last two years. Despite the pause, Biden assured that it would not immediately impact the ability to supply LNG to US allies.
However, Europe is already ensnared in an energy crisis. Germany, having shifted away from Russian gas supplies, is facing challenges. Economy Minister Robert Habeck acknowledged the country’s difficult situation after abandoning Russian gas, a source that accounted for 40% of Germany’s gas imports before the Ukraine conflict escalated.
The replacement of Russian gas with LNG from the US, along with energy from Norway and the Netherlands, has incurred substantial costs for Germany. The government has implemented significant subsidy packages to prevent major industrial firms from relocating, yet the country’s industrial output fell by 2% last year, and the overall economy contracted by 0.3%. High inflation, surging energy prices, and weak foreign demand were cited as contributing factors by the Federal Statistical Office.
The pause on LNG exports could impact projects like the Calcasieu Pass 2 facility in Louisiana, set to become the nation’s largest export terminal. The facility, with half of its output destined for Germany, faces delays as it awaits DOE approval. Critics argue that this move sends a concerning signal to US allies, questioning the reliability of American support in times of energy demand.
The situation raises uncertainties about Europe’s gas supply, having initially cut imports from Russia to counter financial support for Putin’s war efforts in Ukraine. Now, with the pause on US gas exports due to climate concerns, questions linger about the potential impact on Europe’s gas availability.
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