Home Business European Union, industry at odds over energy security impact of Biden administration’s LNG pause: ‘worrying’

European Union, industry at odds over energy security impact of Biden administration’s LNG pause: ‘worrying’

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European Union, industry at odds over energy security impact of Biden administration’s LNG pause: ‘worrying’

European Union (EU) energy officials are at odds with industry over the long-term impact of the Biden administration’s pause on liquefied natural gas (LNG) exports and the impact on Europe’s energy security.

The U.S. has become the largest exporter of LNG to Europe as EU countries rushed to replace gas imported from Russia that was cut off in the wake of Moscow’s invasion of Ukraine in 2022. Over 60% of U.S. LNG exports went to Europe in the last two years. 

A spokesperson for the European Commission told Reuters that the U.S. LNG pause “will not have any short-to-medium term impacts” on the EU’s security of the gas supply. The pause impacts approvals of new LNG export projects without affecting permits that have already been approved.

But energy industry groups are sounding alarm that the pause could prove detrimental to Europe’s energy security in the future if the supply of gas from LNG exports proves insufficient to meet demand.

BUSINESS GROUPS FROM US, EUROPE AND JAPAN PUSH BACK ON BIDEN LNG PERMIT PAUSE

Europe has been the largest importer of U.S. liquefied natural gas (LNG) exports in recent years, using facilities like this in Wilhelmshaven, Germany. (Photo by Stefan Rampfel/picture alliance via Getty Images / Getty Images)

“The planned review could have negative consequences for Germany’s and Europe’s energy security in the future, for example, in the form of price increases due to volume shortages on the market,” said Uniper, Germany’s largest gas trader.

One of the LNG projects put on hold due to the pause, Venture Global LNG’s Calcasieu Pass 2 plant, is planned to serve as an LNG source for SEFE, another German gas importer, as well as Japan’s top LNG buyer JERA.

The International Gas Union, which has over 150 members, said the U.S. decision “is highly worrying… (and) will harm global energy security and emission reduction.”

US LED THE WORLD IN LIQUEFIED NATURAL GAS (LNG) EXPORTS IN 2023

LNG TEXAS

The Biden administration paused approvals of new LNG export facilities. (Mark Felix/Bloomberg via Getty Images / Getty Images)

U.S.-based industry group LNG Allies called on the Biden administration to allow the market to decide which LNG projects move forward in the years ahead. A memo from the group said, “Most energy outlooks expect global growth in LNG demand to continue well into the 2030s. If U.S. supply doesn’t rise to meet that demand, will countries needing natural gas turn back to Russia? Or to coal?”

Over the long term, Europe’s gas consumption is expected to decline as countries shift away from fossil fuels to meet climate change goals – although strong demand growth elsewhere in the world is expected to sustain the market for LNG.

Anne-Sophie Corbeau, a researcher at Columbia University’s Center on Global Energy Policy, told Reuters that the “EU will become a declining gas-consuming region” in the future. “Between growing biomethane, Norwegian gas, some African gas, Azeri gas and declining production, we might just see eventually a progressive decline of our LNG demand, especially post-2030, and this is precisely for that period that the Biden decision would matter,” she added.

BIDEN ANGERS FOSSIL FUEL PROPONENTS WITH ‘DEVASTATING’ MOVE TO HALT NATURAL GAS PROJECTS

LNG Tanker

The U.S. became the world’s largest LNG exporter last year, with Europe and Japan the largest importers of U.S. gas. (Photographer: Kiyoshi Ota/Bloomberg via Getty Images / Getty Images)

The Biden administration, acting through the Department of Energy (DOE), implemented a pause on new LNG export authorization requests to consider whether exports to non-free trade agreement (FTA) countries are in the public interest. Notably, both the European Union and Japan are non-FTA countries despite having deep and longstanding economic ties with the U.S.

The move doesn’t impact previously approved export applications and the DOE noted that the U.S. currently has the capacity to export 14 billion cubic feet of LNG per day, with 48 billion cubic feet in total authorizations approved.

“The administration is committed to the affordability of energy and economic opportunities for all Americans; ensuing energy security here in the U.S. and with our allies; and protecting Americans against climate change and winning the clean energy future,” Secretary of Energy Jennifer Granholm said in a statement announcing the pause. “This practical action will ensure that DOE remains a responsible actor using the most up-to-date economic and environmental analyses.”

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Last year, the U.S. surpassed Australia and Qatar as the world’s largest LNG exporter – with Europe as the largest importer followed by countries in Asia. Japan was the world’s second-largest importer of LNG in 2023, according to data from the country’s finance ministry, and the share of its imports from the U.S. rose by 34% year-over-year as imports from the Middle East and Russia fell by 12% and 11%, respectively.

Reuters contributed to this report.

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