Congressional hearings scheduled for February 6 and 8 expose the Biden administration’s massive energy policy blunder. This misstep will impede American energy production, undermine economic growth, endanger the hard-earned U.S. status as the world’s largest liquefied natural gas (LNG) exporter, and threaten Washington’s strategic credibility among friends and foes. The hearings are set to unite a strange assortment of political bedfellows, including liberal democrats determined to support Ukraine and conservative Republicans determined to expand LNG exports. In late January, Energy Secretary Jennifer Granholm announced a series of new measures aimed at the U.S. LNG sector. Projects already completed or near completion, including several large export terminals in Texas and Louisiana, will be put on hold indefinitely.
Irrespective of what the White House claims, this move is political. Biden’s low approval ratings spell trouble in November. His campaign managers seem to have decided to placate his left flank and drive-up enthusiasm by playing the environmental card. Climate crusaders have grown increasingly influential in Congress and beyond in recent years, a sign of Gen Z’s growing political clout.
However, regardless of economic or environmental pros and cons, this strategy is simply bad energy policy, bad politics, and bad foreign policy. It will limit exports and shave off a significant share of U.S. GDP growth. The states Biden needs most, including Pennsylvania, Michigan, Ohio, Virginia, Georgia, and North Carolina, are skeptical. While “Progressive” pollsters argue that Democratic voters, particularly the younger demographic, favor limiting LNG exports, it is unlikely that increased Democratic turnout will offset the losses of independent voters and shale gas states.
Beyond partisan politics, this move undermines America’s geopolitical interests, first and foremost in Europe. Following Moscow’s invasion of Ukraine, Europe cut its piped gas exports from Russia by approximately 100 billion cubic meters (BCM) in 2022, replacing much of it with LNG imports. Weakening our European allies benefits Russia—a move more expected from Trump than Biden. Higher gas prices will result in energy-triggered inflation in Europe and may force European manufacturers to scale back production due to higher electricity prices.
Europeans are worried. “Total consumption in the European Union (EU) is some 350 BCM, and only 33 BCM (8.5 percent) of that gas is produced in the EU. In 2015, the EU’s gas production still covered some 21 percent of overall consumption. 30-50 percent of the overall gas supply to the EU is based on LNG imports from various sources around the world,” says Benjamin Lakatos, CEO of MET Group, a large Swiss-based LNG trader.
Lakatos continues, “As a European, I take a pragmatic approach—it is in our continent’s interest to see more LNG from the U.S. coming to Europe at an affordable price. In the past two years, in the middle of heavy turbulence, the U.S. had a stabilizing effect on the global gas markets… The U.S. has become more important, as Europe is seeking new gas and LNG suppliers to improve the security of supply and reduce prices. U.S. LNG represents a significant part of the overall supply to Europe, especially since the war in Ukraine started in February 2022.”
He concludes, “As one of the largest private gas market players in Europe, MET is very much interested in buying LNG from the U.S. on a long-term basis. We already signed a Memorandum of Understanding, a non-binding Agreement with Commonwealth LNG for the supply of LNG over 20 years.”
Turning back to Russia and its allies, Biden just handed Moscow a massive win. Russia is expanding its LNG exports to reach 100 million tons by 2030. Energy is not optional, and energy demand is relatively inelastic. Penciling in higher energy prices is a surefire way to ease Russian budget constraints and, by extension, enable Moscow’s assault on Ukraine. If Biden believes players like India won’t take full advantage of Moscow’s discounted offerings, he should think again.
More broadly, the ban will negatively affect U.S. interests in Southeast Asia and the Middle East, from Gaza to Yemen to Iran. Energy-poor states seeking to diversify their energy portfolios away from autocratic exporters like Russia, Qatar, and Iran will have to keep looking.
The Biden gas export decision isn’t even environmentally sound. First, LNG is a transition fuel. It pollutes the environment at one-sixth the rate of oil and one-ninth of coal and releases significantly less greenhouse gas emissions. It thus can mitigate immediate environmental harm quickly.
Second, LNG provides a cheap and steady energy baseload when the sun doesn’t shine and the wind doesn’t blow. LNG is required to make sure renewables can come online. Renewable sources are just not ready for prime time. Energy demand usually peaks in the evening when solar power is inoperable. Similarly, the wind is variable. It doesn’t always blow, and its intensity fluctuates heavily.
Finally, we lack affordable and scalable energy storage capacity, as current lithium batteries are less energy-dense than hydrocarbons. Additionally, scaling up breakthroughs takes time. Installing tens of millions of new industrial batteries across power grids may take decades.
The choice is not between LNG exports and green energy. Rather, the choice is between American LNG exports and Qatari, Russian, or Algerian LNG exports. The choice is between LNG or oil and coal. The United States cannot afford to indulge in looking at LNG exports through green-tinted glasses. The Biden administration needs to return to reality, lest it wreck its own reelection prospects and the energy security of America’s foreign partners.
Dr. Ariel Cohen is a nonresident senior fellow at the Atlantic Council’s Eurasia Center and a member of the Council of Foreign Relations. He is a recognized authority on international security and energy policy and a leading expert in Russia, Eurasia, and the Middle East. Dr. Cohen is also a managing director of the Energy, Growth, and Security Program (EGS) at the International Tax and Investment Center (ITIC).