The quick, quiet death of Biden’s natural gas export pause
When the Biden administration paused the approval of new liquefied natural gas exports in January, environmentalists and left-leaning politicians hailed the decision as a watershed moment for the climate movement. After months of pressure from climate activists, the Department of Energy, or DOE, announced that it would rethink how it evaluates the massive export projects that condense fracked gas into a supercooled liquid, known as LNG, and load it onto tankers that ship the fuel for sale in Europe and Asia. In the meantime, the administration committed to keeping the LNG projects awaiting approval in a holding pattern, preventing them from breaking ground.
The surprise move reportedly came about after senior White House officials met with young climate activists who were campaigning against LNG exports, and it seemed to mark a shift in the trajectory of the industry, which had received strong support from both the Obama and Trump administrations. The 350.org founder and writer Bill McKibben said the decision meant that President Biden had “done more to check dirty energy … than any of his predecessors.” (McKibben is also a former Grist board member.)
But just six months later, the pause looks like little more than a speed bump in the rapid growth of an industry that has transformed the global energy mix. Even though the pause incensed oil and gas executives and drew furious protests from Republicans, its application was limited to just a few projects that were in the planning stages; it didn’t affect several large terminals that have already received approval or are under construction, which together will double U.S. export capacity.
And earlier this week, a federal judge appointed by former president Donald Trump struck down the current administration’s policy. The Louisiana judge ruled that the Biden administration still has to consider individual projects for approval even while it ponders a broader shift in LNG export policy, negating the impact of the pause that Biden officials had said would last at least through the end of the year. With Biden facing diminished odds of defeating the former president in the November election, it’s become increasingly likely that his administration will not manage to change the country’s natural gas export policy at all.
“If this is really over — you have a DOE that’s going to go back to a presumption that LNG exports are in the public interest — this will have been a blip,” said Steven Miles, a research fellow and natural gas expert at Rice University’s Baker Institute for Public Policy. “If this is going to be an opening salvo in an ongoing battle over every step in LNG exports, it’ll be trench warfare. It probably all depends on the election.”
When the DOE announced the pause in January, Energy Secretary Jennifer Granholm framed it as a necessary attempt to update the government’s criteria for evaluating the massive export terminals that have sprung up along the Gulf of Mexico. The United States had become the world’s largest exporter of liquefied natural gas, but officials still weren’t sure how the export surge was changing the world’s energy mix. Was sending so much gas overseas helping to displace coal, a far more climate-unfriendly fuel, or was it stalling the growth of renewable energy? Was it creating jobs in gas-rich U.S. states, or driving up costs for electricity ratepayers and American companies — or both?
These questions are very difficult to answer, in part because they rely on counterfactual assessments of what would happen if the U.S. didn’t export gas. Even since the pause took effect, a flurry of new research has complicated the picture. On the one hand, a report from the Institute for Energy Economics and Financial Analysis, an energy think tank, found that gas exports to China aren’t helping to reduce coal usage in the energy-hungry country, undermining a key argument for the industry. On the other hand, an economics paper published in March argued that exports have driven up natural gas prices within the United States and thus encouraged substitutes for the fuel, acting in effect like a carbon tax and aiding the country’s net-zero target as a result.
While the administration tried to answer these questions, it paused its review of a handful of LNG projects that had been awaiting approval. Republicans and industry leaders excoriated that move, saying it jeopardized the nation’s ability to deliver fuel to foreign allies. In truth it only slowed down a few projects that had already received clearance from the Federal Energy Regulatory Commission, or FERC, a separate independent regulator that has been far friendlier to LNG projects.
The pause also didn’t stop FERC from continuing to kick more projects over to the Department of Energy for approval: Just last week, the commission approved Venture Global’s Calcasieu Pass 2 terminal, or CP2, a massive project that would be able to ship out 24 million metric tons of LNG per year, enough gas to power more than 15 million homes. It was the CP2 project that had galvanized many activists on TikTok and other social media platforms, reportedly drawing the attention of the Biden administration officials who pushed the pause in the first place.
In March, a group of sixteen Republican-led states sued the administration over the DOE’s regulatory pause, and they found a sympathetic audience in a Louisiana court. The judge, Trump appointee James Cain, ruled that the Department didn’t have the authority to stop reviewing LNG export terminals, finding that the decision had led to “the loss of revenues, market share, and deprivation of a procedural right” for states such as Louisiana and West Virginia.
For Roishetta Ozane, an activist in Lake Charles, Louisiana, who has led the charge against the LNG industry for more than three years, the decision was demoralizing.
“It’s insane,” she told Grist. “I’m sad, I’m frustrated. I feel like I’m fighting against a state that I love and am trying to protect.”
The ruling doesn’t prevent the Biden administration from pursuing a larger review of how it regulates LNG projects, one that could lead to more comprehensive restrictions on the industry. However, given that this review would require the department to push through a new definition of whether exports are in the “public interest” under the decades-old Natural Gas Act, it would likely be subject to legal challenges now that the Supreme Court has scrapped the so-called Chevron deference precedent that gave federal agencies the flexibility to craft such policies under their interpretations of federal law.
Even so, in the aftermath of the ruling, environmental and climate advocates urged the administration to continue pushing forward with that bigger shift.
“It’s no surprise that a Trump judge would bend the law to hand the oil industry a win,” said Craig Segall, the vice president of the climate-oriented political group Evergreen Action, in a statement. “Luckily, today’s deeply misguided ruling from the Western District of Louisiana should have no impact on the Department of Energy’s statutory authority over what must be included in a public interest determination.”
But that long-term review of LNG exports will only continue if Biden wins reelection, and it’s unclear whether the attempted pause has helped or hurt his election chances.The January move represented an attempt to shore up support among young environmentalists, but some Democratic politicians in gas-rich states such as Pennsylvania — a must-win state for the president — have said that it hurt his standing locally.
It may also have damaged Biden’s fragile and largely unspoken truce with large oil and gas companies, which had been supportive of carbon capture and hydrogen provisions in the landmark Inflation Reduction Act that the president signed in 2022. During a March dinner at the Mar-a-Lago resort, former President Trump asked a group of oil and gas executives to donate around $1 billion to his campaign in exchange for favorable policies, including an end to the natural gas export pause.
“The damage has been done, in my view,” said Mary Landrieu, a former Democratic senator from Louisiana who now helps lead a coalition of gas industry stakeholders. “The decision was made so abruptly and so poorly that it doesn’t give people confidence that the president has a consistent and well thought through policy on the energy transition. I don’t think there was any upside to it, and I believe that the downside was really damaging the trust relationship that was building [with the oil industry] to some degree.”
This story was originally published by Grist with the headline The quick, quiet death of Biden’s natural gas export pause on Jul 3, 2024.