US LNG pause decision will be ‘short-lived’
US President Joe Biden's decision to temporarily pause all pending approvals of LNG exports amid climate change concerns will be short-lived as the environmental impact from the LNG industry could be addressed through stricter regulations, according to Adrian Duhalt, a research fellow at Columbia University's Center on Global Energy Policy.
During this pause that Biden announced on January 26, he said it would exclude 'unanticipated and immediate' national security emergencies but would include studies on the impacts of LNG exports on energy costs, energy security and the environment.
This decision comes at a time when the US has a substantial slice of Europe’s LNG market, having supplied 64% of the LNG it produced to Europe last year.
Nonetheless, Duhalt said that the administration's move would not impact LNG exports immediately.
“It certainly poses important questions about the different potential supply scenarios that could arise down the line, especially in Europe, where its energy security is increasingly reliant on the US LNG industry,” he said.
Russia's suspension of gas supplies via pipelines to Europe led to a dramatic increase in European gas and electricity prices in the second half of 2021, and since February 2022, the Russian-ukrainian War has created serious challenges for Europe.
Europe has installed 36.5bn cubic meters of new LNG regasification capacity since the start of the war in Ukraine.
An additional 106bn cubic meters of new or expanded LNG import capacity by 2030 is in the planning phase. This is expected to bring Europe's LNG import capacity to 406bn cubic meters.
While Asia was previously the main destination of US LNG exports, two-thirds of all US cargoes were sent to Europe over the last two years.
According to US Energy Information Administration (EIA) data, the amount of US LNG shipped to Europe in 2022 increased by 141% compared to the previous year.
Europe's share in the US LNG basket rose to 64% after piped gas from Russia fell to its lowest level in 40 years.
Although international research organisations have not yet shared the exact data, estimates show the US is likely to be crowned the top global LNG exporter in 2023.
Ship tracking data compiled by Energy Outlook Advisors shows global LNG demand reaching an all-time high in 2023, rising to 401mn tonnes from 390mn tonnes in 2022, registering a year-on-year growth of 2.8%.
US has a substantial slice of Europe’s LNG market, having supplied 64% of the LNG it produced to Europe in 2023