Biden reins in gas exports that have raised both US prestige and climate fears

The Biden administration announced a freeze Friday on new export permits for natural gas while it studies their impact on climate change — despite those exports' role in bolstering the U.S. economy and Washington's influence in Europe.

The announcement, part of a review that POLITICO first reported two weeks ago, is the most sweeping step yet by President Joe Biden to clamp down on a fossil fuel industry that has prospered on his watch (despite Republican rhetoric to the contrary). It also shows the resurgence of environmental groups’ influence on the White House as Biden ramps up his political campaign ahead of November’s election.

The action comes a month after the U.N. climate summit in Dubai, where the U.S. joined nearly 200 other nations in pledging a “transition” away from fossil fuels. Biden said in a statement that he remained committed to fighting climate change, which he called "the existential threat of our time."

"While MAGA Republicans willfully deny the urgency of the climate crisis, condemning the American people to a dangerous future, my administration will not be complacent. We will not cede to special interests," he said.

But Republicans and gas industry advocates denounced the action.

"It’s a national security disaster and a climate disaster,” Alaska Republican Sen. Dan Sullivan said in an interview this week after reports emerged about the pending action. “When we export clean-burning American natural gas to countries in Asia it reduces emissions. So all they are doing is sucking up to their far left base, undermining jobs, undermining national security and undermining the environment."

The review would put a hold on approvals for about 10 projects that have applied for permits but not yet received them, and whose backers have not made final investment decisions whether to build them. That includes the CP2 project, a massive facility that gas exporter Venture Global plans to build along the Louisiana coast. But exports themselves are still expected to soar in the coming years because of projects already approved and under construction.

White House officials said they did not think the moratorium on new projects would throttle gas shipments to Europe. White House climate adviser Ali Zaidi put the decision in context of Biden’s climate goals, saying it was in line with the agreement the United States and other countries made last year at COP 28.

“We're doing this weeks removed from a U.N. climate conference where the United States, under President Biden's leadership, was out front making sure that the global community was clear-eyed about the need to transition globally away from fossil fuels,” Zaidi told reporters before today’s announcement. “We take this action in a context where the United States has been an unwavering partner to our allies in Europe.”

The natural gas boom has turned the U.S. into the world’s largest exporter of the fuel, just eight years after former President Barack Obama first began approving the export permits. The years of breakneck growth since then have padded the industry’s profits and allowed the United States to play the role of global energy superpower, including by breaking Russia’s grip on Europe’s gas supplies after Vladimir Putin’s invasion of Ukraine.

U.S. gas export capacity has more than tripled since 2018, to 12 billion cubic feet a day, and is projected to nearly double again by 2030, the U.S. Energy Information Administration said.

But methane pollution from natural gas is a potent source of planet-warming pollution. Now, the White House and Department of Energy will reevaluate how the plants that produce liquefied natural gas affect climate change, the country’s environmental quality and domestic economics, administration officials said.

“As our exports increase, we must review export applications using the most comprehensive up-to-date analysis of the economic, environmental and national security considerations,” Energy Secretary Jennifer Granholm told reporters.

“The pause will not affect already authorized exports,” Granholm continued. “Nor will it impact our ability to supply our allies in Europe, Asia or elsewhere. We remain committed to ensuring our partners' medium-term energy needs are met and, if needed, the department can determine if exceptions should be made for national security needs.”

The Energy Department’s National Labs will conduct the review, after which the administration will release the analysis for public comment. The process could take up to 15 months to finish, a person familiar with the plan told POLITICO on Thursday.

The administration’s move drew applause from environmental groups that had made LNG exports a litmus test for Biden’s climate agenda.

"This is a huge deal and further cements the already strong climate record of President Biden,” said Sara Chieffo, vice president of government affairs at the League of Conservation Voters. “This is a win-win-win for saving families money while protecting communities and our climate."

Environmentalists pushing for the freeze included activist and author Bill McKibben, who previously helped turn the proposed Keystone XL oil pipeline into a major political headache for Obama, as well as groups such as the Sierra Club. They launched a pressure campaign late last year aiming to stop liquefied natural gas exports, saying the amount of gas the industry was processing was increasing methane leaks into the atmosphere and contributing to climate change.

Some critics have also alleged that the export facilities that have proliferated along the Gulf Coast were diverting increasing amounts of natural gas from the domestic market — potentially threatening to raise costs for U.S. electricity customers and industrial plans that use natural gas — while degrading air quality for communities near them.

Methane is a potent greenhouse gas, 28 times as powerful as carbon dioxide in trapping heat in the atmosphere, although it remains in the air for a far shorter period than CO2.

Maine Independent Sen. Angus King, who for years called for closer scrutiny of whether growing gas exports was pushing up domestic energy prices, applauded the administration's announcement.

“The point here is to look before we leap — to gather the necessary data to be sure the proposed projects don’t compromise the interest of our own citizens," King said in a statement.

The oil industry itself savaged the moratorium. The American Petroleum Institute, the trade association representing the largest oil and gas companies in the United States, called the decision “a win for Russia.”

“There is no review needed to understand the clear benefits of U.S. LNG for stabilizing global energy markets, supporting thousands of American jobs and reducing emissions around the world by transitioning countries toward cleaner fuels,” API President and CEO Mike Sommers said in a statement. “This is nothing more than a broken promise to U.S. allies, and it’s time for the administration to stop playing politics with global energy security.”

Both oil industry executives and environmental groups compared the new permit moratorium to Biden’s move to cancel permits for the Keystone XL pipeline when he first took office. They called it a politically expedient move by Biden to appease green groups still sour over the administration’s decision to approve the massive Willow oil project in Alaska last year.

“The LNG permit debacle is the KXL for natural gas,” said Stephen Brown, director of the energy consulting firm RBJ Strategies and former energy lobbyist. “This move is so blatantly politically transparent.”

The environmental community and Democratic lawmakers critical of the LNG industry had kept quiet on their concerns while the U.S. ramped up gas exports to Europe to blunt skyrocketing fuel prices because of the war in Ukraine. But as European storage tanks filled and the gas market steadied, criticisms of the industry returned to the fore late last year.

“It's undeniable that LNG export projects are simply not in the public interest and we are confident that if this review is done right, that would end the rubber-stamping of these projects,” Sierra Club Executive Director Ben Jealous said in a statement ahead of the announcement.

Progressive Democrats Sen. Jeff Merkley of Oregon, Rep. Jared Huffman of California and more than 60 of their congressional colleagues sent a letter to Biden in November asking his agencies to reevaluate the climate and economic impacts of LNG exports.

Green groups also promoted an open letter signed by 60 European government officials asking Biden and Energy Secretary Granholm to pause new gas exports.

“Europe should not be used as an excuse to expand LNG exports that threaten our shared climate and have dire impacts on US communities,” the European officials said in the letter. “Europe’s current consumption of fossil gas is already being met under current import levels and with existing infrastructure.”

The Department of Energy, which is in charge of approving permits to export LNG, has so far never turned down an application. The amount of gas the U.S. sent overseas is already set to double to 24 billion cubic feet a day by 2028 — more than 20 percent of U.S. production — via projects already holding permits and under construction. Those projects will continue under the DOE review.

Granholm, White House clean energy adviser John Podesta, Zaidi and White House energy security adviser Amos Hochstein helped craft the decision to hold the review, three people familiar with the process said.

The moratorium affects “nothing under construction, nothing that would have an impact on our exports for years to come,” said one of those people, who was not authorized to talk to the press. “It says, ‘Look, we can’t just keep building and building and building.’”

Josh Siegel contributed to this report.