Why Biden’s LNG Bone to the Left Matters
Much too much has been made of the “temporary pause” in government approvals for exports from new liquified natural gas (LNG) plants recently announced by US President Joe Biden.
The claim by one LNG project developer that Biden’s pause would “send a devastating signal to our allies that they can no longer rely on the United States” was a wild overstatement. So, unfortunately, was the reaction from someone I admire and respect, journalist and 350.Org founder Bill McKibben. He termed the pause “the strongest move against dirty energy in American history.”
This pause on LNG export approvals was, in fact, an easy bone for Biden to throw to the disaffected progressive wing of the Democratic Party. Easy because the US has virtually run out of potential new long-term LNG customers in any case. And because there are plenty of sellers with projects already approved by the Biden administration that are short of buyers.
So while Biden may be hurting a few companies hoping to get projects in before the 2022 LNG bubble totally collapses — including Venture Global, the company that screamed about the “devastating signal” to America’s allies — he isn’t hurting the gas industry overall.
Indeed, the oil and gas industry may actually benefit from being stuck with fewer stranded LNG assets, given the strong likelihood that the International Energy Agency (IEA) is right in forecasting a pre-2030 peak in global gas use. Canada’s Energy Minister Jonathan Wilkinson said as much when he praised Biden’s licensing pause and warned on Bloomberg TV of the very real risk of stranded LNG assets.
The Biden Administration was just being realistic when it reassured European officialdom — which issued only perfunctory sounding complaints — that “this pause will not have any short- to medium-term impacts on the EU’s security of supply.” It shouldn’t have any long-term impacts either, since the EU has every intention of being largely off fossil fuel electricity and onto renewables before anything you might reasonably call the “long term” arrives.
What Biden Didn’t Do
Biden’s pause would be a genuine victory for climate activists if it provided “an actual climate test… of American fossil fuel expansion plans,” as McKibbon suggests it does. The kind of comprehensive review of the impacts of greenhouse gas (GHG) emissions resulting from oil and gas investments that President Barack Obama seemed to promise a decade ago but never implemented.
If Biden had done that, the oil and gas industry really would be up-in-arms, with its full lobbying might brought to bear. Nothing like that has happened.
All the Biden statement actually says is that during a “pause” of unspecified duration in granting new LNG export licenses, “we will take a hard look at the impacts of LNG exports on energy costs, America’s energy security, and our environment.” That sounds nice. The bit of the White House statement that terms climate change “the existential threat of our time” sounds even better. But none of it has any solid legal standing.
It’s essentially a political statement. A reasonably strong political statement, and certainly better than Trump’s insistence that he would overturn the freeze if he is re-elected. But all it’s actually designed to do is score points with voters worried about the climate crisis without overly upsetting the “all of the above” energy crowd.
The administration has loudly signaled that the pause will last for at least a year, that is until after the presidential election in November. The administration could decide over that period to implement a requirement for full greenhouse-gas-emission reviews as a condition of approving any new fossil fuel facilities including not just LNG plants, but also oil export terminals and refineries, oil and gas pipelines, and chemical plants.
That would be a really big deal. If it stood up to the inevitable legal challenges, it might even reverse the trend that has returned the US to its historic role of world’s top oil and gas producer.
However, such a gutsy move seems unlikely in a period in which political calculations are expected to take precedence and Biden has already scored about as many points as he can with progressives from the LNG issue — including a full-throated endorsement from McKibben: “Biden deserves to reap the benefits of powerful environmental backing in his re-election”
Truth about Energy
OK, but why attack a good guy like McKibben, you may ask? Don’t I, too, want to defeat Trump? And does a little fudging matter so much if it advances that goal?
I think it does matter. I think progressive climate, environmental, and social goals are forwarded by people telling the truth as they see it, not by doing whatever it takes to defeat Trump or his ilk in other countries. I think it matters both on tactical and moral grounds. If we progressives and activists can’t even tell — or don’t tell — whether and where we’re genuinely winning or losing, how can we genuinely win?
McKibben knows a lot about energy and has been involved in some brilliant tactical decisions by environmentalists in his long struggle with the oil and gas industry, most notably in targeting pipelines as a weak spot in Big Oil’s North American armor. Maybe he knows that the LNG pause isn’t that big a deal, but he played it up for the opportunity it provided to give a boost to the Biden campaign at a point when it is lagging a Trump-led Republican machine that McKibben fears and despises.
Or maybe he really doesn’t grasp what’s going on in international natural gas. Few seem to. Because gas by its nature is difficult and expensive to transport, it hasn’t been traded much beyond narrow regional limits for nearly as long as oil has, or in nearly as large volumes. Also, the journalists covering the gas trade tend to be wonkier and less politically aware than their oil counterparts.
Even in government, not many seem to fully grasp how the business operates or the implications of the enormous changes it has experienced in the last few years, first with the US entry into LNG exports and then with Russia’s reckless slashing of sales volumes to Europe in the early stages of the Ukraine conflict. Followed by the destruction of Russia’s Nord Stream pipelines to Germany by US miliary divers, as detailed by prize-winning investigative journalist Seymour Hersh. Another one of those awkward things people choose to ignore.
Europe suffered from the dramatic cuts in Russian gas flows in 2022, and US LNG helped keep the situation from being even worse. Decisions by China, India, and Japan to resell to Europe at a huge profit part of the LNG they had contracted to buy and use coal instead was another big help. As was a warm winter.
What did not help was a surge in new US LNG export projects. Several were licensed by the Biden administration amid gushing words about saving our allies. But given long construction lead times, they won’t provide any gas to Europe until late this decade or beyond. By then, the Europeans will hopefully have built enough solar and wind capacity, installed enough heat pumps, and implemented enough energy efficiency measures that they won’t need the incremental gas.
In the interim, the US became the world’s biggest LNG exporter thanks only to completion of prewar expansion plans and the demise of Russia’s gas industry. A year ago, a freeze on licensing of new US LNG facilities might have put a ceiling on still more expansion of US LNG for which there are only two outcomes: the climate suffers, or they rot for a lack of market for their output.
These are important realities to understand and costly mistakes that could have been avoided and shouldn’t be repeated.
Bernie Sanders is among the few who has noticed the weakness of the Biden administration’s climate policy. While joining McKibben in stressing the importance of defeating Trump on climate grounds, Bernie this month sent out a plea to supporters specifically on the climate crisis. It does not even mention the LNG export-licensing pause. What he does plead for is the election of “as many progressive candidates as we possibly can who will fight to pass a Green New Deal.”
I loved the Green New Deal put forward by the Sunrise Movement in 2019, with its emphasis on community building and social justice. Like Bernie, I still do.
