Energy and Our World

This article originally ran on Forbes.com on February 19, 2024. All rights reserved.

Daniel B. Markind is a Forbes.com energy column contributor. The views expressed in this article are not to be associated with the views of Flaster Greenberg PC.

On Friday, January 26, 2024, the Biden Administration announced that it was placing a “Temporary Pause on Pending Approvals of Liquified Natural Gas Exports.”  That announcement was accompanied by a “FACT SHEET” from the Administration attempting to explain the its reasoning and justify its action (Source).

As with nearly everything else relating to the Administration’s relationship to natural gas and other fossil fuels, the Fact Sheet was filled with conflicting statements.  Among them was this verbiage:  “The U.S. is already the number one exporter of LNG worldwide – with U.S. LNG exports expected to double by the end of this decade.  At the same time, the U.S. remains unwavering in our commitment to supporting its allies around the world.”  Thus, even though the Administration has announced that it is freezing new export permit applications, the same Administration acknowledges that our allies are counting on us and states, “[w]e will continue to deliver for our allies.”

However, later in the same Fact Sheet, the Biden Administration also lists its “Top Climate Accomplishments”.  Not surprisingly, most of those “accomplishments” involve items such as protecting 26 million acres of lands and waters and canceling remaining oil and gas leases, which if anything would seem to hinder rather than facilitate, supplying ourselves and/or our allies with natural gas during this period in which major wars regularly impact the continued supply of energy in Europe and the Middle East.  The Biden Administration justified its action by further proclaiming in the Fact Sheet that “this pause on new LNG approvals sees the climate crisis for what it is: the existential threat of our time.”

Whatever may have been the Administration’s intention, the Permit Approval Freeze has not been well received in many quarters, including (if not especially) Biden’s own Democratic Party.  Ten House Democrats from energy-producing states like Texas, Alaska and California sent a letter to Mr. Biden asking him to “refocus” his policies on new LNG exports.  In Pennsylvania, the state that produces the second largest amount of natural gas in the country, Democratic Senators Bob Casey and John Fetterman issued a joint statement:

“While the immediate impacts on Pennsylvania remain to be seen, we have concerns about the long-term impacts that this pause will have on the thousands of jobs in Pennsylvania’s natural gas industry.  If the decision puts Pennsylvania energy jobs at risk, we will push the Biden Administration to reverse this decision.”

Meanwhile, a coalition of almost two dozen states’ Attorneys General from Republican states also sent a letter to the President last week blasting the permit freeze decision and claiming that it violated federal law (Source). Among other reasons, the Attorneys General claim that the Department of Energy has identified no authority giving it the power to issue the blanket freeze, and it cannot act unless Congress gives it the power to do so by statute.  In addition, the Attorneys General point out that Section 3 of the Natural Gas Act “requires” the Department to approve applications to export LNG to non-Free Trade Agreement countries “unless, after opportunity for hearing, it finds that the proposed exportation … will not be consistent with the public interest.”  Also, the letter notes that the freeze “fails to stay ‘within the bounds of reasoned decision-making,’” as the Department of Energy has not studied the issue and has no idea what impact that pause will have on the large amount of projects that are in varying stages of development, or the impact on our allies of such a freeze.

The Wall Street Journal also pointed the finger causing the freeze at charities controlled by the Rockefellers and Michael Bloomberg (Source). According to the Journal, about four years ago those same charities began a campaign to identify and fund community leaders campaigning against fossil fuel projects.  The high-intensity campaign allegedly got the ear of the Administration and Democrats in Congress.  Administration officials admit that they were influenced by the campaign, but also by new new research that they claim to have seen on the emissions from new LNG approvals.

Ironically, one of the biggest winners from the export freeze may be Canada.  Following the Biden Administration’s announcement, Canadian Energy Minister Jonathan Wilkinson stated “I think there’s an opportunity.”  Under the Liberal-minority government led by Prime Minister Justin Trudeau, Canada has not been as willing as the United States to build out its energy infrastructure over the last decade, claiming climate concerns.  Wilkinson cautioned, however, that any Canadian opportunity will be ...”on the basis of Canada offering the lowest carbon intensity natural gas in the world, and ensuring we’re linking it to the displacement of heavier hydrocarbons like coal.” (Source).

Minister Wilkinson’s optimism wasn’t shared universally in Canada though,as many Canadian LNG producers have been relying on United States LNG export facilities, which have come on line or expanded at the same time that the Trudeau Government has stalled the development of Canadian facilities.  Lisa Balton, CEO of the Canadian Association of Petroleum Producers, released a statement saying: “[g]iven the highly integrated nature of the North American energy market, CAPP is disappointed in the White House decision.”

Not to be outdone, the Republican controlled United States House of Representatives announced that it would vote on overturning the export freeze in the next week or two (Source). Some Republicans also noted the irony in the Administration’s move, which they say will only empower Russia at a time when Democrats are claiming that by not fully funding Ukraine, it is actually the Republicans who are empowering Vladimir Putin.

Given the many conflicting responses that have come from so many disparate corners following the LNG export freeze announcement, the one thing that everyone can probably agree on is the potential for this action to have a dramatic impact here in the United States and elsewhere around the world.  Almost exactly two years after Vladimir Putin invaded Ukraine, anything that potentially diminishes world energy security must be looked at carefully, if not skeptically.  The ability to do so, and the need to study the issue carefully and in  all of its facets, has never been more apparent than now.

Unfortunately, of course, 2024 is a presidential election year in the United States.  As 2024 continues and the election pressures increase, the chances of reasoned discussion will no doubt diminish.  Given the many uncertainties in the world right now and the powerful arguments on all sides of the debate concerning the fossil fuel export issue, it is imperative for the United States to study this issue carefully and systematically, as not only the world’s largest LNG exporter, but also the country with the greatest stake in the many competing issues.  Any move that the Administration makes will most certainly impact the entire world, often in ways not immediately visible.  Vacillating between allowing the United States to become the world’s leading LNG exporter, and then suddenly putting all of that policy initiative into question, is a sure way to promote worldwide instability and uncertainty at a time when the entire planet desperately needs the opposite.  It also will have the effect of the world not being willing to follow the United State’s lead, and not being sure whether the American position will change from day to day depending on who can apply greater electoral pressure on the Administration over competing domestic and foreign issues and concerns.

The stakes – and the necessity to get this right – are truly enormous.  For President Biden, he certainly needs to continue cultivating the environmental parts of his political base, but acting precipitously, as his Administration already seems to have done, has had, and will no doubt continue to have, dramatic consequences, many in ways that we can only now imagine.  It also opens up a large new political issue for the general election to consider in the United States that, presumably, the Administration would have wanted to avoid.  The country, and the world, need better.