**: CBN.
Author: Zhu Ying.
[ The U.S. went from 28% of European LNG imports in 2021 to 43% in 2022 and 46% in 2023.]On January 26, Biden announced that the United States would freeze the approval process for liquefied natural gas (LNG) exports. U.S. Energy Secretary Jennifer Granholm, previewing the decision, said the process would not affect authorized exports or gas exports to U.S. allies, including Europe. In the United States, Biden's decision reflects the energy political game of votes.
The global position of U.S. LNG.
1 The United States is the second largest source of LNG in Europe.
Before Russia's invasion of Ukraine, Russian gas accounted for 40% of the European gas market. Russia exports gas to Europe through six gas pipelines, including the controversial Nord Stream 1 and Nord Stream 2 gas pipelines, which transport 140 billion 170 billion cubic meters per year. In the wake of Russia's invasion of Ukraine, Biden has made gas exports to Europe a key geopolitical issue, and Europe has had to import large quantities of American LNG. As of December 2022, U.S. LNG exports to Europe and the U.K. have increased to more than 42% of Europe's total LNG imports.
European natural gas** is attractive to US LNG merchants**. So far in 2022, the average natural gas in Europe has been more than twice that of Japan and about six times that of the United States. Such a high level of ** not only stimulates the ** business of the United States ** to Europe**, but also pushes up the cost of European households and businesses. U.S. LNG has become Europe's second-largest importer of natural gas, after Norway's pipeline gas. The U.S. went from 28% of European LNG imports in 2021 to 43% in 2022 and 46% in 2023.
In March 2022, Biden** and the European Commission agreed to expand the size of LNG between the United States and the European Union by at least 50 billion cubic meters per year by 2030. This decision by Biden is at odds with Biden's long-flaunted climate policy. By November, the EU renewed its agreement with the United States, which means that Europe will seek up to 147 billion cubic meters of LNG imports in 2023. Although this target is about double the 77 billion cubic meters lost from Russian pipelines** in 2022, Europe's 159 billion cubic meters of LNG imports in 2022 exceeded this target.
S&P said that while Europe has been working to reduce natural gas demand and thus LNG demand, the United States has been increasing LNG export capacity and is planning new export terminals. Considering only the LNG terminals currently under construction in the United States, the United States will have an export capacity of about 238 billion cubic meters per year by 2030. If the U.S. were to build all proposed LNG terminals, the U.S. would have an LNG export capacity of about 465 billion cubic meters by 2030, far exceeding the 392 billion cubic meters of gas needed by all of Europe**.
2 The United States is China's main importer of LNG.
As of 2021, the U.S. has become China's second-largest LNG country, surpassing Qatar and Malaysia and second only to Australia. China's LNG imports are also more abundant and diverse than pipeline natural gas imports. On the one hand, there are many sources of liquefied natural gas in China, including Australia, Qatar, Malaysia, Russia, Indonesia, the United States and other places. On the other hand, the annual import volume of LNG from different gas sources has also changed more significantly. Taking imports with the United States as an example, China's LNG imports from the United States in 2021 were 1238.7 billion cubic meters, affected by the Russia-Ukraine conflict in 2022, the import volume plummeted to 288.5 billion cubic meters, a decrease of 7671%。At the same time, China's LNG imports from Qatar are growing rapidly.
3 The United States is the world's largest exporter of liquefied natural gas.
U.S. LNG exports hit record monthly and annual highs in December 2023, and the U.S. has overtaken Qatar and Australia to become the world's largest LNG exporter. U.S. LNG exports rose 14 percent in 2023, according to the London** Stock Exchange7%。In 2024, two new LNG projects in the U.S. are on the verge of coming online: Venture Global's Plaquemines facility in Louisiana and Golden Pass in Texas. If run at full capacity, the two projects will add another 38 million tons of U.S. LNG exports per year.
The reason why Biden suspended the approval of LNG exports.
1 Biden is ostensibly for the climate.
Biden has praised the export of American LNG in the past. But he has been facing strong criticism from environmental groups that fear that the rapid expansion of liquefied natural gas exports in recent years has led to an increase in greenhouse gas emissions and question Biden's commitment to phase out fossil fuels such as oil and gas.
Ben Geros, executive director of the Sierra Club, an environmental group, said: "Biden has taken a bold step and continues the historic efforts made by this generation of ** to meet global commitments to phase out fossil fuels and combat the climate crisis. "World leaders agreed to abandon fossil fuels during last year's COP28 climate talks, and Biden's decision today to suspend new LNG export licenses shows that he is taking that commitment seriously," said former U.S. Deputy Al Gore. ”
2 Biden is actually trying to get votes.
If Biden is serious about delivering on his pledge to phase out fossil fuels like oil and gas, why not take real action to reduce U.S. natural gas production and exports from day one in office? Objectively, both Trump and Biden have actively promoted the export of LNG. Why is Biden approving the suspension of LNG exports at this juncture? Canvassing for votes has become Biden's biggest politics at the moment, and Biden's decision on January 26 panders to the political demands of environmentalists. Four years ago, Biden promised to become a "climate leader" when he entered the White House, and he is making another attempt to attract green activists, including taking dramatic steps to stop issuing new gas export licenses. But Biden's bad luck has been for the United States, which has seen the Israeli-Kazakhstan conflict run into many young environmentalists who have expressed disappointment at Biden's refusal to demand an immediate ceasefire in Israel. There is an article that young Americans are very disappointed with Biden's foreign policy and other choices on climate and Gaza. They don't think Biden has taken a proactive approach to climate, but they are surprised by Biden's Jan. 26 decision. Judging by this, Biden's decision to suspend gas licenses has become an election gamble. Republicans denounced the move as a threat to the U.S. economy.
Reaction to Biden's January 26 decision.
1 Industry groups and Republicans slam Biden.
Biden's Jan. 26 decision was heavily criticized by international business interests and members of Congress, with the focus on the implications for European allies. The American Petroleum Institute called Biden's actions "a victory for Russia and a loss for U.S. allies, U.S. jobs, and global climate progress." Senate Minority Leader Mitch McConnell, Republican of Kentucky, called the move "stupid" and said it could increase global dependence on Russian and Iranian energy, while "our European allies are increasingly dependent on us to keep their lighting and heating running."
Trump said he would seek to re-establish U.S. energy "dominance" and said that one of his first actions if he returned to his position would be "drill, drill." He also said that if elected, he would resume the construction of an LNG terminal that had been suspended by Biden on his first day in office. According to reports, the US House of Representatives will vote in February to overturn Biden's decision to suspend the approval of LNG exports. The report quoted House Energy and Commerce Committee Chairman Cathy McMorris Rogers as saying that the decision to overturn Biden on January 26 may gain support in the Republican-controlled House of Representatives, but is unlikely to pass in the Democratic-controlled Senate. It is clear that around Biden's January 26 decision, US politicians are playing energy politics.
2 Reaction from international industry groups.
IOGP Europe issued a statement stating that it expressed grave concern over Biden's decision to suspend the approval of LNG exports to non-free countries. In the current geopolitical situation, this could exacerbate market volatility, increase the use of more polluting alternatives, and jeopardize Europe's energy security. Europe's energy** situation remains volatile and highly susceptible to market volatility. If the volume of US LNG** does not increase steadily, Europe will not be able to replace Russian gas imports in the coming years. IOGP Europe, along with industry associations, sent a letter to Biden** urging him to reconsider any changes to the approval process so that U.S. gas can continue to support U.S. energy security.
Without American LNG**, it is difficult to imagine how Europe could adapt to the sharp decline in Russian pipeline gas**. Biden may have had extensive conversations with policymakers in Europe and Asia to explain the decision and reassure them that exports will not be affected. But LNG importers will be concerned about Washington's policy uncertainty. One concern is that future US restrictions** will make it harder for Europe to rely on non-Russian gas** in the medium to long term (Russia** LNG still accounts for 13% of European LNG imports in 2023).
All in all, Biden's decision on January 26 is the energy politics of the United States, and the domestic energy politics of the United States has been involved in international geopolitics.
The author is a professor of economics at the School of Business, Tianhua College, Shanghai Normal University