In 2014, the United States barely exported any liquified natural gas (LNG). By 2022, it had emerged as the world’s top gas exporter. With encouragement from the Biden Administration, it continues to build LNG terminals to double its export capacity by 2027.
Yet, on January 26, 2024, the Biden administration announced a “pause” in permitting new LNG exports. Why this reversal and why now? In our assessment, this probably reflects Biden’s desire to consolidate climate voters behind him in the November Presidential elections.
Although climate change is a global issue requiring international cooperation, climate policies are shaped mainly by domestic considerations. This is because these policies create winners and losers. They also carry cultural baggage evoking an emotional response from policy supporters and opponents.
In election years, politicians take positions on high-visibility issues such as climate change, the economy, or national security. If elections are expected to be close, high visibility issues that allow candidates to differentiate themselves from their presumptive opponents get even higher priority.
U.S. Presidential elections are decided by eight swing states, given the winner-takes-all system (Nebraska and Maine being exceptions).
He secures approval from climate supporters who consider the pause an important step in combating global warming (primarily due to methane fugitive emissions associated with gas liquefaction and transportation). But he provokes the anger of fossil fuel supporters who view the pause to be destroying jobs and undermining energy security. The gas export pause means that Biden assessed the electoral payoffs of appealing to climate voters to be higher than vote losses in fossil fuel communities and some blue-collar voters. Why so?
Winners and Losers from the Gas Export Pause
To dig deeper into the gas export pause, consider three voting blocks: Biden supporters, Biden opponents, and the swing voters.
Let us start with supporters, the climate voters. Biden oversaw the enactment of the most important U.S. climate legislation ever, the Inflation Reduction Act. Yet, his climate supporters are unhappy with policies such as the Mountain Valley Pipeline and Alaska’s Willow project. A prominent climate activist Bill McKibben noted “Biden wants young people, who care about climate above all, in his corner. They were angry about his dumb approval of the Willow oil project.″ For them, the gas export pause became some sort of a litmus test for Biden’s climate commitments.
Young climate voters probably are not hurt by the gas export pause because they come from the urban middle class and have little in common, economically or culturally, with the fossil fuel workforce. Moreover, while the economy is doing well, as reflected in economic growth and unemployment levels, Biden’s approval ratings are lagging. Biden must consolidate his support among climate voters, especially the younger generation. While these voters will probably not support Trump, they may not turn out to vote or may even cast their votes for a third-party candidate. A lower turnout of this constituency could cost Biden the election. So, Biden must pass the climate litmus test.
What about the pause opponents? After all, the gas export pause hurts the Gulf Coast states such as Louisiana where new export terminals would be located (in particular, the $10bn Calcasieu Pass 2 project). Louisiana Senator John Kennedy has threatened to hold up the Senate confirmation of Energy and State Department nominees.
Biden can afford to neglect Louisiana (ironically, Kennedy’s statements probably enhance Biden’s credibility with climate voters) because it is a deep Red state where Biden secured only 40% of votes in the 2020 elections. Nothing changes even if his vote share falls dramatically in Louisiana (there is a lesson here for states: if you want to be counted in U.S. Presidential politics, become the moderate purple as opposed to partisan red or blue).
The most interesting category is the swing states that are hurt by the gas export pause, specifically, the gas-fracking Pennsylvania. Biden won this state in 2020 by about 82,000 votes (50% vote share versus 48.8% for Trump). But this state has a strong fracking constituency, which could get upset by the gas export pause. This is why both Pennsylvania Democratic Senators, John Fetterman and Bob Casey Jr., have criticized the pause: “Pennsylvania is an energy state. As the second largest natural gas-producing state, this industry has created good-paying energy jobs in towns and communities across the Commonwealth and has played a critical role in promoting U.S. energy independence. … 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 this decision puts Pennsylvania energy jobs at risk, we will push the Biden Administration to reverse this decision.”
Biden’s challenge is to appease climate voters (who matter across all swing states) and reduce backlash in Pennsylvania. He probably hopes that a higher turnout of climate voters in urban Pennsylvania will offset the decreased support in the fracking country. And, he could shore up his support in the fracking country through measures such as blocking the sale of Pittsburgh-based US Steel to Nippon, which the labor unions are opposing.
What About the International Pressure?
Biden might face backlash from European countries (and to some extent Japan). In the aftermath of Russia’s invasion of Ukraine and its decision to weaponize gas exports, European countries have become major importers of U.S. gas. For context, Russia met more than 50% of the EU gas demand in 2021. By the end of 2022, its share fell to about 13%. Thus, pausing gas exports could diminish U.S. credibility to counter Russian leverage via its dominance over the export of natural gas.
While European countries make their obligatory protests, the reality is that the U.S. will be doubling its export capacity by 2027. Thus, Europe faces no danger of reduced gas supplies from the U.S., at least not in the short run. Moreover, Europe is hardly in the position to put pressure on the U.S. with the stalemate in Ukraine and the real possibility that Trump might win in November. Given Trump’s opposition to supporting Ukraine (NATO more generally), Europeans have incentives to stay quiet so that Biden can invest his political capital in managing his vocal pro-climate domestic constituency.
From Biden’s perspective, the gas export pause makes a lot of political sense. For climate supporters, the good news is that Biden is willing to incur political costs, domestically and internationally, to push the climate agenda. The not-so-good news, however, is that the pause is temporary, and Biden could lift it, should he be reelected in November—Trump certainly will. Even if Biden makes the pause permanent, the importing countries can still secure gas from Qatar or Australia. And if they cannot secure gas at a reasonable price from anywhere, some of these importing countries might burn more coal to generate electricity. Thus, the broader climate challenge of reducing fossil fuel use remains undiminished.