When President Joe Biden instituted a so-called pause on new LNG export terminal permits, he also commissioned an assessment of the impact that LNG exports have on global emissions. The study is now in, courtesy of the Department of Energy—and it has found no problem with higher U.S. exports of liquefied gas.
The pause on new terminal permits was based on a single study authored by a self-described biogeochemist and environmental scientist who claimed in a study that LNG is more harmful to the Earth’s atmosphere than coal. Now, the Department of Energy has concluded, perhaps somewhat surprisingly, that a boost in U.S. exports of liquefied natural gas would have a negligible effect on global emissions of greenhouse gases, where negligible means a maximum increase in emissions of 0.05%.
The results of the study may not matter so much in light of President Trump’s cancellation of the “pause,” but they do add to a growing body of work dedicated to LNG and its effects on things like energy security and emission trends—the latter of the utmost importance for climate activist groups that are probably preparing their lawsuits against the Trump administration for its energy policies.
Per the Department of Energy, “The ultimate global GHG consequences of U.S. LNG exports depend on market effects such as changes in energy demand and the sources used to meet that demand for electricity and other uses of natural gas.” The assumption before the study was that the more U.S. LNG flows into global markets, the higher the emissions would climb. However, the assumption appears to be wrong, according to the DoE study. This is because most of the gas that the U.S. is expected to export in the future would not be used to replace lower-carbon generation but simply new gas-fired generation responding to greater energy demand.
The overall conclusion, therefore, seems to be that while the production and transportation of liquefied natural gas does generate emissions of methane and carbon dioxide, there are offsetting effects that bring down the net effect of these emissions to a negligible fraction of a percentage—even if U.S. LNG exports really boom, expanding fivefold between now and 2050. That should be good news for producers, but there is even better news for energy consumers. The Department of Energy also concluded in its assessment that even a major increase in LNG exports would not move domestic gas prices too much.
That might be arguable in the context of AI development and the surge in electricity demand that is being forecast because of that industry’s growth. However, the DoE estimates that Henry Hub prices could rise by 31% as a result of higher LNG exports between now and 2050. This means the 2050 price could reach $4.62 per million British thermal units, compared with $3.53 per mmBtu in 2024. For context, the study notes that the Henry Hub average for 2022 was over $6 per mmBtu, dropping to $2.53 per mmBtu in 2023.
So, the study commissioned by the Biden administration appears to have found that even a massive increase in U.S. export capacity for liquefied natural gas would not result in any catastrophic consequences either for the planet or for American households. Ultimately, it would come down to demand—and prices.
Last year, U.S. exports of liquefied natural gas added 4.5% on the year to a total 8.5 million tonnes. The biggest portion of those went to Asia, with Europe the second-largest importer of U.S. LNG due to slower demand. This is changing this year. The EU is buying up all LNG it can get its hands on as gas storage nears depletion—and as Trump calls on the EU to buy more American gas or face the music, in this case, paying 25% tariffs.
Supply is seen tightening in the short term, which would push prices higher and eventually sap demand growth until new capacity comes online. On the other hand, Big Tech, which is widely seen as a source for significant demand growth at home, is currently in trouble after a Chinese startup released a much cheaper and less energy-intensive AI model. That significant demand growth, in other words, may never materialize, and that would help keep domestic prices down.
Ultimately, it all comes down to costs and benefits. The benefits of liquefied gas include its delivery flexibility, which is much greater than pipeline gas, and the fact that burning gas for power generation is indisputably less emission-intensive than burning coal for the same purpose. The costs include the literal cost of transporting a cargo of liquefied—an expensive process—gas half a planet away and those methane emissions Horwath took aim at. According to the Department of Energy study, it seems the benefits currently outweigh the costs, and substantially.
By Irina Slav for Oilprice.com
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