Biden’s LNG Plan for Europe: Ineffectual and a Climate Disaster
Locking in climate pollution for decades to come is not an answer to Russian aggression
As evidence of Russian war crimes in Ukraine continues to mount, Europe is considering increasingly ambitious measures to wean itself from Russian energy. Most European nations are, as of today, heavily reliant on Russian imports of coal, oil, and especially methane gas. The European desire to cut ties with Russia has led to bold, new plans to accelerate the transition to renewable energy—which would be good for both European security and the effort to address climate change. But the war in Ukraine has also led policymakers on both sides of the Atlantic to pursue another energy strategy: increasing US gas sales to Europe, an idea that many experts say would lock in decades of continued greenhouse gas emissions.
In late March, President Biden announced a new joint task force with the European Commission aimed at helping Europe transition away from Russian gas, which today accounts for roughly 40 percent of European gas supplies for home heating and electricity generation The goal of the plan, Biden said, is “helping Europe reduce its dependency on Russian gas as quickly as possible.” The plan relies heavily on exporting larger volumes of American gas to Europe. But energy experts say the efficacy of such a strategy is dubious, while environmental advocates warn that it also risks setting the world even further behind on its climate targets.
The joint US-EU task force announced by Biden called for an additional 15 billion cubic meters (bcm) of US liquefied natural gas (LNG) shipped to Europe in 2022, and a long-term goal of an additional 50 bcm per year through 2030. (Though the announcement was vague on exactly what “additional” means and how it would achieve these increased volumes.) Even before the Russian invasion of Ukraine, US LNG exports were already on the rise, soaring by 50 percent in 2021 compared with the previous year, a result of rising global demand and expanding export capacity. Export volumes are expected to continue to increase as more LNG terminals, mostly on the Gulf Coast, come online.
It is not clear that such new capacity is even needed. According to a new report from the Institute for Energy Economics and Financial Analysis, the United States can meet the Biden export targets without building any new LNG infrastructure or signing any new LNG deals. The six existing export terminals, plus a handful already under construction, are on track to export enough supply to meet both the short- and long-term goals laid out by the White House.
Other analysts agreed. In an April 7 note to its clients, investment bank Goldman Sachs said that the US short-term goal of increasing LNG to Europe can be “easily achieved” given current commercial trends of rising gas exports, regardless of the Biden administration’s announcement.
New LNG projects are not a relevant solution to the current crisis for the simple reason that they take so long to complete. In order to move forward, an LNG export terminal needs to obtain billions of dollars of financing and secure long-term contracts from buyers; only then can companies begin the multiyear construction process. It could take until “the late 2020s before new projects actually come on-stream and contribute to supply,” Mike Coffin, head of oil, gas, and mining research at Carbon Tracker, told Sierra in an email.
Energy analysts and environmentalists also say there is a glaring disconnect between Europe’s attempts to speed up the transition to renewable energy while, at the same time, scaling up LNG imports. The Europe Union plans to slash its use of methane gas by 155 bcm by 2030—roughly equivalent to the volume that the EU currently sources from Russia. That raises questions about the need for huge new LNG projects, which typically require long-term contracts of 20 years to get off the ground.
Because long-term demand for fossil fuels is incompatible with maintaining a stable climate, inking 20-year contracts has become a tricky proposition. In recent years, many proposed LNG projects remained on the drawing board because of the developers’ inability to secure long-term deals. The Biden administration’s announcement does not provide answers for how the US government will resolve this commercial conundrum.
“They need long-term buyers, and what was announced won't be sufficient because the Europeans don't anticipate having significant gas demand after 2030. That's the goal,” Zorka Milin, senior legal adviser at Global Witness, told Sierra. “How energy regulators will interpret this international policy signal, that is something that remains to be seen.”
What is clear is that if the United States and Europe push for an expansion of LNG, they will be locking in pollution for decades to come. That “is particularly true for large infrastructure projects, which require huge amounts of capital, such as LNG projects, predicated on demand (and high prices) continuing well into the future,” Coffin said.
A new gas export project built in the 2020s will likely still be operating by mid-century, when the world is supposed to be closing in on net-zero emissions. And as LNG infrastructure proliferates, the terminals will require more drilling to supply the gas needed for the rising number of shipments heading overseas—a vicious circle in which demand manufactured by a geopolitical crisis in 2022 will spur continued fossil fuel supply well into the future.
All of that will contribute to higher carbon dioxide emissions—as well as faster and larger releases of methane, an extremely potent planet-warming gas that leaks out of wells, pipelines, and storage tanks. Last year, global methane concentrations increased by a record amount, in part because of the oil and gas industry.
On April 4, the Intergovernmental Panel on Climate Change released its latest report on how to address the climate crisis, warning that “without immediate and deep emissions reductions across all sectors,” limiting global warming to 2.7 degrees Fahrenheit of warming (or 1.5 degrees Celsius) is “beyond reach.”
“Climate activists are sometimes depicted as dangerous radicals. But the truly dangerous radicals are the countries that are increasing the production of fossil fuels,” United Nations Secretary-General António Guterres said in response to the publication of the report. “Investing in new fossil fuels infrastructure is moral and economic madness.”
Nevertheless, the US oil and gas industry is attempting to capitalize off of Russia’s war in Ukraine by ratcheting up the pressure on the Biden administration to support an ongoing expansion of fossil fuels. Among other things, the industry is demanding new drilling on public lands and streamlined permitting for LNG projects.
But the notion that LNG is a solution to the immediate crisis “is a ruse by fossil fuel execs, and the Biden administration should not take that bait,” said Kelly Sheehan, senior director of energy campaigns at the Sierra Club. “The US is already the largest producer of gas and oil in the world. We don't need anymore. That is inconsistent with our climate goals and with the administration's commitment to environmental justice.”
There is one clear policy alternative to increasing US gas exports to Europe: speeding up the clean energy transition.
The one silver lining of the Ukraine war is that the conflict could accelerate the energy transition. Not only does Russia’s invasion of Ukraine highlight the security threats posed by fossil fuel dependence, but the extreme price volatility for oil and gas only tilts the economic equation even further in favor of renewable energy and electrification.
A “rapidly increasing focus on energy independence driven by current geopolitical events may actually see the energy transition accelerate in the medium- to long-term, as renewable energy sources and enabling technologies such as battery storage are developed even more rapidly,” Coffin said.
New policies in Europe could spur that along. On April 6, Germany rolled out a new energy package that would result in 80 percent of its electricity coming from renewable energy by 2030, up from around 41 percent today. Germany's vice-chancellor Robert Habeck called it “the biggest comprehensive energy package in two decades” and said the plan would “turbocharge” the expansion of renewable energy sources “at sea, on land, and on roofs.” He cited the war in Ukraine and the climate crisis as reasons that make it “doubly urgent” to scale up renewable energy.
“The solutions are there. In most cases they are cheaper than fossil fuels,” Milin said. “So, obviously the blockers are not financial or market ones—they're really political.”