LNG is controversial. Canary Media fact-checks 5 big… | Canary Media

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Source: LNG is controversial. Canary Media fact-checks 5 big… | Canary Media

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“The U.S. government can’t say where [LNG] is going to head — it’s based on pricing dynamics and demand,” said Nnenna Amobi, a European gas analyst at BloombergNEF. ​“There’s still competition between Europe and Asia to receive gas. Wherever it’s more profitable is where that cargo tends to go.”

In fact, much of U.S. LNG export capacity is currently earmarked for Asian buyers via long-term contracts. Some of those Asian buyers, particularly Japanese companies, own stakes in the U.S. LNG projects built to supply them, Amobi noted. The interconnected gas markets in Europe, on the other hand, only hold long-term contracts to supply about one-third of its LNG needs, so European countries have to buy the rest on the open market.

The response to Russia’s invasion of Ukraine, in which the LNG industry seemingly rallied behind Biden’s pledge of support for his allies, was really a case of Europe temporarily paying top dollar to divert shipments headed to other places. This happened to coincide with weak demand in Asia as economies there were still dealing with Covid; contract holders could resell to Europe at exorbitant markups.

The upshot: Sometimes the business incentives of LNG companies align with U.S. foreign policy goals, but U.S. foreign policy does not dictate shipments of LNG.

More U.S. LNG is already on the way. Seven new LNG export terminals have been approved by the Federal Energy Regulatory Commission and begun construction, enough to more than double existing capacity once they are up and running. Another 11 have been approved by FERC but haven’t begun construction. None of these will be impacted by the Biden administration’s pause. But, again, the exporters have already allocated much of this forthcoming capacity to Asia.

The upshot: The earlier-stage developments that are stymied by the pause weren’t expected to show up until the end of the decade anyway, so the pause does not change Europe’s near-term energy supply. It could, however, be felt in the late 2020s and into the 2030s.

The upshot: Gas burns cleaner than coal, but LNG creates substantial emissions from extraction to delivery at power plants. Tackling upstream gas emissions will be crucial to lowering the climate impact. The industry has yet to attempt achievable emissions reductions from clean electricity procurement, which is commonplace among other large American businesses.