President Biden’s LNG export pause is sparking global concern, in contrast to Qatar’s plans to expand LNG production amid Red Sea tensions.
In the realm of energy geopolitics, President Biden’s recent decision to halt pending and future LNG export permits is a move that may have significant ramifications, not just domestically but also globally. Even if overturned at a later date, weaponising LNG exports is a political card that cannot be put back in the box – whoever the next President of the United States is.
Ostensibly a bid to bolster his political standing ahead of the forthcoming presidential elections, this pause overlooks the critical role LNG plays in the current energy landscape. While investments in alternative energy sources like green ammonia and hydrogen are undoubtedly essential for the long-term energy transition, the immediate reality dictates that LNG remains a vital and accessible energy source.
National Ocean Industries Association president, Erik Milito, points out the adverse effects of this decision. Pausing LNG exports disrupts not only the US economy but also global energy stability. With the US being the largest exporter of LNG, any disruption in its supply chain reverberates worldwide. This move not only jeopardises billions of dollars in investments, but also risk deleveraging a competitive advantage to other major LNG exporters, like Russia.
Moreover, the global demand for LNG continues to surge, driven partly by the persistently high demand for coal, particularly in countries like China. Despite efforts to transition to renewables, coal usage remains alarmingly high, exacerbating carbon emissions and air pollution. The recent Shell LNG Outlook 2024 report underscores the indispensable role LNG plays in curbing emissions, particularly in sectors like steel production. Limiting LNG supply only serves to prolong the use of coal-fired plants, hindering progress towards emissions reduction targets.
“President Biden’s decision underscores the need for a balanced approach to energy policy”
The announcement of Qatar’s ambitious plans to expand LNG production offers a glimmer of hope amidst the uncertainty. QatarEnergy’s commitment to increasing production capacity by 85% by 2030 signifies a significant step towards meeting growing global energy demands. Additionally, Qatar’s investment in modern LNG carriers demonstrates a forward-looking approach to supporting its expanding LNG infrastructure.
However, challenges persist, as evidenced by the recent attacks in the Red Sea disrupting Qatar’s LNG exports to Europe. These geopolitical tensions underscore the need for diversified supply routes and robust security measures to ensure the reliability of LNG shipments. If the Suez Canal (and low water levels in the Panama Canal) dictate an increase in longer routes, then economies of scale also dictate a change. In the immortal words of Chief Brody in the film Jaws: “You’re gonna need a bigger boat.”
Amidst these challenges, innovative solutions emerge to address the pressing issue of carbon emissions. The partnership between Captura, Ecospray, and Equinor to capture CO2 from seawater represents a groundbreaking step towards carbon removal technology. By leveraging CO2 capture pilot systems, such initiatives offer a promising avenue for mitigating the environmental impact of LNG production and consumption.
While President Biden’s decision may be politically motivated, it underscores the need for a balanced approach to energy policy. LNG remains an indispensable energy source in the transition to a sustainable future. As Qatar expands its LNG production capacity and innovative solutions like carbon capture from seawater gain traction, there is reason to be optimistic about the future of LNG and its role in shaping a cleaner, more sustainable energy landscape.
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