The unlikely coalition behind Biden’s liquefied natural gas pivot

This story was first published by Grist.

Environmental activists and community organizers on the Gulf Coast have spent years pressuring the Biden administration to halt the construction of terminals that export liquefied natural gas, or LNG. As U.S. production of natural gas skyrocketed over the past few decades, energy companies began building massive coastal facilities to liquefy the fossil fuel and transport it by ship to Europe, Asia and elsewhere. In response, activists staged protests, organized sit-ins, wrote to members of Congress and broadly made the issue Biden’s ​“next big climate test.”

When the administration announced that it would pause its approval of new LNG terminals late last month, the climate movement and its allies were largely credited with the victory. Bill McKibben, the renowned founder of 350.org (and a former Grist board member), began his blog post about the news by saying, ​“Um, I think we all just won.” The decision reportedly came about after senior administration officials, including White House climate advisor Ali Zaidi, learned that young activists on TikTok were drawing millions of views elevating LNG as a major climate issue.

As if to prove the president was listening, the White House has collected dozens of quotes from climate advocates praising the decision. (In some ways, the activists’ celebration belies the reality that the climate impact of constricting LNG exports is far from certain, and the devil is in the details: While a broader buildout certainly has the potential to promote unnecessary fossil fuel use, it may also speed other countries’ transition away from other, more harmful fossil fuels like coal.)

But a broader, less-climate-concerned coalition, representing thousands of manufacturers, chemical companies and consumer advocates, has also been quietly pushing for the pause — and stands to benefit if Biden curbs LNG exports. The more American natural gas that’s available to be shipped overseas, they argue, the more unpredictable the price of the fuel will be stateside. If, for example, an unexpected gas shortage in another country means U.S. gas companies can make more money selling their product overseas than they can at home, prices will rise as the supply is stretched thin. This volatility would hurt not only households that heat and power their homes with natural gas but also the profit margins of big companies that rely on the fuel.

“LNG exports put pressure on domestic markets, which…results in higher energy costs,” said Mark Wolfe, executive director of the National Energy Assistance Directors Association, an organization representing state officials who administer federal energy assistance programs that help low-income households pay energy bills. ​“There’s an impact on families that are benefiting from these lower prices. That needs to be taken into account.”

Wolfe said that average home heating prices have risen more than 16 percent since March 2020, driven in large part by higher natural-gas prices. (Hotter summers also mean utilities need more fuel to power a grid stretched thin by air conditioning in the summer and therefore have less natural gas for heating in the winter.) The result is that 1 out of 6 households nationwide are behind on their energy bills.

“If the administration wants to approve these facilities, they should do it in the context of saying, ​‘How do we help families pay their bills?’” Wolfe added.

Some manufacturers back a pause on the LNG export buildout

It’s not just cash-strapped families that might benefit if LNG exports are limited: The Industrial Energy Consumers of America, or IECA, a trade group representing more than 11,000 manufacturing facilities nationwide, has also been arguing against LNG exports. IECA’s members include fertilizer companies, aluminum smelters and glass manufacturers, among others. These industries are heavily dependent on natural gas either as feedstock for production or to fuel their operations.

As natural-gas prices rose in 2022, heavy industries that require large amounts of natural gas or electricity — such as fertilizer production and aluminum smelting — saw their costs skyrocket. That year, multiple steel mills, as well as the country’s second-largest aluminum smelter, paused operations in the face of unsustainable costs.

Paul Cicio, IECA’s president, has been imploring the federal government to curb natural-gas exports since the Obama administration. The last three presidential administrations ​“have just ignored consumers’ interests,” Cicio told Grist.

Biden’s team seems to hope to change this perception. In announcing the LNG pause last month, senior administration officials said that the relationship between exports and domestic prices is one of the main topics they plan to study, in addition to climate and environmental impacts, as they consider whether to resume permitting more export terminals.

In a call with reporters, Zaidi said that the decision reflected Biden’s ​“aggressive approach to cutting costs for consumers.” He noted that manufacturing groups like IECA had been pushing the administration for price relief, making common cause with climate advocates.

“You saw, even today, different manufacturers from around the country who represent a diversity of manufacturing interests here in the United States, raising concerns, asking the department to study the impact of expanded exports on reliability and on prices,” he said.

In an interesting twist, many of the manufacturers that would benefit from a permanent halt to the LNG buildout have themselves been the target of campaigns by the very same Gulf Coast activists who pushed the pause. IECA member companies Mosaic and CF Industries operate some of the nation’s largest fertilizer plants in the polluted Louisiana region known as ​“Cancer Alley,” and they have been accused by environmental activists of harming nearby communities with toxic emissions.

Natural gas is a key ingredient in fertilizer production, so these companies would take a direct hit if gas prices rise. As members of IECA, they’ve found themselves on the same side of the LNG debate as environmental groups like the Louisiana Bucket Brigade, which coordinated several protests against gas export terminals.

Faulty assumptions about the impact of LNG exports

The United States has only been exporting LNG in large quantities for about eight years, but a growing body of data shows that these exports do influence domestic natural gas prices. The Energy Information Administration, for instance, has found that increasing LNG exports ​“results in upward pressure on U.S. natural gas prices.” The agency projected that, if additional LNG terminals are built and exports increase, domestic prices could increase by 25 percent by 2050.

This has not always been the dominant point of view. In approving past LNG terminals, the Department of Energy assessed whether the facilities would promote the public interest. Over the years, the agency has commissioned a series of reports addressing the issue and repeatedly come to the conclusion that more exports would actually improve consumer welfare.

An analysis conducted during the Trump administration found that, as exports increased, domestic production of natural gas also rose, mitigating the harm of supply shortages and ultimately resulting in more jobs and higher wages. The study also concluded that households that held shares of stock in LNG companies stood to benefit from their profits.

“These additional sources of income for U.S. consumers outweigh the income loss associated with higher energy prices,” the report noted.

That study, however, has been criticized for making faulty assumptions about families’ investments in natural-gas exporters, and the Energy Department is expected to undertake a new round of analyses assessing both the climate and economic impacts of exporting LNG.