US President Joe Biden’s decision last week to suspend the approval of new licenses for the construction of liquefied natural gas (LNG) export terminals, citing a climate “threat”, is not very good news for Europe. In just two years, the European Union got rid of its dependence on Russian gas, and American liquefied gas became its favorite substitute. U.S. gas imports are expected to rise significantly over the next six years, prompting analysts to wonder if Europe could face overinvestment in liquefied natural gas (LNG) terminals.

• Read also: Overinvestment in LNG infrastructure possible: US wants more LNG terminals in Europe, but capacity outstrips demand for gas

Where are we, to what extent Europe has become dependent on American gas

In recent years, the US has become the main supplier of liquefied natural gas to Europe, accounting for 28% of imports in 2021, 43% in 2022 and 46% in 2023, analysts at the Institute for Energy Economics and Financial Analysis (IEEAF) say. . The US is planning new terminals and increasing export capacity. Including only those LNG terminals already under construction, by 2030 US export potential will reach about 238 billion cubic meters. This indicator is 76% higher than the European demand for liquefied gas, estimated at the level of 2030.

In addition, if all the LNG terminals planned by the US are built, the capacity will reach 465 billion cubic meters by 2030, which is more than the estimated gas demand for all of Europe of about 392 billion cubic meters.

In this context, more and more analysts have started to say that by 2030, Europe may have an excess of liquefied gas and excess infrastructure. Soon the idea began to spread, and the American president suspended possible investments. , due to climate security.

The outage will not affect terminals already under construction or in operation, but will only jeopardize some of the larger projects planned for the next six years.

However, the White House’s decision to suspend licenses for new terminals will delay those plans.

“Exaggerated dependence, even on a friendly nation, creates risks” / Analysts suggest that renewable energy sources will be better

According to Bloomberg analysts quoted by The Business Standard, American gas is considered by many to be surplus and politically acceptable. They comment that instead of focusing on replacing Russian gas with renewable sources, Europe is increasingly turning to American gas, which is risky. “Exaggerated dependence, even on a friendly nation, creates risks,” according to Bloomberg analysts.

They suggest that Europe would be better off focusing on renewable energy sources rather than becoming increasingly dependent on American gas. “The European Union’s decision to swap Russian gas for American LNG instead of focusing on renewables shows that its energy security remains dependent on external factors beyond its control, such as the Atlantic hurricane season or politics in Washington.” — notes Bloomberg. analysts who believe that the European energy system is still vulnerable and prone to shocks.

Europe may lose faith in the promises of the American administration

They remember how Russia inflated gas prices even before the invasion of Ukraine. A few months before the attack on Ukraine, Russia stopped supplying gas through the pipeline and stopped offering volumes on the spot markets, a tactical move aimed at raising prices. Two weeks after the invasion of Ukraine, the EU developed a plan to replace Russian gas, choosing American gas to fill the gap.

Europe is positive about American liquefied gas producers, but that assessment is likely to disappear after President Joe Biden’s latest move. Following Russia’s invasion of Ukraine, the US administration promised the European Union to quickly consider requests for any new export capacity, but Joe Biden’s announcement could undermine the credibility of that commitment.

It is possible, however, that in a situation in which he is re-elected, Biden will return to the decision and allow the process of granting new licenses for liquefied gases to resume. If a Republican such as Donald Trump wins the US presidency, the decision will “almost certainly be overturned” in early 2025, according to gas market expert David Sedusky.

But even Trump’s victory will not be a sure sign of increased gas exports to Europe. During his time in the White House, Trump has proven willing to use trade war tactics to implement his policies, especially against China, and there is no guarantee he won’t do the same to the EU.

Climate security before energy security

Last week, US President Joe Biden announced a moratorium on the construction of new liquefied natural gas (LNG) export terminals, citing the climate “threat”, a decision that is slowing the development of the industry, AFP reports.

“This pause on permits (for LNG terminals) takes into account what the climate crisis really is: an existential threat,” the White House leader said in a statement, according to Agerpres.

The announcement was made at a time when the presidential campaign is in full swing.

As reported by AFP, a confrontation seems inevitable between Joe Biden, who in 2022 promoted a large-scale plan to finance the energy transition, and Donald Trump, who questions the very principle of global warming, despite the scientific consensus.

“MAGA Republicans (Donald Trump’s catchphrase) are denying the urgency of the climate crisis, dooming the American people to a dangerous future, but my administration will not remain passive,” Biden said. “We will not give in to special interests,” he added.

“As exports grow, we must review export requests in light of the latest economic, environmental and national security analyses,” Energy Secretary Jennifer Granholm said during a conference call.

Anticipating the moratorium, which was reported by several US media outlets, the Sierra Club, an environmental group, said the move “would represent a positive and significant change in policy.”

In early December, on the sidelines of the COP28 climate conference, more than 250 organizations and environmental groups appealed to Joe Biden to stop authorizing new LNG terminals, reminding them that natural gas is a polluting fossil fuel.

In a letter to Granholm on Thursday, several representatives of the US energy industry asked her to lift the moratorium.

In particular, they argued that the gas industry had created jobs in the United States and enabled supplies to Europe, which had been deprived of Russian gas following an embargo imposed after Moscow’s invasion of Ukraine.

The moratorium would “undermine confidence in the US and threaten jobs,” the group said.