In January, the Biden administration announced a pause to authorize liquefied natural gas (LNG) exports to non-FTA countries. It is widely understood that this decision was made to appeal to the environment-conscious groups within the Democratic base. Although election years often yield decisions based on domestic political considerations, it is nonetheless essential to assess whether such choices are aligned with the long-term national interest.

In the wake of Russia’s invasion of Ukraine, the consensus view remains that Europe and the United States must reduce their dependence on Russian energy, especially LNG. However, since the demand for LNG is expected to grow—especially in Asia—there must be an alternative source. For many countries, the United States, with its extensive natural gas reserves, is an ideal alternative supplier. 

This is why the decision to pause authorization shocked many trying to expand LNG exports from the United States to meet demand and reduce dependence on Russia. The United States has been calling on the world to reduce its reliance on Russian energy to enhance energy security. The pause could impede the efforts by allies to build up resilience against Russia. To make matters worse, the Biden administration apparently did not consult allies before the decision. When energy security and alliance integrity are more important than at any time in recent history to stand up to Russian aggression, the administration’s sudden turn clearly does not advance the national interest.

As the demand for natural gas is expected to continue to rise and the production from existing sources naturally decreases, the world will have to invest in additional capacity. The reality is that there are only three countries with the potential to substantially expand their capacity to meet the needs of the world: the United States, Russia, and Qatar. Obviously, Russia is not a feasible contender as a future alternative. Qatar plans to increase its LNG capacity, but there may be limitations to further substantial growth. This leaves the United States as the leading supplier of LNG. In fact, the United States has the possibility of becoming the “Saudi Arabia for LNG” thanks to the “Shale Revolution.” However, the authorization pause has summoned crippling uncertainty in the energy market and may translate to a lost opportunity.

The administration is defending its decision, arguing that the stability of supply will not be affected as there are already many existing authorized projects. But this conflates authorization with actual capacity expansion. Out of the total forty-eight billion cubic feet per day (bcf/d) that has been authorized in total, 14 bcf/d are in operation, 12 bcf/d are under construction, 22 bcf/d of LNG projects with authorization have not yet received the “Final Investment Decision” to start the construction. On the other hand, the market believes in the need for further capacity expansion. In fact, there are projects with a commitment to procure five bcf/d of LNG that are waiting to obtain authorization. The pause will directly affect these projects.

The core problem is beyond such short-term supply and demand. The question revolves around the willingness of the United States to act as the reliable leading alternative source of LNG to satiate world demand and enhance energy security. While the administration is downplaying the decision’s impact by stressing that this is just a review process for several months, users and allies are concerned about the future direction of U.S. energy policy. LNG infrastructure is very much a long-term project, requiring solid, decades-long reliability from suppliers. The stakes are much higher, and the scope much larger than the immediate outcome of a multi-month pause.

With uncertainty rising, consumers will have to begin exploring other options to ensure their necessary supply. If they eventually decide to invest in other countries, this will constitute a loss in potential American job creation and tax revenue. If some are tempted to invest in Russia for the lack of an alternative, it would present a strategic pitfall for the United States.

Some may argue that the pause is necessary to protect the global climate from further warming. Yet, pausing the authorization will not keep the planet from warming. As long as there is demand for LNG, users will have to invest in other countries. It is known that a significant amount of methane, which is more damaging to the climate in the short to mid-term than CO2, may be leaked into our atmosphere when producing LNG. This can be fully regulated and monitored if the production is taking place in the United States.

On the other hand, if LNG production shifts to other countries, there may not be the same quality of regulation or environmental safeguarding. Climate concerns would be better addressed when a critical mass of LNG production is under the control of the United States. For environmentalists, pausing the authorization will be counterproductive.

I hope the administration can place this issue into a long-term strategic perspective alongside the views and concerns of allies, culminating in a timely resumption of authorizations. Election-year politics is a reality, but that does not mean the administration should leave the national interest—and the world’s energy needs—in the rearview mirror.

Tatsuya Terazawa is the Chairman and Chief Executive Officer of The Institute of Energy Economics in Japan.

Image:  Wojciech Wrzesien / Shutterstock.com.