US LNG Flies in the Face of Mainstream Climate Analysis: the Department of Energy must stop all expansion now.

In January of last year, the Biden administration ordered a pause on permitting new Liquified Natural Gas (LNG) export capacity while it updates the studies it uses to determine whether such projects are in the public interest. In Biden’s final months in office, his Department of Energy is expected to release a draft of those studies, which are meant to more fully reflect the risks LNG poses to our climate and public health. These studies will form the basis for determining which – if any – LNG projects are permitted to be built going forward. 

Oil Change International, frontline communities, and other partners have provided ample evidence for the need to end LNG expansion. But if we needed further evidence that permitting more US LNG export capacity is a surefire way to cook the planet, we certainly got it with the International Energy Agency’s (IEA) latest annual report. This year’s flagship World Energy Outlook (WEO) dedicated over ten pages to the issue of the looming LNG supply glut, its potential impact on the clean energy transition, and, crucially, how even the LNG export terminals that have already begun construction – which would represent over a 50% increase in the world’s LNG capacity – do not align with our climate goals.

Indeed, for the first time, the WEO made clear that the coming wave of new LNG export capacity not only fails the 1.5C test but also undermines governments’ current energy policy pledges and commitments that aren’t even enough to maintain the crucial 1.5C threshold.

Figure: LNG trade by scenario relative to existing and under construction export capacity to 2050

Source: IEA World Energy Outlook 2024 p.180.

The chart above makes this clear. It shows LNG capacity against the three IEA scenarios presented in the WEO, each modeling energy supply and demand according to different policy goals. These range from the business-as-usual all-out climate disaster (STEPS) to the Net Zero Emissions scenario (NZE), which details what is needed to maintain a 50% chance of keeping climate change to 1.5C. In between is the Announced Policies Scenario (APS), which models current government climate pledges, some of which are yet to be set into policy. 

Crucially, the chart divides LNG capacity into two blocks, showing capacity already operating and capacity currently under construction and expected to come online before 2030. Its key message is that to align with the NZE and have a chance of maintaining 1.5C, none of the capacity currently under construction can come online. This is something we have known since NZE was first published in 2021. However, what has become more apparent in this report is that most of that new capacity also undermines the current climate pledges of the world’s governments, including those of the United States. If governments were to pursue and meet their pledges, even though they are insufficient to meet 1.5C, much of this new LNG capacity would go underutilized, and none would be needed by 2040. 

Only in the disastrous STEPS scenario, which models energy demand based on business-as-usual, does the demand for LNG keep rising. Even then, there is ample capacity until the 2040s. This scenario leads to catastrophic climate change consequences associated with 2C or more of average global temperature rise.

The United States is the single biggest overbuilder

The US has an outsized role in creating the looming global LNG glut. Fed by the ongoing fracking boom, the US has become the world’s largest LNG exporter, with 20% of global capacity. Its current wave of giant polluting LNG projects under construction will nearly double that capacity and accounts for almost 40% of global capacity under construction. None of these projects should have been authorized to prevent overshooting the 1.5C goal. 

We remade the IEA’s chart showing the construction capacity under construction in the US and the temperature rise implications of each of the IEA scenarios. It could not be clearer that the US is overbuilding LNG capacity and should have stopped permitting new capacity years ago. The Biden administration has no excuse but to end permitting now.

Figure: LNG trade by scenario relative to existing and under construction export capacity to 2050 showing US capacity under construction

Source: Oil Change International using IEA WEO 2024 and BloombergNEF

The implications of an LNG supply glut? Undermining the clean energy transition.

It’s much easier to make policy pledges and announce climate targets than it is to implement them. Many countries, including the US, have lofty goals but not enough political will, legislation, or resources to make them a reality. Even governments whose climate pledges are backed up by legislation struggle with implementation in the face of corporate manipulation, right-wing backlash, or simply a lack of resources. In poorly regulated market economies such as the US, a flood of cheap fossil fuels can be a disincentive for businesses, families, and individuals to make a switch from the technology they have to a new technology, even if it will save them money (and protect the climate) in the long run.

The IEA warns that the looming LNG supply glut could undermine the clean energy transition. It states that in its business-as-usual scenario, the potential for coal to be replaced by gas in the power sector is limited as retiring coal plants are increasingly replaced with renewables. However, “if natural gas prices were to fall low enough,” gas consumption in the power sector could rise, particularly in Asia, at the expense of “a major slowdown in clean technology deployment and efficiency improvements.”  (p.54)

The IEA also sees a threat to heat pump installation coming from the current wave of LNG oversupply, stating that heat pump sales in China and the European Union could be 20% lower as a result. (p.184)

This highlights the danger of increasing LNG supply and exposes fallacies peddled by LNG promoters, often repeated by government agencies such as the Department of Energy (DOE) and the Federal Energy Regulatory Commission (FERC), which issue permits for gas pipelines and LNG plants. The central fallacy is that LNG displaces coal, which oil and gas executives claim is a net positive for the environment. But it makes no sense to say that LNG benefits the environment when it emits vast amounts of climate pollution into the atmosphere and harms critical habitats and frontline communities. The IEA’s warnings of low gas prices challenging renewable energy and heat pump installations make clear that adding additional LNG export capacity will increasingly displace clean energy, exponentially increasing emissions. 

Industry response to Trump’s election makes clear Biden must act now

Trump’s win at the polls – and the prospect of the LNG permitting pause ending abruptly – has the gas industry gleefully rubbing its greedy hands together. Tim Tarpley, president of the oil and gas trade association the Energy Workforce & Technology Council, says that his organization “appreciates President Trump’s commitment to energy production in the United States and we look forward to working together with him and his administration on removing barriers to access federal leasing both onshore and offshore … [and] ending the LNG pause.” 

But an interview with the CEO of Technip Energies, an engineering firm that builds LNG plants, just before the election exposed how at least one industry player sees clearly how oversupply can help generate future demand. Arnaud Pieton was quoted in Upstream Online saying, “The LNG market is supply led and so you may see excess supply in the market around 2027 or 2028, but that will drive costs down and attract more customers and more demand. Thereafter we will see another wave of investment in additional supply.”

This is why it is so crucial for the DOE to act now to solidify the permitting pause by issuing a report that makes clear any expansion of LNG is not in the public interest. While President Biden is still in office, he must reject the pending authorizations for LNG export terminals, like the Calcasieu Pass Terminal 2, a massive carbon bomb slated to be built directly next to another LNG export terminal on Louisiana’s Gulf Coast. The Trump administration can ignore the study, but a strong, unequivocal report can be used in legal challenges to future LNG permits – permits we know, beyond doubt, should be rejected.