Trump Means Huge New LNG Opportunities and Growth in Exports and Energy Dominance

Guest Post from William Rampe at the Institute for Energy Research.

The reelection of President-elect Donald Trump provides a new opportunity for the U.S. to reclaim its leading role in liquified natural gas (LNG) exports. LNG developers expect President Trump to lift President Biden’s pause on permits for LNG exports to countries without free trade agreements (FTAs) with the United States.

While analysts are correct to worry about the effect Trump’s tariff plans will have on LNG exports to Europe and China, LNG trade will likely remain strong despite these policies. China’s LNG imports grew by 12% in 2023 and Europe’s desire to decouple from Russia means that “it would be much more challenging for Europe to find another gas supplier comparable to the U.S. in terms of output size that is not Russia.”

The U.S. became the world’s leading LNG exporter in 2023, however, LNG exports are expected to rise at their smallest pace since 2016 in 2024 at just 2% as a result of permitting delays. Overall, natural gas production took a hit under the Biden administration, declining in 2024 amid record-high demand.

Whether it be the Biden administration’s ban on LNG transport by rail or its tax on methane emission from natural gas facilities, the U.S. is being prevented from living up to its natural gas production potential. These policies, along with the export pause, increase costs for natural gas production and trade by creating barriers to entry and uncertainty for firms investing in LNG.

Besides the direct barriers these policies put on LNG production, the willingness of politicians to meddle in the natural gas market creates new fears for would-be LNG investors. According to a report from Global Energy Monitor, none of the 21 proposed U.S. LNG export terminals received final investment decisions or reached the construction stage in 2021, citing “competition from lower-priced producers” and “increased scrutiny from regulators and permitting challenges over environmental and community impacts” as reasons.

Despite this slowdown, it’s clear that demand growth is not slowing down anytime soon: Shell projects global demand to rise by 50% by 2040.

To deal with rising global demand for power, policymakers must allow LNG producers to establish the necessary infrastructure to produce and export natural gas through permitting reform that removes barriers created by regulation.

Why We Need LNG Dominance and How to Achieve It

The U.S. Energy Information Administration projects global electricity demand to increase by about one-third to three-quarters by 2050, with natural gas fueling 15-20% of that electricity. This estimate could be low, however, since it anticipates that renewables and nuclear will account for two-thirds of generation, despite their higher costs and, in the case of solar and wind, intermittency. This cost discrepancy means that lower-income nations will continue to prioritize cheap and reliable sources of electricity even as they are encouraged to transition to renewables.

If this demand for LNG is not met by the U.S., dependence on authoritarian states such as Russia or Qatar will increase. This reliance has significant geopolitical implications, especially for Europe. The U.S. supplied the European Union with 46% of its LNG imports in 2023 as Russia’s share of pipeline gas fell from 41% to 8% from 2021 to 2023. Without a reliable commitment from the U.S. to export LNG, Europe will face uncertainty that will limit its ability to continue to transition its imports from Russia.

A new report from Tristan Abbey of the National Center for Energy Analytics offers solutions for how the U.S. can achieve “dominance” in global LNG markets to meet these challenges.

“​​Projections of greater electrification and industrialization around the world entail greater consumption of natural gas as a practical necessity,” argues the report. “Export terminals operating today that are enabling U.S. allies in Europe to reduce their dependence on Russian energy navigated an extremely complicated permitting process, compounded with increasingly divisive politicization, to reach this point.”

Since the liquefaction process for natural gas involves giant refrigerators and transportation involves insulated and temperature-controlled containers, trading LNG is a long and capital-intensive process. According to the report, it involves $5 billion in capital per billion cubic feet of gas and three to five years for the construction of facilities. Given the time commitment and scale needed for LNG trade, failing to reform policy now will have negative implications on exports in the future.

Failure to make the right policy choices would cause the U.S. to miss out on a “generational opportunity.” This opportunity arises from the record-high proved reserves of natural gas in the U.S. and increasing industrialization and electrification across the world. Natural gas is used as feedstock to create fertilizers, plastics, and other petrochemicals and will be required in greater quantities for baseload electricity generation or peaker plants to ensure against variability in solar and wind generation.

The report suggests three non-mutually exclusive reforms, with increasing difficulty, for deregulating LNG exports: lifting the LNG export permitting pause, reforming the Department of Energy’s (DOE) authorization responsibility for natural gas exports, and amending the National Environmental Policy Act (NEPA) to restrict the Federal Energy Regulatory Commission’s (FERC) scope of review from downstream and upstream environmental implications to technical reviews of export facilities.

Lifting the LNG export permit pause to non-FTA countries is the most feasible step and will likely occur under Trump’s DOE. The Biden-Harris administration issued the pause to give the DOE more time to “update the underlying analyses for authorizations” even though the Natural Gas Act dictates that the DOE “shall” approve export permits unless it determines that they are inconsistent “with the public interest.”

This process differs from FTA countries in that those permits are automatically assumed to be in the public interest. According to the report, the resumption of licenses could be timed so that they incorporate the conclusions of the forthcoming studies in 2025, avoiding possible litigation and claims of administrative procedure violations.

Source: National Center for Energy Analytics

Reforming the DOE’s authorization process for new LNG permits could also streamline exports. Although FERC is responsible for conducting an environmental review of an LNG export facility, the DOE has the authority to approve the facility after FERC’s review. This procedure, as the report argues, leaves “open the possibility for the politicization” of the approval process. Therefore, taking the DOE out of this process removes one hurdle for exporters to clear while maintaining the responsibility of FERC to conduct environmental reviews under NEPA.

A motivated Congress, however, could reform FERC’s responsibility under NEPA to “technical reviews of energy infrastructure and stewardship of U.S. electricity grids,” removing its responsibility to consider broader climate-change-based impacts of LNG trade. As the report explains, “FERC is not equipped to assess the climate-change impacts of individual projects, and NEPA was enacted at a time when technical reviews were far less prone to politicization.” While enacting this reform would be challenging politically, limiting the scope of FERC’s reviews would hasten permit approvals by lessening the work needed for compliance and making it more difficult for partisan interest groups to intervene.

Conclusion

Even though the U.S. became the largest LNG exporter under the Biden-Harris administration, this achievement occurred despite numerous regulations that sought to restrict LNG production and trade. President-elect Trump has the chance to seize the moment and reverse the anti-LNG policies of the Biden-Harris administration through both executive order and legislation. Abbey’s report provides a roadmap for policies that Trump should consider to ensure that the increasing global demand for natural gas is filled by American wells.

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