Trump wants to scrap Biden’s ban on a chunk of natural gas exports. It won’t help America’s top buyer much

By Anna Cooban and Zachary Cohen, CNN

London/Washington, DC (CNN) — President-elect Donald Trump is set to overturn a ban on some US exports of liquefied natural gas, or LNG, in a boon for US energy producers.

But the move is unlikely to help address the climate crisis and may even make it worse. As for the biggest buyer of American LNG — Europe — which depends heavily on natural gas imports, it will have to wait till after the end of the decade to see the benefit.

The region would welcome extra flows from January as, after nearly three bruising years of high energy prices, it is on the brink of losing one of its last remaining sources of Russian pipeline gas.

“The global gas market remains on edge heading into winter, unassuaged by warm winter weather predictions,” Bank of America strategists wrote in a note this month. “The market remains vulnerable due to relatively low inventories in Europe, the historical inaccuracy of weather forecasts, uncertainty around gas supplies from Russia and the startup timelines for new LNG projects.”

LNG is a chilled, liquid form of natural gas that can be transported via sea tankers — and American exports are booming. In less than a decade, the United States has gone from selling negligible amounts of the fuel abroad to leapfrogging Australia and Qatar to become the world’s top supplier, according to the US Energy Information Administration (EIA).

Yet, in January, the Biden administration paused federal authorizations for several pending LNG export projects while it assessed the impact of the export boom on the environment and on energy security and prices at home. The pause does not apply to exports that had already been approved.

On Tuesday, the Department of Energy published that assessment, forecasting that, if the US increases LNG exports beyond what’s currently authorized, the resulting emissions would amount to an additional 1.5 gigatons of planet-warming pollution or so per year by 2050, equivalent to a quarter of current US annual greenhouse gas emissions.

The final decision on additional LNG exports is “in the hands of the next administration,” Energy Sec. Jennifer Granholm told reporters.

Some studies have found that LNG produces significantly less greenhouse gas pollution over its lifecycle than other fossil fuels, but its climate impact will depend on whether the gas is displacing oil and coal or, rather, clean renewable energy. Other studies have detected high rates of leakage of methane — the main component of LNG — at various points during the fuel’s production. Methane is a potent planet-heating gas, with 80 times more warming power over short timeframes than carbon dioxide.

Trump’s allies are already making plans to lift the LNG moratorium after he takes office in January, according to a source familiar with discussions among the incoming president’s advisers as well as candidates under consideration for national security roles.

Here is what this means for America’s biggest customer.

Europe’s energy makeover

Before Russia launched its full-scale invasion of Ukraine in 2022, Russia was the European Union’s biggest supplier of natural gas. Since then, the bloc whittled Moscow’s share of its imports down to 15% in 2023 from 45% in 2021 by slashing the supply arriving via pipeline.

To fill the gap, Europe has imported vast quantities of LNG from the US and other countries, as well as pipeline gas from Norway. Now, according to the EIA — which counts the United Kingdom and Turkey as part of Europe — the region is the biggest recipient of US LNG exports, soaking up two-thirds of the shipments last year.

The EU has also ramped up imports of Russian LNG to help heat its homes and power its factories. But the bloc faces a self-imposed deadline of 2027 to break its dependence on all fossil fuel imports from Moscow, setting the US up to play an even bigger role as the region’s energy supplier.

That independence day is still far off, however. Well before then, on January 1, 2025, a contract enabling the transit of Russian pipeline gas through Ukraine is set to expire. The flows represent about 5% of the EU’s total gas imports, according to Brussels-based think tank Bruegel, and supply mainly Austria, Hungary and Slovakia.

These countries are not at risk of an energy shortage, say analysts, noting they would likely fill the gap by importing more LNG or more natural gas via pipeline from other European nations.

But the loss of the flows via Ukraine will make it harder for Europe to refill its stores before next winter, said Massimo Di Odoardo, a senior natural gas researcher at energy data firm Wood Mackenzie.

The global LNG supply is expected to grow only modestly over 2025, he told CNN, such that “Europe will struggle to get storage levels up to a very comfortable level at the end of next summer.”

Natural gas prices in Europe have tumbled from all-time highs reached in summer 2022 but are still more than double their historical levels. The end of the transit deal is one reason prices are unlikely to decline much next year, analysts told CNN. Di Odoardo said prices are likely to remain close to their current levels or perhaps rise if the contract is not renewed.

The oncoming glut

The picture should brighten for Europe in the second half of the decade, when a wave of fresh LNG supply from the US, Qatar and other producers is expected to hit the global market.

By the end of the decade, the amount of LNG trading in the world market is likely to be 50% higher than currently, excluding the potential supply from the currently pending US projects, according to Di Odoardo.

Any additional flows due to the reversal of Biden’s ban would not enter the market until after 2030, analysts said.

When they do, they will contribute to broader downward pressure on European natural gas prices.

In a note earlier this month, analysts at Capital Economics said their central forecast is for European prices to roughly halve from current levels by the end of 2026.

Even so, prices are unlikely to return to their levels before Europe’s energy crisis, according to Francisco Blanch, head of commodities and derivatives research at Bank of America. Natural gas prices soared in the wake of Russia’s invasion, which followed a rise in global demand for energy as economies reopened after Covid lockdowns.

As long as Europe continues to import LNG across huge distances — crossing the Atlantic Ocean, for example — and not from an immediate neighbor, Blanch told CNN, it will bear the costs of transportation and other logistics.

It’s a predicament that puts European businesses at a competitive disadvantage to those in the US, which generally pay much less for their energy.

European natural gas prices are currently up to five times higher than those in the US, according to analysts at Capital Economics, who expect the gap to narrow by the end of 2026 — resulting in prices that are up to three times higher.

Writing in landmark report in September, Mario Draghi, the former chief of the European Central Bank, said that volatility in European energy prices is “also a significant factor, hampering energy-intensive industries and the entire economy.”

Likewise, Blanch at Bank of America makes a striking observation.

“(Companies) have been moving their operations away (from Europe),” he said. “If you have a heavy or chemical industry — which is a high-energy-intensity industry — you’re going to the US Gulf Coast. You’re going to the source of the energy.”

Laura Paddison contributed reporting.

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