Industry Backlash
The Biden administration’s pause on new licenses for liquefied natural gas export projects has drawn sharp criticism from industry leaders. CEO Toby Rice of EQT Corp. (NYSE:EQT) has labeled the move a “political stunt,” claiming that it will not only lead to higher emissions but also undermine global energy security.
Emissions and Energy Security Concerns
Rice emphasized that the pause on LNG projects is detrimental from both environmental and energy security standpoints. According to him, LNG serves as a replacement for coal, and by limiting LNG, emissions will inevitably rise. He stressed the repercussions of this decision on projects scheduled for 2027-28, arguing that the uncertainty has prompted a shift in the timeline, impacting the potential to replace foreign coal.
Industry Voices
Exxon Mobil (XOM) CFO Kathy Mikells has also criticized the move, labeling it a “mistake.” She believes that it hinders the world’s efforts to achieve net zero emissions, effectively delaying progress in the global energy transition.
Political Pushback
The decision has not only faced criticism from industry leaders but also has prompted political action. A group of 10 Democrat U.S. House lawmakers from gas-producing states, including Texas, Alaska, and California, penned a letter to President Biden, urging him to reconsider the pause on LNG projects.
Uncertain Outlook
While the industry and lawmakers express concerns, industry analysts, such as Jinjoo Lee of The Wall Street Journal‘s Heard On The Street column, predict a natural lull in the buildout of LNG export facilities, potentially independent of the administration’s decision. Lee pointed out that the U.S. has already granted export authorizations to a significant volume of projects, with some not having secured enough contracts to proceed with construction. Furthermore, Wood Mackenzie estimates that the global LNG market could absorb an 18- to 24-month delay due to existing construction projects in the U.S.
Market Implications
The disruption in LNG export projects has not gone unnoticed by investors. Exchange-traded funds (ETFs), including (UNG), (BOIL), (KOLD), (UNL), and (FCG), may experience fluctuations as the industry navigates the aftermath of this decision.