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Biden’s LNG export pause will hobble Asia’s energy plans
As Japanese Prime Minister Fumio Kishida arrives in Washington this week to meet with Joe Biden, it is worth reflecting on the American president’s decision in January to pause approvals for new liquefied natural gas exports.
First, it is important to understand how critical gas from the U.S., the world’s biggest exporter of LNG, is for Asia. Asia is a net importer of energy and depends on other parts of the world to keep industry going and households powered.
Second, much of Asia relies on high-emitting coal for electricity generation, particularly fast-growing Southeast and South Asia where lifting people out of poverty remains a primary goal. Of total coal demand worldwide last year, three of every four tons were consumed in China, India or Southeast Asia.
In Japan, South Korea, Singapore, Taiwan and Thailand, LNG has an established role ensuring energy security and economic stability, while also providing the foundations for a low-carbon future.
Massive volumes of coal must be displaced through the 2030s and beyond across emerging Asia to achieve the region’s net-zero aspirations. This inevitably will mean substantial gas imports
As the sole realistic coal alternative in terms of affordability and energy density, LNG from the U.S. offers a much cleaner option for always-available power generation that, in partnership with renewables, can meet growing energy demand while facilitating climate progress.
India, Vietnam and the Philippines are among the fast-growing Asian nations that plan to increase the role of gas in their economies through LNG imports as a reliable complement to renewable energy investment.
Therein lies the concerning disconnect between Asia’s energy realities and the U.S. government’s LNG pause.
National energy plans and research from regional experts who know Asia best, including The Institute of Energy Economics, Japan, indicates natural gas demand in the region over the next 30 years will be much higher than implied by the projections the Biden administration used to justify the export pause.
These higher forecasts are driven by crucial differences in economic and demographic outlooks and the country-specific feasibility of scaling renewables at speed. Optimism is a positive attribute, but reality has no substitute.
Utilization of the full export potential of U.S. LNG — which would be 52% higher than the level currently approved — will be required by 2040 to meet Asia’s demand during energy transition, according to a report last year by energy research company Rystad Energy commissioned by the Asia Natural Gas and Energy Association.
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