The US LNG pause and the need for pragmatic, realistic energy transition

– by Paul Everingham

If you are talking purely about geography, it’s a long way from Washington DC to Asia. More than 6700 miles of land and the Pacific Ocean lie between the US capital and Tokyo, for example. 

But if you are considering energy, the two are much more closely aligned.  Decisions made about energy in DC resonate incredibly deeply throughout Asia. 

I’ve had cause to consider this energy relationship a great deal over the past few weeks, as I visited DC for a series of meetings with senior US government officials and members of Congress, and then carried on to Houston for CERAWeek 2024. 

The number one topic of conversation throughout my travels – unsurprisingly – has been the ongoing pause in pending US LNG export approvals and Asia’s reaction to it. 

For many of the people with whom I met, it was their first introduction to the Asia Natural Gas and Energy Association (ANGEA). 

We are very appreciative of the time they afforded our delegation and take encouragement from the fact that a diverse group of stakeholders – including representatives from both sides of politics and members of the media – are interested in hearing Asia’s perspective on US LNG. 

But it’s also very apparent that there is an ongoing need to grow a deeper understanding in the US of Asia’s specific energy needs, which relate not only to energy security but also very much to progress on climate targets. 

At the heart of this equation is the fact that Asia is a net importer of energy (without the resources to be self-sufficient) and a region that remains reliant on high-emitting coal for electricity generation. 

While a pause on approvals can be put into effect quickly, Asian energy policy makers are making decisions about how their countries’ energy systems will function decades in advance. 

For nations in Asia where gas has an established role in the economy – Japan, South Korea, Singapore, Taiwan and Thailand – the halt to approvals and the potential for changes to permitting of projects are viewed as a threat to energy security. 

For countries which are looking to LNG to support the transition away from coal during periods of strong economic growth – the likes of India, Vietnam and the Philippines – the pause introduces a supply risk as they seek to navigate a difficult balance around meeting rising energy demand and simultaneously decarbonising their economies. 

Asia does not question the right of the US to review its policies around national interest determinations, which is common practice around the world. 

However, to also stop the approvals process for LNG projects that are advanced in planning and have committed customers is a step that makes nations in Asia question whether the US will continue to be a reliable energy supplier. 

It would be unfair to suggest that the LNG situation overshadowed CERAWeek, an exceptional annual event that showcases the energy world at its most innovative, insightful and impactful. 

But the pause to approvals was certainly a strong discussion point in Houston. That will remain the case until the US LNG industry and its stakeholders have clarity around what the future holds. 

One of the highlight sessions of CERAWeek 2024 was an hour-long lunchtime conversation between Daniel Yergin and Bill Gates. It’s hard to think of two public figures better placed to have a pragmatic and realistic exchange about the world’s energy future. 

Really, that’s what energy transition has to be: pragmatic and realistic. Technologies and fuels shouldn’t be ruled in or out on the basis of ideology. 

Getting to global net zero will require a mix of gas-fired power, wind and solar power, hydropower and geothermal power, along with significant development of low-carbon fuels (like hydrogen and ammonia) and abatement technologies (including carbon capture and co-firing). 

All available levers should be pulled. 

For Asia, energy transition cannot just be about accelerating investment in renewable energy and then hoping for the best. Already we have seen Vietnam and Indonesia adjust ambitious renewable energy targets because of cost concerns and limitations of existing grid infrastructure. 

A more credible version of energy transition would see emerging nations in Asia progressively replace coal with gas to realise both energy security and emissions reductions, as they steadily incorporate more renewable energy. 

To enable this pathway, the world must make its gas resources available.  

And the US, as the world’s largest LNG exporter, must continue to be the responsible energy trading partner that Asia has come to rely on. 

Paul Everingham is the inaugural CEO of the Asia Natural Gas and Energy Association (ANGEA), which works with governments, society and industry throughout Asia to build effective and integrated energy policies that meet each country’s climate objectives. Connect with him on LinkedIn.

Photos from CERAWeek by Andrea Hanks and Louis DeLuca.