Presidential election and Biden’s natural gas export freeze

In 2014, the United States they are barely exported any liquefied natural gas (LNG). By 2022, it had emerged as the world’s leading natural gas exporter. Encouraged by the Biden administration, it continues to build LNG terminals double its export capacity by 2027.

However, on January 26, 2024, the Biden administration announced a “pauseallowing new LNG exports. Why this reversal and why now? In our estimation, this likely reflects Biden’s desire to consolidate climate voters behind him in the November presidential election.

Although climate change is a global issue that requires international cooperation, climate policies are primarily shaped by domestic concerns. This is because these policies create winners and losers. They also carry cultural baggage that provokes an emotional response from supporters and opponents of the policy.

In election years, politicians take positions on high-profile issues such as climate change, the economy, or national security. If elections are expected to be close, high-profile issues that allow candidates to differentiate themselves from their perceived opponents take on even greater priority.

US presidential elections are decided by eight swing statesgiven the winner-takes-all system (Nebraska and Maine being exceptions).

With small margins of victory in both 2016 and 2020 election, President Biden probably carefully weighed the electoral benefits and costs of the natural gas shutdown.

It secures approval from climate advocates who see the moratorium as an important step in the fight against global warming (mainly due to methane emissions associated with the liquefaction and transport of the gas). But it has drawn the ire of fossil fuel advocates who see the freeze destroying jobs and undermining energy security. The freeze on natural gas exports means Biden has estimated that the electoral returns from appealing to climate voters outweigh vote losses in fossil fuel communities and some blue-collar voters. Why so?

Winners and losers from the gas cut

To dig deeper into the natural gas export freeze, consider three voting blocs: Biden supporters, Biden opponents, and swing voters.

Let’s start with the advocates, the climate voters. Biden oversaw the passage of the most important US climate legislation, the Inflation Reduction Act. However, his climate advocates are unhappy with policies like the Mountain Valley Pipeline project and Alaska’s Willow. A prominent climate activist Bill noted McKibben “Biden wants young people, who care about the climate above all else, in his corner. They were angry about the foolish approval of the Willow oil project.’

Young climate voters are probably not hurt by the gas export freeze because they come from the urban middle class and have little in common, economically or culturally, with the fossil fuel workforce. Additionally, while the economy is doing well, as reflected in economic growth and unemployment levels, Biden’s approval ratings are lagging. Biden needs to consolidate his support between climate voters, especially the younger generation. While these voters likely won’t support Trump, they may not turn out to vote or even vote for a third-party candidate. A lower turnout in this constituency could cost Biden the election. So, Biden needs to get past the climate Lydianism.

What about opponents of the pause? Ultimately, the shutdown of natural gas exports hurts Gulf Coast states like Louisiana, where the new export terminals will be located (in particular, the 10 billion Calcasieu Pass 2 work). Louisiana Senator John Kennedy has threatened to delay Senate confirmation of Energy and State Department nominees.

Biden can afford to neglect Louisiana (ironically, Kennedy’s remarks probably boost Biden’s credibility with climate voters) because it’s a deep red state where Biden secured only 40% of the votes in the 2020 election. Nothing changes even if his vote share drops dramatically in Louisiana (there’s a lesson here for the states: if you want to count in the US political presidency, go moderate purple as opposed to partisan red or blue).

The most interesting category is the swing states affected by the natural gas export shutdown, namely, gas-killing Pennsylvania. Biden won this state in about 2020 82,000 votes (50% vote share vs. 48.8% for Trump). But this state has a strong fracking constituency, which could be upset by a halt to natural gas exports. That’s why both of Pennsylvania’s Democratic senators, John Fetterman and Bob Casey Jr., have criticized the pause: “Pennsylvania is an energy state. As the state’s second largest producer of natural gas, this industry has created good-paying energy jobs in cities and communities across the Commonwealth and played a critical role in advancing US energy independence. … While the immediate impact in Pennsylvania remains to be seen, we are concerned about the long-term impact this shutdown will have on the thousands of jobs in Pennsylvania’s natural gas industry. If this decision puts energy jobs in Pennsylvania at risk, we will push the Biden administration to reverse this decision.”

Biden’s challenge is to appease climate voters (who matter in all swing states) and dampen the backlash in Pennsylvania. He’s likely hoping that a higher turnout of climate voters in urban Pennsylvania will offset declining support in fracking country. And, he could shore up his support for fracking country through measures such as blocks the sale of Pittsburgh-based US Steel in Nippon, which labor unions oppose.

What about international pressure?

Biden may face backlash from European countries (and to some extent Japan). In the wake of Russia’s invasion of Ukraine and its decision to weaponize natural gas exports, European countries have become major importers of US gas. For context, Russia covered more than 50% of the EU’s gas demand in 2021. By the end of 2022, its share fell to about 13%. Thus, the cessation of natural gas exports could reduce US credibility to counter Russian leverage through its dominance of natural gas exports.

While European countries do their obligatory protests, the reality is that the US will double its export capacity by 2027. So Europe faces no risk of a cut in gas supplies from the US, at least not in the short term. Moreover, Europe is hardly in a position to put pressure on the US with the impasse in Ukraine and the real possibility that Trump will win in November. Given Trump’s opposition to supporting Ukraine (and NATO more generally), Europeans have an incentive to remain silent so that Biden can invest his political capital in managing his domestic pro-climate constituency.

From Biden’s perspective, ceasing natural gas exports makes a lot of political sense. For climate advocates, the good news is that Biden is willing to incur political costs, domestically and internationally, to advance the climate agenda. The not-so-good news, however, is that the pause is temporary, and Biden could lift it if he’s re-elected in November — Trump certainly will. Even if Biden makes the pause permanent, importing countries can secure gas from Qatar or Australia. And if they can’t get natural gas at a reasonable price from anywhere, some of these importing countries can they burn more coal for the production of electricity. Thus, the broader climate challenge of reducing fossil fuel use remains unabated.