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The decision by the Biden administration to pause new licenses for liquefied natural gas (LNG) export projects has ignited a firestorm of criticism from industry insiders and political figures. According to EQT Corp. (NYSE:EQT) CEO Toby Rice, the freeze is a “political stunt” that will escalate emissions and jeopardize global energy security.
“It’s bad policy from an environmental and energy security perspective,” Rice stated in an interview with Bloomberg. “LNG helps replace coal, so limiting LNG increases emissions.”
Rice emphasized that the uncertainty caused by the pause has prompted a shift in the timeline of upcoming projects, impacting the ability to reduce coal imports. This view is echoed by Exxon Mobil (XOM) CFO Kathy Mikells, who branded the move a “mistake” that will hinder the world’s progress toward achieving net zero emissions.
Adding to the dissent, a coalition of 10 Democrat U.S. House lawmakers from gas-producing states, including Texas, Alaska, and California, penned a letter to Biden urging a reconsideration of the decision.
However, some analysts argue that even without the administration’s intervention, a natural slowdown in the construction of LNG export facilities was likely on the horizon. According to Jinjoo Lee of The Wall Street Journal‘s Heard On The Street column, this is partly due to the status of projects that have been granted export authorizations but have not commenced construction.
Research by Wood Mackenzie also suggests that the global LNG market could absorb an 18- to 24-month delay, given the numerous ongoing projects in the U.S.
As the opposition mounts, uncertainty surrounding the potential ramifications of the freeze lingers. Investors are closely monitoring this development, which has the potential to impact various exchange-traded funds (ETFs) including (UNG), (BOIL), (KOLD), (UNL), and (FCG).
