WASHINGTON–On their current trajectory, increasing U.S. liquefied natural gas exports would support nearly half a million domestic jobs annually and contribute $1.3 trillion to U.S. gross domestic product through 2040 while having a negligible impact on domestic gas prices, an analysis by S&P Global projects.

According to Major New U.S. Industry at a Crossroads: A U.S. LNG Impact Study–Phase 1, the country’s LNG export capacity will double over the next five years under its base case scenario, which it says takes into account current conditions. These include the impacts from a 2024 pause of decisions on exports of LNG to non-free trade agreement countries. In addition to projected sizeable jobs and GDP gains, S&P Global forecasts future export activity will generate more than $2.5 trillion in total revenues for U.S. businesses, $166 billion in federal and state tax revenues and more than $500 billion in labor income.

S&P released its study on Dec. 17, the same day that the Department of Energy published the updated study on LNG exports that the administration claimed was necessary when it initiated the permitting freeze in January 2024. DOE’s study argues that LNG exports will harm U.S. consumers by increasing prices, a contention that several senators and industry trade groups dispute.

“The emergence of the U.S. LNG industry has placed the United States in the pole position with global demand for gas expected to grow through 2040 alongside the rapid growth of renewables,” says Daniel Yergin, vice chairman of S&P Global. “Continued growth in U.S. LNG capacity would have outsized impact in terms of jobs, GDP and labor income. In addition to domestic economic benefits, being the world’s leading LNG supplier adds a new dimension to U.S. influence abroad. It was U.S. LNG that replaced nearly half of Russia gas supply to Europe after the outbreak of war in Ukraine.”

The S&P Global analysis compares base case findings to those under an extended halt scenario where no new or currently paused U.S. LNG capacity comes on line, the company says. The latter scenario, the study warns, would have substantial repercussions:

• An annual average of more than 100,000 jobs would be at risk;
• More than $250 billion in contributions to GDP would go unrealized;
• $491 billion in revenues for U.S. businesses and $110 billion in labor income would be lost; and
• $34 billion in federal and state tax revenues would be given up.

Restricting future LNG capacity would have little or no benefit in terms of U.S. gas prices, the study finds, with the two scenarios showing a difference in average annual gas costs for U.S. households through 2040 of less than 1%.

If future U.S. capacity were not to materialize, the study cautions that other countries would seek to fill any LNG gap, with Qatar, Canada and Mozambique expected to accelerate their own projects to claim market share. S&P Global notes other countries, including Russia, would likely also add capacity. In total, the study estimates that 85% of the supply deficit under its extended halt scenario would be made up by fossil fuels from non-U.S. sources.

“The economic consequences of ceding the U.S. position in LNG would be stark, but it goes far beyond that,” argues Carlos Pascual, senior vice president for global energy and international affairs at S&P Global Commodity Insights. “Such a move would diminish U.S. geopolitical influence as a reliable and affordable energy supplier to allies and trading partners, as a key source for expanding energy access in developing countries and–by providing a replacement for coal in baseload power generation–an important catalyst to global decarbonization efforts.”

S&P Global says a companion study, to be released in March, will offer a rigorous emissions analysis and an examination of U.S. LNG’s economic and supply chain impacts.

DOE’s Study

DOE says its analysis, 2024 LNG Export Study: Energy, Economic and Environmental Assessment of U.S. LNG Exports, seeks to understand how shipping natural gas overseas affects communities near export facilities, strengthens or weakens domestic and international energy security, and impacts the environment and global climate. The agency indicates it intends to use the study and generated comments to guide its decisions on exporting LNG to non-free trade agreement countries.

“Today’s publication reinforces that a business-as-usual approach is neither sustainable nor advisable,” Energy Secretary Jennifer Granholm said when releasing the study. “DOE analysis exposes a triple-cost increase to U.S. consumers from increasing LNG exports–the increasing domestic price of the natural gas itself, increases in electricity prices (natural gas being a key input in many U.S. power markets), and the increased costs for consumers from the pass-through of higher costs to U.S. manufacturers.”

Granholm argues that very large LNG projects–those exporting 4 billion cubic feet a day or more–warrant special scrutiny. Considering its direct life cycle emissions, such a facility would yield more annual greenhouse gas emissions by itself than 141 of the world’s countries individually did in 2023, she says. “Any sound and durable approach for considering additional authorizations should consider where those LNG exports are headed, and whether targeted guardrails may be utilized to protect the public interest,” she advises.

Since U.S. LNG exports began from the lower-48 states in 2016, DOE has authorized 48 billion cubic feet a day of gas for export, or nearly half of current domestic production, the agency calculates. Of that authorized amount, 14 Bcf/d of associated capacity now is operating, with facilities for another 12 Bcf/d under construction. Another 22 Bcf/d of export capacity has been approved by DOE but is awaiting final investment decisions to begin construction.

Future Uncertainties

DOE emphasizes that 2024 LNG Export Study is not intended to serve as a forecast of U.S. LNG exports and impacts, but is rather “an exercise exploring alternative conditional scenarios of future U.S. LNG exports and examining their implications for global and U.S. energy systems, economic systems, and greenhouse gas emissions.”

While the global LNG market has been expanding for several years as regasification and associated import infrastructure continue to be built globally, the DOE analysis suggests that which countries will be vying for natural gas and LNG imports is uncertain.

For the five years before Russia invaded Ukraine in 2022, South Korea, Japan and China were the top three importers of U.S. LNG, collectively taking 34% of U.S. exports while European customers imported 28%, the analysis states. In 2022-23, it contrasts, the European share jumped to 63% of total U.S. LNG exports while Asian imports fell to 24% of the total.

“European policies are moving to reduce the use of fossil fuels, including natural gas. Demand for natural gas and LNG in Asia is expected to increase in most scenarios. China is expected to have the highest LNG imports of any country across all scenarios in 2050,” 2024 LNG Export Study says.

Greenhouse gas emissions support a reduction in U.S. LNG exports, DOE claims. According to the agency, increasing the availability of those exports from today’s 23.7 Bcf/d to 56.3 Bcf/d in 2050 would result in an additional 711 million metric tons of carbon dioxide equivalent in cumulative global GHG emissions, an increase of 0.05%.

Criticizing The LNG Pause

The DOE study’s release provided an opportunity for legislators and industry associations to comment on the permitting freeze. U.S. Senator Bill Cassidy (R-La.) says the only science driving the LNG pause imposed by the Biden administration is political science.

“It’s no secret the Biden-Harris administration decided to dump this report during the holiday season because their actions amounted to war on American energy and war on the American worker. Natural gas has significantly lowered emissions and LNG has been a lifeline for our allies’ energy and economic security.”

Senator John Barrasso, R-Wy., references studies that repeatedly show that U.S. LNG exports benefit the nation’s environment and security as well as the security of its allies. “Nothing in a biased study from a bitter administration on its way out the door can change that,” he holds.

American Petroleum Institute Vice President Amanda Eversole dismisses the DOE claim that increased LNG exports would lead to higher natural gas bills for U.S. consumers, noting that despite record LNG exports in 2023, gas prices dropped 62%.

David Callahan, president of the Marcellus Shale Coalition, called for a resumption of LNG export permits, saying such action will help the country achieve both domestic and international policy goals. “Abroad, U.S. LNG exports enhance energy security and environmental advancement. At home, exports promote jobs across the natural gas value chain and deliver energy savings for consumers.”

Lifting the LNG export pause will help restore U.S. energy leadership around the world, suggests Mike Sommers, president and chief executive officer of the American Petroleum Institute. He says the year-long halt only demonstrates how crucial U.S. LNG is to meeting growing demand for affordable, reliable energy that also supports overseas allies.

Despite U.S. LNG exports reaching record highs in 2023, the drop in domestic gas prices shows producers can meet increasing global demand for natural gas while maintaining a well-supplied domestic market, Sommers says. He adds that “blocking needed natural gas infrastructure, including pipelines, will impede access to low-cost natural gas regardless of LNG export levels.”

Coal-to-gas switching is the main reason the United States has led the world in reducing carbon dioxide emissions over the past 20 years, he says. With Asian LNG demand projected to double by 2050, Sommers warns that maintaining the permitting pause will force countries in the region to turn to higher-emitting fuel sources.