29 April 2024

Does Joe Biden care about European security?

By Craig Mackinlay MP

Is the US committed to European security? Across European capitals, this question is no longer considered rhetorical or hypothetical. It also stretches far beyond the ongoing questions about weapons and military aid packages. Energy is every bit as crucial.

In a letter this week, nearly 40 Parliamentarians from Britain, Spain, the Netherlands, Italy, Poland and other US allies, urged the Biden Administration to reverse its pause on export approvals for new Liquefied Natural Gas (LNG) projects in the USA.

The decision by President Biden is a shocking example of party politics being placed above international security. Without the guarantee of future LNG cargoes, America’s European allies will likely face supply constraints and price rises. They will be left either competing with gas-hungry China, India, South Korea and Japan for LNG cargoes from Qatar, Australia and other East of Suez producers; or worse, will be forced back to reliance on Russian gas. And if conflict in the Middle East were to close the Straits of Hormuz, global LNG supplies would contract by 20% overnight as Qatari cargoes remain trapped in port  Any of these all too plausible scenarios would gravely undermine European security.

Biden’s pause would also deliver an economic hit to the US. Not only have new natural gas liquefaction facilities provided billions in investment and skilled jobs around the US Gulf Coast, they have also ensured that there is an export market for America’s cheap and abundant shale gas. This has helped to sustain investment and jobs as far away as North Dakota and Michigan.

There is a simple solution: President Biden’s decision must be reversed. If not, this historic mistake will inflict needless economic harm on future generations, both in America and in Europe. The only obvious beneficiary will be Vladimir Putin, an absurd outcome for a US President to generate.

It did not have to be this way. As Europe rushed to free itself from addiction to Russian hydrocarbons following the invasion of Ukraine in 2022, the US provided an essential lifeline via increased LNG exports (up by more than 140% since before the war). Europe was lucky that so much US capacity was coming onstream at just the right time – the result of investment decisions made a decade previously (it takes many years to build an LNG plant).

Nevertheless, the strategy has been working. Russian gas now accounts for less than 8% of the gas mix in Europe (pre-war it was 38%), and it is still falling today. Europe as a whole (including the UK) now accounts for 60% of all US LNG exports. These shipments are the unsung hero of Nato’s response to Putin’s war. The US in turn has now become the third largest exporter of LNG in the world, narrowly behind Qatar and Australia – both of which it was set to overhaul later this decade, until Biden’s unwise permitting pause.

The benefits for Americans are far more than the sometimes-abstract concepts of ‘security’ for allies across the Atlantic. Those benefits are measured in the hundreds of billions of dollars: the US earns significant revenue from increasing exports to Europe, and US jobs and investments are booming in southern states such as Texas, Louisiana and Georgia, and elsewhere in the supply chain.

This win-win – jobs and investment for Americans; energy security for Europeans – can be cemented in place for decades to come. The conditions now genuinely exist, for the first time in living memory, for Europe to access to secure energy supplies from a democratic geopolitical ally. European businesses and governments – in the past often too slow to recognise strategic energy threats – have learned from their mistakes. Investment has poured in. New and expanded LNG regasification terminals to receive US cargoes are shortly coming online in the UK, Italy, Spain, and Germany.

The European infrastructure is being built as we speak. Consumers are benefitting. Prices have stabilised. The US’s role as a global energy superpower is secure for the long-term.

Except… now it isn’t.

The Biden Administration’s decision to pause permits to new developments throws all of these benefits, on both sides of the Atlantic, up in the air. With such uncertainty, investments will not be made; alternatives will be sought (in the new wave of LNG mega-projects in West Africa or off the back of Argentina’s Vaca Muerta shale basin, for example); costs will rise again as global LNG demand growth – driven largely by developing Asian economies – outstrips supply growth once more.

As we wrote in our letter to President Biden:

‘The Western world cannot stay ahead of our adversaries simply by standing still… we must plan ahead, expand our cooperation in energy and other fields, and prepare ourselves for the challenges of the future’.

As politicians ourselves, we are not blind to the role of party politics in Washington DC in this election year – but surely international security concerns must rise above partisanship? Our signatures represent Conservatives and Liberals, Christian Democrats and Greens; from Europe’s Atlantic coast all the way to its Eastern borders. In a dangerous and uncertain world, some issues transcend ideological labels and geographic differences.

British and European leaders have been (rightly) critical of President Trump’s past rhetoric towards Nato and European security. It is time for our politicians now to criticise President Biden’s regulatory actions with the same vigour, given the negative impact on current and future energy security. This is no time for a double standard.

The decision to pause the permits is a mistake; it needs to be corrected.

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Craig Mackinlay MP is Chairman of the Net Zero Scrutiny Group of UK Parliamentarians.

Columns are the author's own opinion and do not necessarily reflect the views of CapX.