The recent halt on permits for new U.S. liquefied natural gas (LNG) export facilities has caused concern among Asian industry groups, who fear the decision could undermine Asia's energy security and climate objectives. However, a report by the Institute for Energy Economics and Financial Analysis (IEEFA) suggests these fears are unfounded, providing five reasons to support its claim.

The IEEFA report states that the first reason why concerns about the U.S. LNG pause are overblown is that the pause only applies to proposed facilities seeking authorization from the U.S. Department of Energy. This generally includes projects in the very early stages of development. The United States remains the largest LNG exporter and continues to have significant capacity under construction, with five projects set to nearly double exports over the next decade. The pause will not affect these ongoing projects.

Secondly, IEEFA predicts that an increase in supply will result in a global glut, with supply expected to surge by 13% in 2026 alone. The report states: "The U.S. permitting pause will do nothing to ease this glut or prevent already under-construction capacity from entering the market."

For its third point, IEEFA highlights a decline in demand from Japan and South Korea, which are currently the United States' largest LNG customers. As these countries increasingly shift towards renewable energy sources, IEEFA anticipates that LNG demand will decrease by 27 million tons before 2030 in Japan and drop by 20% by 2036 in South Korea.

Fourthly, IEEFA disputes concerns that the pause will negatively impact Asia's climate goals based on what it describes as a "false narrative" that LNG is cleaner than coal. The report argues that LNG is no less harmful to the climate than coal and asserts that natural gas is not significantly displacing coal usage in Asia. It states: "In China, for example, natural gas and coal demand have increased in lockstep, since the fuels perform separate functions in the energy mix."

Finally, IEEFA suggests that since Russia's invasion of Ukraine, LNG traders have profited immensely from selling shipments to Europe. Oil and gas majors and commodity traders have been purchasing LNG supplies from new projects and establishing trading desks in target markets. As much as two-thirds of export capacity currently under construction will not be going to end buyers in Asia and Europe, but rather to traders. The report concludes: "In other words, it’s not Asia’s energy security and climate goals at risk from the U.S. decision, it’s the global oil and gas industry’s unquenchable thirst for profit."