Trump presidency likely to expedite DOE LNG permitting, but tariffs could affect competitiveness of US LNG projects

Donald Trump won re-election to the office of the US Presidency in a decisive victory over Kamala Harris. Trump’s ascension back into the seat of power will likely spur a complete reversal from the Biden Administration’s US energy and climate policy, similar to his first term. In particular, Trump has vowed the put an end to the Department of Energy (DOE) pause on non-FTA permit approvals for LNG export projects that was instituted during the Biden administration. In this Research Update, we will discuss how a Trump presidency might affect future LNG project development in the US.

Does Trump plan on resuming the DOE non-FTA permitting process?

Yes. He has specifically indicated that he will do this in both public appearances as well as on his campaign website. Indeed, his campaign has said that moving LNG approvals forward is a day one concern of his incoming administration. It is unclear how quickly Trump’s executive actions will impact the DOE approval process, but it is likely that most projects currently seeking fresh non-FTA permits or extensions will receive them. In total, there are over 124 mtpa of projects that are either awaiting new non-FTA DOE permits or that will require an extension.

Major US LNG projects awaiting DOE non-FTA permit approval

Source: DOE

US LNG liquefaction projects need to apply for separate authorizations to export LNG to FTA and non-FTA countries. The approval to export LNG cargoes to countries with which the US possesses a free trade agreement is usually quick, taking a matter of months.  Approvals to export volumes to countries that the US does not hold a free trade agreement with takes much longer, often years.

Are FERC authorizations affected by a Trump presidency?

FERC commissioners are appointed by presidents for a five-year term. The next commissioner whose term expires is Mark Christie, a Republican, in June 2025. He will either be re-appointed or replaced with another Republican, keeping the 3-2 Democrat-Republican party-balance the same. However, the term of Willie L. Phillips, the current FERC Chair and a Democrat, is up in 2026, with Trump likely to replace him with a Republican, tipping the balance of the FERC Commission towards the right. Legally, the FERC commission can only have up to three members from a single political party, so a 3-2 Republican majority on the Commission will hold until the end of his presidential term. Additionally, Trump will likely name either of the two Republicans currently on the Commission as Chair. A 3-2 Republican majority on the Commission will likely not significantly affect FERC rulings on LNG projects. The FERC Commission has been actively approving projects over the last 10-15 years without much issue, regardless of the party split at the time.

Will the incoming Trump administration’s economic and trade policies affect LNG project development in the US?

One of the main economic policies Trump has touted throughout the campaign has been his intention to institute harsh tariffs. Trump indicated his desire to implement tariffs of up to 60% on goods imported from China and tariffs of between 15% and 50% on goods imported from other countries. If the Trump administration enacts these tariffs, it is likely the affected countries will respond quickly with their own fusillade of tariffs on goods imported from the US, effectively beginning a new trade war. This situation could impact LNG project development in many ways.

The US imports many of the components required for the construction of LNG trains. From steel to entire modular liquefaction trains, US LNG project development is heavily reliant on sourcing materials from other countries. Increasing the costs of the necessary raw materials, machined parts, and equipment will in turn increase already rising costs associated with constructing a liquefaction plant in the US. Higher project expenditures may make it more difficult for US LNG projects to secure financing and could decrease profitability.

Retaliatory tariffs from major buyers of US LNG, especially China, could greatly impact the cost competitiveness of US LNG as well. While many pre-FID projects have already signed binding long-term supply agreements with offtakers, those that have not may find it difficult to secure buyers. Indeed, it is possible some buyers may even desire to exit their contracts if retaliatory tariffs are high enough to make supply from other sources, chiefly Qatar, more attractive. Though, given that energy security is seen by most countries as a key national security concern, it is certainly possible that LNG could be partially or fully exempt from tariffs. Indeed, China did allow for buyers of US LNG to apply for tariff exceptions for US LNG in 2020. Though, the tariffs at the time (25%) were far lower than the 60% currently proposed by the Trump administration.

Overall, how does a Trump presidency affect LNG development in the US?

The acceleration of DOE non-FTA approvals will certainly benefit pre-FID projects. Many of these projects already have full slates of buyers and receiving their non-FTA permit is one of the last major hurdles they face. This will also uniquely benefit Golden Pass LNG as their expected start-up date of mid-2025 has been pushed beyond the expiry of their existing non-FTA export permit in September 2025.

However, the economic side of the equation is murkier. If Trump implements his planned tariffs, the cost impact on US LNG projects may be significant. Already, labor and material costs have been considerable issues for many projects in the US. Tariffs will only serve to exacerbate this. Though, the specifics of the planned tariffs will likely become clearer in the coming weeks and months, which could potentially include carve-outs for energy projects like LNG.

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