Modeling the interplay of global and domestic drivers on U.S. LNG Export Futures

Abstract

Liquefied natural gas (LNG) has become a critical commodity in the global energy market. While the United States is now the world's largest exporter of LNG, there is ongoing debate over whether exporting LNG aligns with U.S. long-term climate and economic goals, especially given increasing uncertainty in the size of global LNG markets. To inform this debate, we evaluate 128 future scenarios representing various combinations of two global factors (climate target and global reliance on LNG trade), two domestic factors (U.S. climate target and LNG export infrastructure cost), and three other uncertainties (socio-economic trends, cost of carbon capture and storage (CCS) technology, and upstream gas production costs) that have found to be important for LNG markets. Simulating these scenarios with the Global Change Analysis Model (GCAM), we find that U.S. LNG exports in 2050 vary by a factor of four across these scenarios (8-34 Tcf/yr), which is a substantially larger variation than that of global gas demand or global LNG trade. Notably, the variation in U.S. LNG exports exceeds the variation in domestic gas production, highlighting the strategic competition between retaining domestically produced gas for U.S. consumers and exporting it to the global market as LNG. Using Classification and Regression Tree (CART) analysis to evaluate the relative importance of these factors, we find that while global reliance on LNG trade and the global climate target are the two most influential factors, no single factor dominates. This result suggests that U.S. LNG export trajectories are jointly shaped by domestic, global, and other uncertain factors, and that this uncertainty may not be resolved before infrastructure investment decisions need to be made, underscoring a key source of risk for energy investments.