Biden administration puts approvals for new LNG export terminals on ice

Policy may increase uncertainty in Europe’s energy supply

Washington last month announced that it will indefinitely halt approvals for new LNG export terminals, potentially placing further pressure on Europe’s energy security. This has resulted in the suspension of applications for 17 projects that were awaiting approval. Among the projects is Venture Global’s CP2 in Louisiana which was the largest LNG terminal to be proposed in the US. The Biden administration, currently in its election year, claims that the move is motivated by efforts to drive down domestic energy prices and environmental concerns. The US has risen to become the world’s largest LNG exporter in the past few years. Its seven operating LNG terminals have a capacity of 87 million tonnes per year, while five more approved projects are set to add a further 63 million tonnes by 2028.

The Biden administration’s directive has added further complications to the future supply of energy in Europe. Europe was the main destination for US LNG exports in 2022, with US exports averaging 10.6 billion cubic feet per day during the year. Venture Global, for instance, counts large energy-intensive industrial companies in Germany among its customers. Germany has struggled with energy security following the cutoff of Russian sources since the invasion of Ukraine. While Germany and the EU have said the US’ move will not have an impact on short to medium term energy supply, it may have notable consequences further down the line. Some bodies, such as the International Energy Agency, have been forecasting a glut of supplies on the global LNG market, with much of it set to come from US production. But whether or not there will be such an extensive surplus is now uncertain. Nevertheless, it is unclear how long the Biden administration intends for the suspension to last.

Rebel gains in Myanmar put military junta on the ropes

However, opposition forces lack coherent strategy

Rebel forces in Myanmar have made significant territorial gains against the ruling junta over the past few months, significantly weakening its grip on power. Around the end of 2023, the ethnic armed organisation (EAO) Myanmar National Democratic Alliance Army (MNDAA), a rebel group with ostensibly Chinese backing, pushed back the junta’s forces in the key northern Shan State near the Chinese border. China has significant interest in securing these areas and has been constantly dismayed after many of its requests to end certain actions in the area were ignored by the junta leadership. The area is known to foster large-scale internet scam sweatshops, the trafficking of women and children, and digital fraud operations. MNDAA’s successful offensive seemingly encouraged the two other EAOs of the so-called Three Brotherhood Alliance in the Shan State – the Ta’ang National Liberation Army (TNLA) and the Arakan Army (AA) – to launch operations against the junta. The AA’s operation near the Indian border took control of towns close to the strategically-important port city of Sittwe.

Although the junta’s strength has clearly diminished, the opposition rebel groups remain largely uncoordinated. The rebel groups part of the Three Brotherhood Alliance as well as most other EAOs have largely prioritised the establishment of their own autonomous entities over toppling the junta (and re-installing democracy). The most powerful EAO, the United Wa State Party (UWSP) – also situated in the Shan State - has called for a ceasefire and refused to engage in the recent fighting. The People’s Defence Force groups (PDFs) - a series of organisations that cropped up following the coup in 2021 with an intent to remove the military junta - are generally poorly armed and lack a coherent strategy among themselves. Their cooperation with EAOs has also been unreliable. The PDFs support the National League for Democracy, which was previously led by the imprisoned former leader of Myanmar Suu Kyi. Meanwhile, the National Unity Government, which has attempted to cast itself as the exiled legitimate government, has little effective control over the PDFs.

Washington set its sights on expanding domestic uranium enrichment

US looking to end reliance on Russia

The US is attempting to rebuild and secure its nuclear supply chains, in an attempt to end its reliance on Russian energy. Rebuilding the country’s uranium enrichment industry is top of the agenda. Russia provides over 20 percent of the enriched uranium required for the US and Europe’s nuclear fleets. In November, the Biden administration requested Congress’ approval for an additional US$2.16 billion to guarantee the Department of Energy as a last resort buyer of enriched uranium. Washington last month also requested proposals for uranium enrichment services worth a total US$500 million. It is also ‘friendshoring’ uranium supply chains by funding uranium enrichment projects in Canada, France, Japan, the UK and Mexico. The US ultimately aims to add nuclear to the list of other sanctioned Russian energy sources. A bill to ban the import of Russian uranium products, which includes exceptions if there is no alternative supply until 2028, is currently making its way through Congress.

However, the ability for the US to effectively ramp up domestic uranium production in a short amount of time is uncertain. Only around half of Russia’s uranium supplies to the US and Europe could be replaced by all current plans of companies to boost enrichment capacity. One of the largest reasons that US companies are hesitant to invest in new enrichment plants is a fear that Russia could flood the market in response. Washington is therefore risking the possibility of Russia cutting off its uranium exports in retaliation while it is not being ready to replace its supply. Ultimately, the US will be weighing up its short term energy security with its long term reliance on Russia.

Washington intensifies calls for Vietnam to establish chip fabrication industry

Hanoi constrained by labour shortages, unstable power supply and competition with Chinese investment

The US is actively pushing Vietnam to establish a semiconductor fabrication industry, as part of its efforts to diversify chip supply chains from Taiwan and China. On a visit to Vietnam last month, US undersecretary of state for economic growth Jose Fernandez reportedly rallied Vietnamese government officials to invest in semiconductor fabrication. While Vietnam has established capabilities in some parts of the semiconductor supply chain including assembly, testing and packaging, it is now seemingly looking to enter the more complex fabrication industry to produce chips that could be used in cars and telecommunications. This could allow Vietnam to tap into the US Chips and Sciences Act’s US$500 million fund aimed at building up semiconductor industries in foreign countries. The fund is part of the US’ greater strategy of reducing overreliance on Taiwan and China – which house 46 and 26 percent of global chip fabrication capacity, respectively - in semiconductor manufacturing.

However, there are significant obstacles Vietnam would have to overcome. For one, it has a large shortage of engineers. Its chip industry only employs between 5,000 to 6,000 of  the 20,000 trained hardware engineers that are estimated to be required for its chip industry in five years. Vietnam has attempted to pressure chip companies such as Samsung to address the issue by upskilling the local workforce, however so far this has done little to resolve the problem. Vietnam also faces difficulties in filling companies’ demands for clean and reliable energy - the chip fabrication process is extremely power-intensive. Last year, it faced lengthy blackouts, partially due to the country’s overreliance on unstable supplies of coal-fired power. While Vietnam’s Eighth National Power Development Plan (PDP8), which partially aims to provide certainty for foreign investors in renewable energy projects, shows some promise, coal is still expected to play a large role in Vietnam’s energy supply for the foreseeable future. Vietnam will also faces challenges from Chinese state investments, as Beijing responds to the US’ attempts to restrict its access to semiconductor technology. Ironically, Vietnam will also be up against the US, which is both attempting to build up alternative semiconductor bases offshore whilst also placing billions of dollars towards domestic projects