The Weekend Wonk: Europe’s Gas Crisis is Now

September 9, 2022

Fatih Birol in Financial Times (paywall):

There are three narratives in particular that I hear about the current situation that I think are wrong — in some cases dangerously so. The first is that Moscow is winning the energy battle. Russia is undoubtedly a huge energy supplier and the increases in oil and gas prices triggered by its invasion of Ukraine have resulted in an uptick in its energy income for now.

But its short-term revenue gain is more than offset by the loss of both trust and markets that it faces for many years to come. Moscow is doing itself long-term harm by alienating the EU, its biggest customer by far and a strategic partner. Russia’s place in the international energy system is changing fundamentally, and not to its advantage. This narrative also ignores the significant medium-term impacts of the tougher international sanctions on Russia’s oil and gas sector.

This particularly concerns its ability to produce oil and transport gas. A growing share of Russian oil production had been set to come from more complex oilfields, including offshore, Arctic or otherwise hard-to-recover resources. The absence of western companies, technologies and service providers as a result of sanctions presents substantial risks for the country’s capacity to exploit those resources. Russia was banking on liquefied natural gas as the main way to diversify its exports away from a heavy reliance on Europe.

Before its invasion of Ukraine, Russia’s stated aim was to export 120mn-140mn tonnes of LNG a year by 2035, at least quadruple its current level. This appears a distant prospect without international partners and technologies. A homegrown liquefaction technology has been beset by difficulties and delays. Russia’s LNG expansion plans are now back on the drawing board.

The second fallacy is that today’s global energy crisis is a clean energy crisis. This is an absurd claim. I talk to energy policymakers all the time and none of them complains of relying too much on clean energy. On the contrary, they wish they had more. They regret not moving faster to build solar and wind plants, to improve the energy efficiency of buildings and vehicles or to extend the lifetime of nuclear plants. More low-carbon energy would have helped ease the crisis — and a faster transition from fossil fuels towards clean energy represents the best way out of it.

When people misleadingly blame clean energy and climate policies for today’s energy crisis they are, intentionally or not, moving the spotlight away from the real culprits — the gas supply crunch and Russia.

The third mistaken idea is that today’s energy crisis is a huge setback that will hinder us from tackling climate change. I don’t see it that way. This crisis is a stark reminder of the unsustainability of the current energy system, which is dominated by fossil fuels. We have the chance to make this a historic turning point towards a cleaner, more affordable and more secure energy system. And this is already happening.

The EU is raising its renewables and energy efficiency targets and putting significant resources behind achieving them, with its REPowerEU plan. The US government just put into law the Inflation Reduction Act, giving a boost to a huge array of clean energy technologies, from solar, wind and electric vehicles to carbon capture and hydrogen. The act provides for $370bn in energy security and climate change investments, with the potential to mobilise far larger sums from the private sector.

The Japanese government is seeking to restart and build more nuclear plants and expand other vital low emissions technologies with its GX green transformation plan. China continues to break records in the amounts of renewables and electric vehicles it is adding each year.

And India just took a key step towards establishing a carbon market and boosting the energy efficiency of buildings and appliances. The world’s biggest economies are pushing hard on clean energy. And with all the readily available, highly competitive clean energy technologies there are good reasons for optimism that others will follow.

Bloomberg:

Two floating liquefied natural gas terminals are setting up in a Dutch port, the first in a wave of the specialist tankers that Europe is banking on to ease the worst energy crunch in decades.

The Golar Igloo and the Eemshaven LNG are berthed together in the northern seaport of Eemshaven. Both are floating storage and regasification units, or FSRUs, designed to convert the super-chilled fuel transported on seagoing vessels into gas that can be pumped into onshore networks. The terminal officially opened on Thursday with the arrival of the first shipment from the US. 

The ships’ arrival before winter will be crucial in helping Europe through a deepening fuel crisis after Russia slashed gas deliveries in retaliation for sanctions imposed over its invasion of Ukraine. Soaring energy prices have pushed economies to the brink of recession, forcing governments to fast-track the use of floating gas terminals that take a fraction of the time to set up than their onshore versions.

The vessels’ popularity is spreading. Germany, which used to get more than a half of its gas via pipelines from Russia, is now chartering five FSRUs through the government and two more that will be privately rented. Three of the ships are slated to start this winter. ItalyFrance and the Baltic countries are also planning or investigating floating terminals to import LNG. 

One Response to “The Weekend Wonk: Europe’s Gas Crisis is Now”

  1. J4Zonian Says:

    Video 1:16 or more to the point:

    I want to shake people by the shoulders & yell into their faces “CO2 ISN’T THE ONLY GHG! GAS IS AS BAD AS COAL FOR CLIMATE!” If I weren’t afraid of causing shaken moron syndrome (and if half of them weren’t on the internet with their shoulders hundreds to thousands of miles away from me) I might not have been able to resist.

    Wind, solar, & batteries can be built & connected faster than fossil fuels & nuclear, especially if an emergency is declared. Heat pumps & induction cookers can be sent over to Europe under Lend/Lease if Congress won’t move.


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