Wednesday

29th Jan 2020

Analysis

EU purchase of US gas serves dual purpose

  • Liquefied natural gas (LNG) can be transported by ship to anywhere with an LNG terminal - making a country less reliable on a single supplier (Photo: kees torn)

The European Union and the United States have found a mutual interest in the form of liquefied natural gas (LNG), which allows the two sides to cooperate on energy despite US president Donald Trump's aggressive stance towards the Paris climate treaty and currently tense EU-US trade relations.

"The United States has what Europe wants: an incredible abundance of clean and affordable gas," US secretary of energy Rick Perry said on Thursday (2 May).

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or join as a group

  • Perry: 'The United States has what Europe wants' (Photo: European Commission)

Perry spoke at the first-ever High-Level Business to Business Energy Forum, held in Brussels.

He said the event, which brings businesses from both sides of the Atlantic together, was an idea of US ambassador to the EU, Gordon Sondland.

"I hope before you leave out here today .. that there are the seeds planted for some deals to be done," Perry told the audience.

The LNG business summit takes place less than a year after European Commission president Jean-Claude Juncker and US president Donald Trump agreed the EU would import more LNG.

The commission published figures on Thursday - with obvious strategic timing the same day as Perry's visit - that said US LNG exports to the EU have increased by 272 percent since the Trump-Juncker meeting.

The LNG event comes amidst otherwise tense trade relations between the EU and US, with a US threat of tariffs on cars hovering over the EU's head.

It is because of that context that one EU source saw a comment by Perry as a thinly-veiled threat.

Asked at a short press conference why Europe should buy American LNG, which is more expensive than Russian gas by pipeline, Perry compared buying Russian gas to buying a cheap car.

"You get what you pay for," said Perry.

"If just the cheapness of the supply is all you care about, then you might not buy a BMW, or a Mercedes-Benz, or one of the fine automobiles that come out of the European Union," said Perry.

"You might buy cheaper from some place else - but it might not be reliable. The point is the same with Russian gas," he said, adding that "our friends from Ukraine" could give some insight into the reliability of Russian gas.

BMW and Mercedes-Benz are relatively expensive, German car brands, US purchases of which Trump has previously riled against, because of his aversion to trade deficits.

The business forum took place as part of the so-called EU-US Energy Council framework, which was set up under the presidency of Trump's predecessor, Barack Obama.

Following the handover in the White House in 2016, it was unclear for a while whether the transatlantic energy cooperation would continue, in particular because of Trump's opposition to climate change action.

But the two sides held a ministerial summit in the summer of 2018, revitalising the framework.

However, a working group on climate change has remained dormant.

An EU source said that there would be no point in having a meeting of the working group, because the US was not interested in working on climate change.

LNG is still fossil fuel

On natural gas however, the interests of the EU and US seem to align.

Despite natural gas being a fossil fuel, the EU commission expects that it will remain a part of the bloc's energy mix until at least 2030.

The natural gas sector has successfully managed to frame its product as relatively clean - when compared to plants powered by coal.

"Gas remains important in the energy supply for some time to come," EU climate action commissioner Miguel Arias Canete said Thursday.

He said that the EU expected natural gas, and thus LNG, "will continue to have an important role in the years to come".

European domestic production of natural gas is going down, International Energy Agency executive director Fatih Birol said Thursday.

"Europe … will need more and more natural gas imports, even in a context of flat, almost flat, natural gas demand," he said.

In the longer term, if it wants to fully decarbonise its economy, the EU will have to phase out natural gas.

But in the shorter term, as long as it does use gas, the EU wants to diversify where it gets it, to become less dependent on Russia.

The LNG import boost can not only reduce dependency on Russia, but at the same time make a small step towards making Trump happy - in the hope of heading off those tariffs on cars, a major EU export product.

The US' economic interests in LNG sales also align with its geopolitical opposition to the Nord Stream 2 project.

This planned pipeline would transport Russian gas to Germany, in direct competition with US liquefied gas.

Investigation

US in denial on EU climate forum

An Obama-era climate change working group has been in limbo since Trump came into office. Other areas of transatlantic energy cooperation also face uncertainty.

Analysis

Did Juncker trick Trump?

The EU commission chief agreed to trade talks even if the US president did not lift tariffs on steel and aluminium. But he avoided tariffs on cars and obtained a commitment to refrain from new unilateral moves.

Energy treaty 'undermines success of Green Deal'

Over 250 civil society organisations and trade unions say that the Energy Charter Treaty is incompatible with the Paris Climate Agreement and the new Green Deal - becoming an obstacle to the clean-energy transition.

News in Brief

  1. EU asylum agency to expand operations in Greece
  2. EU set to repatriate citizens from coronavirus-hit Wahun
  3. German Left MEP resigns over former far-right membership
  4. Sassoli defends 'renewed approach' for enlargement
  5. UK approves limited role for Huawei in 5G network
  6. Cases of coronavirus in France and Germany
  7. Report: EU court seeks authority on post-Brexit deal
  8. Slovenian PM resigns, calls snap election

Planned German coal exit boosts case for Nord Stream 2

German commission recommends phasing out coal power over the next 19 years - which will provide additional arguments to build the controversial Nord Stream 2 pipeline from Russia, which both the European Commission and the US have reservations about.

Stakeholders' Highlights

  1. Nordic Council of Ministers40 years of experience have proven its point: Sustainable financing actually works
  2. Nordic Council of MinistersNordic and Baltic ministers paving the way for 5G in the region
  3. Nordic Council of MinistersEarmarked paternity leave – an effective way to change norms
  4. Nordic Council of MinistersNordic Climate Action Weeks in December
  5. UNESDAUNESDA welcomes Nicholas Hodac as new Director General
  6. Nordic Council of MinistersBrussels welcomes Nordic culture

Latest News

  1. EU not prepared for 2015 repeat, warns migration boss
  2. Selmayr did not want top job, says predecessor
  3. EU states wary of MEPs leading future conference
  4. Timmermans: EU climate law will 'discipline' rogue states
  5. In Orban's Hungary, the law is not for everyone
  6. 'Brexit is not going to go away,' warns EU's Barnier
  7. Belgian spy services launch internal clear-up
  8. US and UK in war of words over Huwaei

Stakeholders' Highlights

  1. UNESDAUNESDA appoints Nicholas Hodac as Director General
  2. UNESDASoft drinks industry co-signs Circular Plastics Alliance Declaration
  3. FEANIEngineers Europe Advisory Group: Building the engineers of the future
  4. Nordic Council of MinistersNew programme studies infectious diseases and antibiotic resistance
  5. UNESDAUNESDA reduces added sugars 11.9% between 2015-2017
  6. International Partnership for Human RightsEU-Uzbekistan Human Rights Dialogue: EU to raise key fundamental rights issues

Join EUobserver

Support quality EU news

Join us