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1st Jul 2022

No new EU gas infrastructure needed despite war

  • To replace Russian gas, the EU wants to import more liquified natural gas from overseas (Photo: kees torn)
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European commissioner for energy Kadri Simson and members of European governments will gather in Budapest to attend a conference organised by the Brussels-based gas lobby agency Gas Infrastructure Europe (GIE) on Friday (8 April).

The EU has put forward plans to slash dependency on Russian gas imports by two-thirds before the end of the year and to fully decouple from Russian imports by 2030 at the latest.

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This involves accelerated investments in renewables and energy efficiency, but also an increase of 60 billion cubic metres (bcm) of gas imports from non-Russian suppliers by the end of this year, which will need to come from all over the world.

The endeavour has created political momentum for the expansion of gas import capacity in Europe, and the GIE and gas industry representatives are now lobbying for new pipelines and LNG (liquified natural gas) transmission facilities.

And with evidence of war crimes by Russian forces pressure on EU leaders to sanction Russian fossil fuels and gas and find alternatives is mounting.

A flurry of new gas projects

In a new report by Global Energy Monitor (GEM), an NGO based in San Fransisco, published on Tuesday (5 April), researchers show that since the beginning of the war, 15 additional gas import and transmission projects have been proposed across Europe adding a further 70 bcm/per year.

Countries that have announced new projects include Estonia, Germany, Greece, Italy and the Netherlands.

"There seems to be little coordination between member states," Greig Aitken, lead author of the study, told EUobserver, adding that Europe's gas problems lie in a lack of global supply, not a lack of infrastructure or import capacity.

Even before the Russian invasion started, Europe already had "overcapacity problems." Many gas projects in Europe were already cancelled, postponed indefinitely or had trouble finding financial support.

In January 2022, the US withdrew its diplomatic support for the proposed €6bn East Med Gas Pipeline, a 1,900-kilometre long pipeline connecting Israel to Cyprus and Greece, citing "financial viability" as one of the reasons for the decision.

But growing uncertainty has led to a flurry of moribund gas projects being resurrected.

All current plans put together amount to a capacity increase of an additional 160.2 bcm/yr, with investments amounting up to €26.4bn, GEM data shows.

Not all of these will be built, but major investments are already underway. A total of 16 pipeline projects are currently under construction, worth €6.5bn.

Expansion at this scale is incompatible with EU climate targets, which require EU gas consumption to decrease by 32 to 37 percent before 2030. In its latest climate report published on Monday, the UN Intergovernmental Panel on Climate Change's (IPCC) also concluded that no new oil, coal and gas infrastructure should be built.

And there is a risk that many of the new gas projects currently discussed will become stranded assets

"Many gas projects need to run 20 years to earn their money back," Clark Derry, an expert at the US-based Institute for Energy Economics and Financial Analysis, said.

Given the rapid decline of fossil fuel use, "significant investment in new oil and gas pipelines are not needed," the International Energy Agency, an intergovernmental body based in Paris, concluded in a May 2021 report.

Accelerating renewable energy and encouraging energy saving and energy efficiency is a more effective, cheaper and environmentally less destructive answer to the bloc's energy security needs, Ember, a think tank based in the UK, also concluded in a March study.

"The EU can stop using Russian gas as early as 2025 without building new fossil gas infrastructure," Raphael Hanoteaux, an expert at global energy think tank E3G, said.

Gazprom subsidiaries

On Thursday last week, Global Witness, a British think-tank published a report showing that GIE has long resisted calls to end EU dependency on Russian gas.

And while other European companies have cut ties and business relationships with Russian companies, GIE still represented the interests of Astora and Gazprom Germania — two subsidiaries wholly owned by Gazprom, a Kremlin-controlled oil- and gas company.

In an unexpected move, Gazprom on Friday announced that it had terminated its 'participation' in Gazprom Germania and Astora which respectively supply and store 40 percent and 25 percent of Germany's gas.

Katja Yafimava, a senior research fellow at the Oxford Institute for Energy Studies in the UK told Reuters on Monday she did not expect any impact on Russian gas deliveries.

But signalling growing unease of Russian influence on its energy system, Germany has now placed the Gazprom subsidiary under temporary state control, German minister for energy minister Robert Habeck said on Monday.

"The government is doing what is necessary to ensure security of supplies in Germany, and that includes not exposing energy infrastructure in Germany to arbitrary decisions by the Kremlin," Habeck said.

Agenda

Gas supplies and the Ukraine war top This WEEK

After elections in Hungary and Serbia this weekend, the focus of attention in the EU again will be on Russia's invasion of Ukraine, and how it impacts gas supplies to the EU and the European economy.

More US gas may explode prices in Europe, experts warn

Washington will increase supply of liquefied natural gas before the end of the year, US president Joe Biden and EU Commission president Ursula von der Leyen announced on Friday, amid warnings that such a move could push prices even higher.

EU tours gas lobby events, amid escalating climate crisis

European commissioner for energy Kadri Simson is scheduled to attend events that include speakers from Gas Infrastructure Europe, a gas lobby organisation that represents former Kremlin-controlled oil and gas companies, amid the escalating climate crisis.

EU energy regulator warns against capping gas prices

In a long-awaited report, the European energy regulator sets out proposals to deal with surging electricity bills — but advises against capping prices on the wholesale gas market, which some member states such as Spain and France have supported.

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