Wednesday

27th Jul 2016

Opinion

Massive EU gas investment a mistake

  • Gas totals one quarter of all energy used in Europe (Photo: eastpole)

Friday's (27 June) gathering of EU ministers is the second time this month to discuss, among other things, Europe’s supply of natural gas.

The crisis in Ukraine has been a wakeup call, exposing Brussels' weak position vis-a-vis Russia which delivers 25 per cent of gas consumed in the EU.

Dear EUobserver reader

Subscribe now for unrestricted access to EUobserver.

Sign up for 30 days' free trial, no obligation. Full subscription only 15 € / month or 150 € / year.

  1. Unlimited access on desktop and mobile
  2. All premium articles, analysis, commentary and investigations
  3. EUobserver archives

EUobserver is the only independent news media covering EU affairs in Brussels and all 28 member states.

♡ We value your support.

If you already have an account click here to login.

Gas totals one quarter of all energy used in Europe, but with price levels on the rise and domestic production falling, it is becoming increasingly expensive to continue current levels of consumption, furthering Europe’s dependence on imported gas.

In response, Europe is investing billions of euros in gas-related infrastructure. Of the 248 so-called projects of common interest (PCIs) identified by the European Commission, 110 are related to the storage or transportation of gas.

Harbours across Europe are being transformed into hubs for overseas liquefied natural gas, and new pipelines are planned to bring gas supplies to the EU from authoritarian regimes such as Azerbaijan and Algeria.

A significant part of the estimated €200 billion to build the PCIs will come from public sources of finance via direct investments or in the form of guarantees.

But pouring such a massive sum into gas-related infrastructure is a huge misstep that will not address the challenge of Europe’s energy demands.

First, gas is expensive. Between 2001 and 2012, gas prices tripled and are expected to continue rising. At the same time, new sources of inexpensive gas are unlikely, with the consensus about an American-style shale gas boom in the EU having been all but abandoned.

It is equally unlikely that the US – a gas importer – will ever export significant amounts of gas to Europe, partly because the transport and liquification of gas are expensive, and shale gas extraction in the US has peaked.

On the other hand, prices for renewable energy sources show a downward trend, and operational costs are much lower.

Gas is also often offered as the transition fuel to help Europe meet its climate change commitments and become a ‘low carbon economy’. To be sure, gas delivers a constant flow of energy and is less polluting than both coal and oil, the most carbon intensive fossil fuels.

But were gas to aid an energy transition, then a credible plan to phase out the most polluting of fossil fuels would be needed, which is currently not the case. To stay within a global warming scenario whereby temperature increases are kept below two degrees Celsius, gas consumption must decrease by two thirds by 2050.

Locking Europe into gas use for decades

By its own account, the Commission’s own 2050 Energy Roadmap scenarios suggest that planned investments in gas infrastructure will create overcapacity and lock in Europe to gas use for decades, while hampering investments in, and the development of, renewable technologies.

The other thread of the narrative underpinning these EU summit discussions – that Europe must invest in its own gas infrastructure in order to increase the security of its energy supply – only tells part of the story.

These investments may make Europe less dependent on imported gas from Russia, but we will come to rely on gas from other countries – Azerbaijan, Algeria, Qatar and Nigeria – not the most stable of democracies, where human rights abuses abound.

The silver lining is that alternative energy scenarios exist.

Research shows that investing in renewables and energy efficiency, in combination with a 40 per cent reduction target by 2030, can generate savings in gas consumption by about 40 percent, exceeding all imports from Russia.

Such a strategy would have the added benefits of improving the odds of meeting our climate targets, as well as developing cutting edge-technologies and jobs. Another energy future is within reach – it is simply a matter of political will.

Xavier Sol is director at Counter Balance and Kuba Gogolewski an Energy expert at CEE Bankwatch Network

Column / Brexit Briefing

Brexit plans missing in action

The Brexit referendum has created an almighty political and economic mess, with little sign of a British or EU plan to clean things up.

Opinion

Brexit seed was planted in 2004

The clause allowing a member state to leave the EU was introduced at a time of prosperity. EU leaders should not repeat the mistake and use the crisis to reinforce eurozone membership.

Stakeholders' Highlights

  1. GoogleHelping Emergency Services Find You When You Need It Most
  2. Counter BalanceWhat's New in the Investment Plan for Europe: Business as Usual or True Innovation ?
  3. Belgrade Security ForumMigration, Security and Solidarity within Global Disorder: Academic Event 2016
  4. GoogleHow Google Fights Piracy: Creating Value While Fighting Piracy
  5. EJC"My Visit to Israel" - Opinion by MEP Lopez Aguilar, Chair of the EP Working Group on Antisemitism
  6. World VisionChildren Migrating, Out of School and at Work as Hunger Deepens in Southern Africa
  7. European Healthy Lifestyle AllianceStand-Up (and Exercise) to Prevent Chronic Diseases
  8. Centre Maurits CoppietersLaunches a Real-time News Hub Specialised in EU Stakeholders
  9. Dialogue PlatformFethullah Gulen Calls for International Probe Into Turkey Coup Allegations
  10. GoogleEU-US Privacy Shield: Restoring Faith in Data Flows and Transatlantic Relations
  11. World VisionWorld Leaders & Youth Advocates Launch Partnership to End Violence Vs. Children
  12. Counter BalanceReport: Institutionalised Corruption in Romania's Third Largest Company