The colossal waste of Europe’s gas rush

With the war in Ukraine and the decision to end supplies from Russian gas pipelines, European Union countries have taken cover, focusing, among other things, on liquefied natural gas. Ship imports increased by 60% in one year as governments opened up their wallets to build new terminals and increase regasification capacity. All in the name of energy security. However, one study questions the desirability of this LNG study, which could prove to be “the world’s most expensive and useless insurance policy.”

These are the words of Ana Maria Jaller Makarewicz, who edited a report by the US think tank Ieefa (Institute for Energy economics and financial analysis) on LNG in Europe. The study analyzed the projects initiated to increase the import capacities of various European countries: among these, Germany, France and the Netherlands stand out according to the volume of investment. But Italy is no less: a recent study by Investigate Europe examined 6 projects, including Fsru (offshore LNG carriers that act as temporary terminals for receiving LNG) and terminals in Piombino, Ravenna, Porto Torres and Portovesme. Then there are the old projects that can be dusted off the land terminals of Gioia Tauro in Calabria and Porto Empedocle in Sicily.

The European Union has backed this LNG race: new terminal projects can also be financed with Pnrr funds under RepowerEU, a plan that Brussels launched to reduce energy dependence on Russia. In total, projects already approved could provide 400 billion cubic meters of total LNG import capacity by 2030, according to Ieefa. Total capacity today is 270 billion.

But will it really be necessary to have that firepower in the midst of a transition that must increase the use of renewable resources and alternatives to fossil fuels? The answer from Ieefa (as well as other experts) is negative. Research by the US think tank predicts that between today and the next seven years, the total demand for liquefied gas in European countries (not just in the EU) should be 150 billion cubic meters. According to Standard & Poor’s, demand should be around 180 billion. So more than half of the terminals would remain unused. Those already in operation will be largely sufficient for the EU’s energy needs.

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According to the study, Spain will have an excess capacity of 50 billion cubic meters, followed by France (14 billion), Italy (10 billion) and Germany (9 billion). “There is a tangible risk of assets being stranded, as upgrading LNG infrastructure in Europe will not necessarily improve reliability,” says Jaller-Makarewicz. The Ieefa researcher also talks about natural gas coming from pipes. This is because, in addition to LNG terminals, Europe’s hydrocarbon race includes new gas pipelines and new extraction facilities.

The Meloni government, for example, has authorized new gas drilling in the Adriatic to increase national production by 1.5 billion cubic meters per year, according to plans. Even in these projects, experts aroused more than one suspicion. Fatih Birol, head of the international energy agency IEA, recently warned Brussels: he said at a recent meeting with the EU Commission that it is not a good idea to extract more gas. “Europe’s geology is very complex and mining may not be economically viable,” the Turkish economist said.

According to Birol, in order for the EU to be independent from Russia, it needs to focus on something else, especially renewable resources. The director said he expects energy prices to remain “high” in Europe. According to the head of the IEA, in the future the EU should prioritize renewable energy generation technologies based on electrolysers, heat pumps, next-generation batteries and offshore wind power. Birol also “recommended that the EU and the US work in close cooperation on battery production”.

Source: Today IT

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