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Monday, August 8, 2022

Why the United States Isn’t Able to Wean Europe Off of Russian Gas

The Biden administration wants to increase the amount of natural gas sent to Europe in order to assist the continent wean itself off of its reliance on Russian energy. However, that high objective will mostly be symbolic, at least in the medium term, due to the fact that the United States does not have the capacity to export much more gas and Europe does not have the ability to purchase substantially more gas.

In recent months, American exporters have already increased the production of terminals that convert natural gas into a liquid that can be transported on huge tankers, thanks to the urging of President Biden. Furthermore, they have redirected cargo that were initially intended for Asia to Europe.

However, energy experts estimate that it will take between two and five years to develop enough terminals on both sides of the Atlantic to substantially increase U.S. exports of liquefied natural gas, or L.N.G., to Europe to meet demand. That fact is likely to constrain the scope of a natural gas supply announcement that President Biden and other European leaders are planned to make on Friday afternoon.

It is possible that any move to enhance natural gas exports could hinder efforts by President Biden and European leaders to tackle climate change. Once new export and import terminals are constructed, they will most likely remain in operation for many decades, so sustaining the usage of fossil fuels for a far longer period of time than many environmentalists feel to be sustainable for the well-being of the planet.

As of now, climate concerns seem to be taking a backseat as politicians in the United States and Europe strive to punish Russian President Vladimir V. Putin for invading Ukraine by depriving him of billions in energy sales revenue.

Building a big export or import terminal may cost more than $1 billion and take years to complete due to the amount of planning required, the number of permissions obtained, and the amount of time it takes to complete the project. A total of seven export terminals are located in the United States, while 28 large-scale import terminals are located in Europe, which also receives L.N.G. from sources such as Qatar and Egypt.

Some European nations, notably Germany, were previously disinterested in developing L.N.G. terminals since it was significantly more cost effective to import gas from Russia through pipeline. This has changed lately. Plan to construct Germany’s first L.N.G. import terminal on the country’s northern shore has been resurrected.

Russia supplies around 40% of Europe’s natural gas, with the majority of its clients concentrated in Eastern and Central Europe. A number of countries have increased their LNG import capacity, but the majority of it is concentrated in Southern Europe, which is not well linked by pipeline to the nations in the north and east.

After a month of fighting in Ukraine, Russian gas imports to Europe have remained relatively constant, but that might change in the coming weeks and months. President Putin proposed on Wednesday that Russia’s energy be purchased in rubles rather than euros or dollars, rather than by nations unfriendly to the Russian Federation. Europe’s businesses would be compelled to do business with Russian financial institutions that have been sanctioned by Western governments.

In part because natural gas has grown so costly, there are some indications that European firms and people may be tempted to lessen their reliance on the fuel. The company Yara International, a major fertiliser producer in Italy and France, has said that it would restrict output as a result of rising prices of raw materials such as natural gas, among other factors.

However, while reducing demand would be beneficial, some climate scientists and activists are concerned that the Biden administration’s and the European Union’s emphasis on building liquefied natural gas terminals will have a detrimental effect on the effort to combat global warming by encouraging the use of fossil fuels.

Former energy advisor to President Barack Obama, Jason E. Bordoff, co-founded Columbia University’s Climate School and is now its dean. Bordoff believes that the Biden administration should support additional gas exports to Europe while simultaneously pushing cleaner alternatives like as wind and solar energy.

Some proponents of natural gas exports argue that the fuel’s ability to displace coal in power plants would aid Europe’s efforts to meet its climate-change objectives. The combustion of coal produces more greenhouse gases than the combustion of natural gas.

In a statement on Thursday, Gina McCarthy, President Biden’s top climate change advisor, said that the administration intended to “balance” what she described as a “short-term emergency repair” to assist Europe in dealing with climate change.

David Faber
I am a Business Journalist of The National Era
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