This was especially evident when President Joe Biden proposed a significant increase in natural gas shipments for his European Union counterpart.
Biden spoke to Ursula von der Leyen (President of the European Commission), and stated that the main issue was “helping Europe decrease its dependence on Russian gas as rapidly as possible.” Europe, which is dependent on Russia for 40% to heat homes, generate power, and drive industry needs this help.
A huge economic error with major geopolitical implications, many European Union countries let themselves become more dependent on Russian fossil fuels over time, hoping trade would triumph over Cold War animosity on a continent often fractured by conflict.
This long-standing practice meant that the 27-nation bloc could not stop Russian energy imports in accordance with Western sanctions.
Changing energy policy can be as difficult as turning around an oil carrier in rough waters. It will take many years.
Biden intervened Friday. The plan will see the United States and some like-minded partners increase their exports of liquefied gas (or LNG) to Europe by 15% this year. These exports will triple in the years following, which is necessary if the EU can support its claim that it has eliminated all Russian imports within five years.
Von der Leyen stated, “We are on the right track now to diversify away Russian gas towards our friends’ or partners’ reliable and trusted suppliers.”
It will require huge investments and it could prove difficult to get more liquefied natural gases to Europe. The U.S. has many export facilities that are operating at full capacity. Most new terminals are still in planning stages. The majority of U.S. exports already reach Europe.
The continent might not be able to receive more natural gas, even if it can be shipped more. The continent’s import terminals are located in the coast, and Europe’s pipeline network doesn’t have the necessary connections to transport natural gas across the continent.
Europe is searching for answers everywhere it can. Germany, Italy, and Bulgaria are all heavily dependent upon Russian gas. This makes it difficult to reach an agreement on either a quicker exit or a complete block now.
Germany’s Chancellor Olaf Scholz stated that an immediate energy embargo would result in thousands of jobs being lost and leave homes and schools unheated. Europe must replenish its gas reserves, which were severely depleted in the winter.
However, LNG cannot be created from thin air. It requires export terminals to convert the gas into super-chilled liquid and then a reception terminal to turn it back into natural gas for Europe’s pipeline system. These terminals are expensive and can take many years to construct. Due to high gas prices and war’s jolt towards volatile energy markets, many terminals and tankers around globe are already fully booked. Customers have to compete for shipments.
The U.S.-EU initiative may require new facilities to import liquefied gas. However, the White House stated that it also aims to reduce dependence on fossil fuels over the long term through energy efficiency and other sources of energy.
Climate campaigners, however, criticized the agreement. They called for the U.S. to put more emphasis on renewable energy and reducing the demand for fossil fuels.
Raphael Hanoteaux (senior policy advisor at E3G, a Brussels-based environmental group), stated that this “is a more economical and sustainable solution that doesn’t lock Europe into infrastructure or deals she does not need.”
According to the Center for Liquefied Natural Gas (an industry lobbying group), the U.S. has seen a dramatic increase in its LNG exports over recent years. Most of these LNG exports now go to Europe. Even though most of the supply has been sold to buyers, there are still options to move it.
Rystad gas market analyst Emily McClain said that the U.S. is unique because it has flexible LNG which can be rerouted to Europe and Asia depending on who is willing to pay that price.
A senior U.S. official stated that the government would continue its efforts to supply LNG while Europe will commit to a stable demand of around 50 billion cubic metres over the course of the agreement.
Germany, Europe’s industrial juggernaut has already begun major efforts to bring the gas in from the coast terminals, especially after Russia withdrew approval for Nord Stream 2 natural-gas pipeline.
The government’s plan for Germany’s last nuclear power plants to be shut down this year and coal-fired power phase out by 2030 rely heavily on natural gas as a bridge until enough renewable energy can produce.
Robert Habeck, Vice-Chancellor of Germany, stated that Germany expects to become almost completely independent from Russian gas by the middle of 2024. The government has obtained three “floating” terminals that can turn LNG from ships into gas. It is also working hard to create permanent LNG terminals for long-term imports.
Clara Duvigneau, a youth activist, said that “by the time the terminals could assist us, we could have already achieved the transition to renewable energy” at a Berlin climate rally.
