Blog Posts: July 2018

July 12th, 2018

The Two Faces of the EU Commission’s Gas Narrative: Arguments Against Nord Stream 2 Completely Ignored in Discussions Around EU Priority Gas Projects

By Frida Kieninger

A while ago, the European Commission published another briefing paper about Nord Stream 2. A steadfast opponent of the planned big underwater pipeline aiming at expanding the gas transport capacity between Germany and Russia through the Baltic Sea, the Commission brings a set of arguments pointing to several reservations in connection with the project.

Interestingly, they use the same line of argument they completely ignore when it comes to other pipeline projects, particularly the Commission’s list of priority infrastructure projects, the PCI (Projects of Common Interest) list.

Nord Stream 2 Vs. the Commission’s Priority Projects: Stick and Carrot?

Having a closer look at some of the arguments, it is striking how contradictory the Commission’s narrative is on the project in question. The briefing paper laments that the Nord Stream 2 pipeline “would cost billions of euros that could be spent in other priority segments of the economy and the energy sector” and that the pipeline’s economic rationale ignores EU objectives on energy efficiency, renewables and research and innovation.

This is a warning that NGOs and grassroots groups have sounded several times in connection with the large amounts of money the EU Commission granted and will continue granting to several projects of common interest. In order to have a chance to stay well below 2 degrees of global warming, direct and indirect subsidies for fossil fuels have to cease; in particular, public money must not be invested in backward-looking technologies locking us into further decades of fossil gas use.

Diversification and Gas Demand – Diverging Approaches

Whenever Food & Water Europe spoke to European Commission representatives, we had discussions on the diversification need and on the already existing capacity to deal with the EU’s gas demand. The briefing mentions current EU gas import capacities of 700 billion cubic meters per year, concluding that there is “an infrastructure overcapacity in the EU as it currently imports less than half the gas that it could when using all existing available infrastructure.” This picture will not change in the future as even demand projections on the higher end could be accommodated by the capacity of current infrastructure.

And, just as NGOs repeatedly mentioned and the European Court of Auditors already criticized, the briefing confirms that “official gas demand projections appear to have been constantly overestimated in the past.” With these facts in mind it would only be logical to doubt the need for any new gas import infrastructure, including LNG terminals and the Southern Gas Corridors – all of which are projects that the EU Commission does support.

Concerning diversification, the briefing indicates that Nord Stream 2 will probably not enhance gas supply diversity and that in order to reduce the strong dependence on Russia as a gas supplier, the answer should be demand reduction, use of indigenous (renewable) resources and a well-functioning energy market. Repeatedly, Food & Water Europe pointed out the need for focusing on renewable energy and energy efficiency to move towards real independence from Russian gas.

Why does the Commission not think about these alternatives when it comes to other gas projects?

Security and Stranded Assets: Only an Issue with Nord Stream 2?

The questions of dependency on Russian gas and supply security are closely linked in the Commission’s gas narrative. Surprisingly though, in its briefing it states not only that Nord Stream 2 is not expected to enhance EU energy security, but that the “EU already has enough pipelines to import all the gas it needs, not to mention its liquefied natural gas terminals. Thus, the building of Nord Stream 2 will lead to stranded assets in the future (…)”. If the Commission (and this would echo clearly Food & Water Europe’s point of view) acknowledges the risk of stranded assets and the fact that the EU has already enough import terminals and pipelines, why does it still invest billions in the construction of exactly this kind of infrastructure, e.g. projects like Krk LNG terminal or the Trans Adriatic Pipeline, among others?

The EU Commission’s Swim with the Tide

The EU Commission has to stop swimming with the tide, subjecting some projects to justified criticism while praising others which are similarly unneeded and pointless. This certainly raises questions about the reasons underlying the European Commission’s position and suggests that they are beyond the simple aim of building a safe, sustainable energy system for all Europeans, and for our future.

We will not stop reminding the EU Commission of its purpose of helping to build a truly clean and secure power system compatible with the Paris Climate Change Agreement!

July 9th, 2018

The Fracking & LNG Ghosts of Gas Addicted Germany (Part II of II)

by Andy Gheorghiu

Read Part I here.

Alleged “Frack-Free” Germany

Many people think that Germany has banned fracking but this is not completely true. And even the existing partial ban is at risk at the moment.

Let’s have a look at the legal framework: In Germany, fracking is officially banned outright in shale and coal bed methane layers until 2021. However, with the approval of an expert panel established in June 2018, up to four fracking research projects in these layers might be allowed and conducted.

In addition, fracking and fracking waste disposal is also prohibited in designated water protection areas, areas with water bodies linking to natural lakes or dams that serve as public water supplies, areas with wells for the production of beverages or drinks, or areas that fall under the water security law.

However, the details of Germany’s current fracking legal framework reveal a number of cracks. Just as in the UK, nature protection zones and national parks appear to be protected. However, this protection only applies to the construction of facilities related to fracking projects directly in the park. It does not prohibit drilling projects from being authorised just outside the protected areas. This allows operators to drill horizontally under them, thereby putting these restricted areas at risk.

The legislation also includes a ban on fracking within the European nature protection zones, the so-called Natura-2000 areas, but this only covers the construction of facilities related to shale gas and coal bed methane projects. In other words, other kinds of tight gas or oil development involving the use of fracking would be allowed. Tight gas is usually extracted from sandstone or limestone layers. The ongoing lobbying of the oil and gas industry has been so sucessfull that the German government has even re-branded sandstone and limestone layers as “conventional layers’ in order to creat the artificial term of “conventional fracking” – which helps tight gas fracking bypass the otherwise applicable ban.

Furthermore, an official request to the German government revealed that Germany provides public funding of €4.75 million towards the above-mentioned fracking research projects.

With this policy, the German government undermines its own goal of being a climate protection leader.

New Drilling and Fracking in Water Protection Areas?

Despite concerns over the dangerous practice, a water protection area in Lower Saxony could become the subject of drilling for hydrocarbons. The German company DEA wants to extract gas in this highly sensitive zone, going against the legal principle of “duty of care” and threatening to impact water quality as well as the environment, nature and landscape of the area. In connection with another site, ExxonMobil is pushing for a fracking project in a priority area for drinking water protection. The almost endless debate around these clearly illegal moves by the industry only illustrates its lobbying power as well as the shocking inactivity of the responsible authorities and political decision makers. Conventional drilling would constitute a considerable threat, but fracking poses an even higher and unacceptable risk to these sensitive areas.

Food & Water Europe – together with German citizen initiatives and environmental NGOs – has called upon officials to end fracking research projects and dismiss the applications for drilling in water protection areas.

Support and Public Money for Southern Gas Corridor and LNG Terminals

Co-financing Southern Gas Corridor: In March 2018 it became public that the German Ministry of Finance will provide a €1.2 billion loan to Azerbaijan to finance its part of the Southern Gas Corridor, the most ambitious European counter-project to Nord Stream 2, the pipeline that will flood Germany and central Europe with another additional 55 billion cubic metres (bcm) of unneeded Russian gas.

Signaling financial help for fracked Liquefied Natural Gas (LNG) Goldboro terminal in Canada: According to the project report and financial analysis paper of the Laurentian Bank Securities Equity Research, the company Pieridae Energy Limited is “On Track to Become Canada’s First Major LNG Exporter”.

Pieridae wants to build the LNG Goldboro terminal in Nova Scotia to export fracked shale gas from Canada (Alberta, British Colombia, Quebec, New Brunswick and Sable Island) and Pennsylvania (the Marcellus Shale). The company has entered into a 20-year LNG sales agreement on a take-or-pay basis of 4.8 million metric tonnes per annum (6.7 bcm) with German Uniper. The spicy part of the report mentions that Pieridae has qualified for US$3.1 billion under the United Loan Guarantee (Garantien für Ungebundene Finanzkredite or UFK) programme of the German government.

Confronted with the fact that Germany has a fracking moratorium for shale gas in place but nonethless intends to invest in importing fracked gas from the US and Canada, the German government answered that a) the fracked gas could help diversify the gas supply of Germany and Europe and b) Germany has issued only a “Letter of Interest” to financially support the project but this doesn’t equal a proper loan yet.

New LNG terminals for Germany

On top of that almost unbelievable absurdity, Germany is also planning to develop at least two new LNG terminals – the first of their kind in Germany.

One possible candidate is in Wilhelsmhaven, Lower Saxony. According to a 2012 study and older plans the terminal could have a capacity of 10-16 bcm per year and gas storage capacity of 160,000 cubic metres.

The project has the political support of the Government of Lower Saxony (currently conservative CDU and social demcratic SPD). The federal state – also known as Germany’s Texas – even wants to set up a coordination unit for the project and intends to provide a public budget of €1.2 million for the next two years.

The most promising – and far advanced – candidate is Brunsbüttel, in the federal state of Schleswig-Holstein. The proposed “big solution” for the realisation of the terminal aims at a storage capacity of 100,000 – 500,000 cubic metres. According to the BrunsbuettelPorts_LNG am Standort Brunsbuettel, the gas could come from the US and Qatar and could be used on-site, for example, by Yara, one of the so-called “Exxons of agriculture”, to make fertilizers.

The Government of Schleswig-Holstein (currently conservative CDU, liberal FDP, and the Green Party!) has nonetheless expressed clear support for the project in their coalition agreement. On top of that, Schleswig-Holstein has already announced public subsidies of at least 250,000 € for the €450 million project.

In July 2017, the European Commission approved the joint venture of Gasunie, Oiltanking and Vopak to develop a LNG Terminal in Northern Germany. This decision has been hailed a milestone by the three companies. The utilization rate of the existing Gasunie LNG terminal at Rotterdam is at a miserly 4%. No wonder that this company is happy to be able to open public budgets somewhere else.

Another fun fact is that Gasunie tries to spin yarns about their “Plan Underway to Subdue Russian Gas With German LNG Terminal” but at the same time the company has no problem with positioning their Dutch Gate Terminal as an LNG transshipment hub for Russian Yamal volumes.

And that’s not the end of the “who’s going to be the next LNG-T in Germany” nonsense. Triggered by the debate about Wilhelsmhaven and Brunsbüttel as possible sites, a third location at Stade, Lower Saxony, has now entered the stage of possible candidates.

Germany’s Gas Addiction Dangerous for the European Union and the Climate

All these projects clearly illustrate the confusing and corrosive strategy that Germany has regarding gas, energy security and diversification. A strong promoter of the Nord Stream 2 pipeline, German authorities defend plans for more fracking and LNG by arguing that the country’s growing dependence on Russian gas is problematic and that they should find new sources of supply.

However, the country is already very well supplied and has many opportunities to diversify its supplies. It should provide a clear and honest agenda for a complete fossil fuel phase-out.

Pushing for more fracking and investing more in the LNG sector is absolute madness, not only from a climate stanpoint but also from an economic perspective if we pay attention to the lousy utilization rate and therefore questionable economic viability of the existing European LNG terminals. In the period between January 2012 and March 2018, the daily average utilization rate of all existing EU LNG terminals was at roughly 22-23%.

One wonders if this push for more gas and gas infrastructure has anything to do with honest geopolitical or energy policy debates—or is the result of aggressive lobbying alone.

One thing is for sure: if the German and European people don’t start to force Germany to seriously question its gas addiction, the European Union as a whole won’t be able to reach the urgently needed climate targets according to the Paris Agreement. But if Europe can’t do that, runaway climate chaos will be an inevitable consequence. And this will definitely see a dramatic rise in mass migration and therefore more social and military conflicts.

For questions & more details contact: Andy Gheorghiu, Policy Advisor/Campaigner at Food & Water Europe ([email protected])

 

The Fracking & LNG Ghosts of Gas Addicted Germany (Part I of II)

by Andy Gheorghiu

Part I

Many folks around the world see Germany as a progressive “green energy“ country and think it has banned fracking. Unfortunately, both statements are untrue.

In October 2017, federal environment ministry calculations showed that – without further action – Germany would miss its 2020 climate target by a wider margin than previously anticipated (a drop in emissions of only 31 – 33 percent instead of 40 percent).

But instead of increasing desperately needed further actions, the current (and former) government watered down the 2020 emission reduction goal. Conservatives (CDU) and Socialdemocrats (SPD) now want to close the current gap “as much as possible” and reach the target “as soon as possible”.

However, it is simply beyond belief that this is anythiing but a spineless promise particularly if we take a closer look at Germany’s gas consumption.

“Gassy” Germany Beats “Green” Germany

 Despite its “green” image, Germany remains the biggest gas consumer in Europe. With almost 92 billion cubic metres (bcm) of consumption in 2017, fossil gas accounted for 24 percent in Germany’s primary energy consumption.
Read the full article…

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