In part II of my LNG blog, I will give a deeper insight into the blatant irrationality of shipping US liquefied natural gas (LNG) to Europe while calling it an opportunity for energy security, sustainability and flexibility.
I already pointed out the myths around the hype concerning LNG imports to Europe. I explained how LNG is no better and maybe worse for the climate than using coal or oil, and how billions spent for building LNG import infrastructure would be wasted trying to out-bluster Russia, while switching to gas imports from countries with their own questionable records and futures. I pointed out that only around a quarter of the EU’s LNG terminals are currently used, but that the Commission, with a long history of relying on overestimations of gas demand, plans to build more LNG infrastructure.
There are several facts around LNG from the United States that are worth further attention. Only recently, the first cargo of US LNG reached the European coast in Portugal. A second cargo from Cheniere’s Sabine Pass export terminal was sent to France and a third is scheduled to arrive in Spain this month. The Trans-Atlantic Trade and Investment Partnership (TTIP) would set the stage for much more LNG. Currently, US companies have to ask for authorisation to export LNG to Europe. Current US law rubber stamps the process when there is a free trade agreement (FTA) with the importing country. Recently, the US Congress has moved two energy bills targeted at speeding up gas export to non-FTA countries though.
Already in December, the United States lifted its ban on exporting crude oil, and any new energy bill from Congress could do the same for natural gas. Regardless, TTIP would suffice as far as approving US export approvals. TTIP negotiations between the EU and the United States have since the beginning been the target of various big gas lobbyists. The EU Commission is suspected of having had secret talks with oil and gas giants and even of having given ExxonMobil access to important TTIP negotiation strategies, documents that the public cannot get access to.
The EU Commission’s proposal for a chapter on Energy and Raw Materials in the TTIP that leaked this month shows clearly this dishonest complicity between the Commission and the fossil fuel giants. If included in the trade deal as proposed, it will lead to more investments in LNG and other dirty fossil fuel infrastructure, assets that would have to be stranded if we are going to meet the climate challenge. We must meet that our climate targets, and we must not leave European taxpayers responsible for bailing out the financiers behind the stranded assets.
The question is, why is the United States pushing for exporting all that LNG? One reason is the continued low price of oil, putting oil and gas companies in serious trouble. The threat of bankruptcy affects already half of the shale drillers in the United States, and several have already gone bankrupt. Due to overproduction of US shale gas, driven by financial incentives on drillers and gas associated with oil production, US gas prices are uncomfortably low for the industry. The push for LNG exports is an attempt to get better prices in Europe or Asia than on the domestic market, and to increase overall demand for US shale gas. Meanwhile a majority of Americans oppose fracking, and the Democratic Party platform has adopted a position that it opposes fracking “when states and local communities oppose it”.
Instead of buying in to the false promise of US shale gas, and sinking billions into helping to create demand for fracking, decision makers in Europe should seize the opportunity to transform our energy systems around proven solutions: renewables, efficiency, conservation and, increasingly, battery storage. Truly green, sustainable jobs would be created in the process.
The EU’s narrative of “competition” through LNG import is mainly targeting Russia. By creating the ability to import sufficient LNG from other countries, the aim is to push for cheap Russian gas, not for independence from it. US LNG is most likely not able to compete with Russian gas, which can still be sold for even lower prices than now. Since Asian prices are also not very attractive for the United States, LNG cargos will probably sail our oceans for a while until finding a buyer paying enough. So we want to build more LNG terminals for LNG that (except for an insignificant part) will not reach, and is not really planned to reach, Europe anyways? Clever.
So there is no way US LNG will play a noteworthy role in European energy markets in the short run. In the long term, globally binding climate commitments will be in place, making any justification for dirty fossil fuels such as LNG impossible.
Fracked gas is expected to account for about all of the gas exported in the form of LNG. Thus, the same extreme extraction method that Europeans heavily oppose in their home countries could soon form a part of our energy supply. According to one new study, the fracking boom in the United States has coincided with a 30% increase in the country’s methane emissions since 2002, and that may account for about half of the global increase in anthropogenic methane emissions since then. A climate culprit like this cannot even for a second be considered viable for a sustainable future.
The EU institutions will have to look at the facts and not indulge in wishful thinking if they want to really tackle energy security, climate change and geopolitical considerations in the future. The transformation of our energy system is urgently needed, and any step in the wrong direction now will result in a forced, disorderly transition at a later stage.