Biden’s LNG Plans Can’t Save Europe This Winter

On Jan. 28, U.S. President Joe Biden and European Commission President Ursula von der Leyen released a joint statement touting their commitment to “working closely together” to solve the European energy crisis. Washington is certainly doing its part: This month, the largest terminal for exports of liquefied natural gas (LNG) on the U.S. Gulf Coast hit a new record for gas exports, gas tankers bound for Asia are diverting to Europe, and Biden has met directly with leaders of other major gas exporters—such as Qatar—to try and secure stockpiles for Europe if Russia cuts off the gas supply. These efforts are laudable, but they are not enough to succeed in the worst-case scenario: Europe’s dependence on Russian gas supply is simply too great.

In some ways, Europe’s gas crisis has been overdue. Over the last decade, global gas prices have fallen sharply as a glut of supply came onto markets. There didn’t seem reason to worry; Russia has been a reliable supplier to Europe since the first pipeline, from what was then the Soviet Union, began flowing in 1968. Even during Cold War crises, such as the Soviet invasion of Afghanistan, Russian gas deliveries to Europe remained divorced from geopolitics. Today, worries over a possible gas cutoff by Russia are exacerbated by the acute energy crisis in which Europe finds itself in this winter. In 2021, a perfect storm hit Europe’s energy markets: A cold, late fall and early winter in the Northern Hemisphere drew down global inventories; Russia started important maintenance of its natural gas infrastructure, which had been delayed in 2020 due to the COVID-19 pandemic; renewable generation collapsed due to a lull in wind across much of Europe; and Russia all but stopped additional gas deliveries beyond contracted volumes. Europe, which phased down its largest onshore gas field in the Netherlands and has built no more than a handful of LNG import terminals, was left exposed.

And Europe will remain exposed, no matter what Biden and von der Leyen say. That’s because LNG—the only source of gas that’s flexible and can be rerouted quickly—cannot replace Russian gas.

The first reason that LNG can be no more than a Band-Aid if Europe’s gas supplies are disrupted is the sheer amount of Russian gas that would need to be replaced. As of the third quarter of 2021, Russia provided 43 percent of European gas imports, its lowest quarterly share since 2015. LNG from non-Russian sources—mainly the United States and Qatar—only accounted for 15 percent of Europe’s imports; the other sources include pipeline gas from Algeria and other countries. There is little hope of substantially more LNG on global markets. The world’s largest producer, the United States, is producing at capacity. So, too, are Qatar and Australia, No. 2 and No. 3, respectively.

European LNG imports have nonetheless ramped up from last year’s exceptionally low levels, mainly by redirecting existing production. January’s imports were almost triple those of January 2021. But the decline in Russian pipeline flows is so great that these imports have not increased the total amount of gas arriving in Europe compared to last winter. More LNG could come if Asia has a particularly warm winter and major LNG importers like China release additional reserved cargoes, which could then go to Europe instead. Yet in the worst-case scenario of additional disruption to Russian flows, LNG is unlikely to be able to make up the shortfall.

The other problem with the idea of saving Europe with LNG is that it would not arrive where Europe really needs the gas. The greatest need is in Germany, which does not have a single LNG import terminal, and where Russian gas company Gazprom owns substantial storage capacity it chose not to fill in 2021. German politicians are taking note, and the country’s new coalition government is considering imposing minimum gas storage levels or building up a strategic reserve—promising solutions that will take time to draft, legislate, and implement. In the immediate future, a substantial majority of Europe’s LNG import capacity is in Western Europe. Spain, which imports little to no Russian gas, has around 27 of that capacity, but its gas infrastructure is not very integrated into the rest of Europe. Crucially, a pipeline project to transport gas from Spain to France—which would allow Spanish LNG imports to feed into the main European pipeline network—was canceled in 2019 after repeated failures to obtain regulatory approval (and despite support at the European Union level). Another 19 percent of European LNG import capacity is in Britain, which faces its own acute problem with gas supply after a controversial decision closed its largest storage facility in 2017.

This crisis could repeat itself if Europe does not find more reliable sources of supply, with major environmental and political consequences. European gas demand is not going anywhere; most European gas is used to run power plants, heat homes, and supply industries, all of which are difficult to decarbonize at scale with today’s technology. Moreover, until Europe can invent affordable, large-scale batteries to store renewable energy, intermittent solar and wind power will need reliable backups. Gas is a relatively clean way to provide firm power, especially considering the opposition to nuclear power and coal in many countries across the continent. The failure to secure adequate gas supplies this year has driven gas prices up, forcing European utilities to burn more coal and fuel oil; 2021 is likely to buck Europe’s decadeslong trend of decreasing emissions from power generation. In the longer term, European politicians must also consider the political cost of expensive gas. Europe’s claim to be a world leader in reducing its carbon emissions makes it vulnerable to criticism linking decarbonization policies to energy crises.

As the world watches Europe battle a full-fledged energy crisis, U.S. opposition to Nord Stream 2 makes more sense. Critics of Washington’s stance have described it as a self-interested gambit to increase U.S. LNG exports to Europe. Yet today, the United States is negotiating on Europe’s behalf to try to avoid an energy crisis that is entirely of Europe’s own making and has largely come from the continent’s dependence on Russian imports. Russia’s argument that Nord Stream 2 is cheaper than transiting gas via Ukraine may be true, but Europe’s willingness to increase its reliance on Russian gas looks increasingly foolhardy.

It is still very possible that Europe’s energy crisis and Ukraine’s political future resolve themselves peacefully. Even if Russia invades, it may not cut off gas flows; after all, Russia needs gas revenues as much as Europe needs gas. If Russian gas flows continue, European inventories will likely last the winter, and Europeans can breathe a sigh of relief. But to avoid a repeat of this winter’s crisis, policymakers must learn their lesson: They must find ways to increase deliveries during the heating season (including by ramping up seasonal production in Europe’s own gas fields and contracting for more LNG deliveries), develop a strategic gas reserve, diversify supply sources, and improve Europe’s internal distribution infrastructure.

Nicholas Kumleben is a senior analyst at GreenMantle, where he leads global energy research. Twitter: @nkumleben

SAKHRI Mohamed
SAKHRI Mohamed

I hold a Bachelor's degree in Political Science and International Relations in addition to a Master's degree in International Security Studies. Alongside this, I have a passion for web development. During my studies, I acquired a strong understanding of fundamental political concepts and theories in international relations, security studies, and strategic studies.

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