Biden boosts LNG exports as Europe faces energy crisis

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The White House announced this morning that the United States will rapidly increase its exports of liquefied natural gas to Europe as Germany and other EU countries try to reduce their dependence on Russian fossil fuels.

The move will increase LNG shipments carried by offshore tankers by 15 billion cubic meters this year, according to a fact sheet released by the White House. By comparison, the United States sent 22 billion m3 of LNG to Europe last year, the highest figure ever exchanged between the two continents.

The announcement promises to raise concerns about the trajectory of global climate action. The construction of LNG terminals and other infrastructure could put the United States and other countries on a path to gas use for years to come, even as these countries strive to phase out fuels. fossils, advocates warn.

The White House has said that US LNG exports will continue to grow until 2030, when the United States plans to send 50 billion cubic meters of gas to Europe each year.

“This construction will happen in a way that is consistent with, and not in conflict with, the net zero climate goal that we are aiming for,” Biden said during a meeting with EU officials in Brussels this morning. He called the effort a “catalyst” to double investment in clean energy.

Biden also spoke with European leaders yesterday about ways to accelerate the transition to clean energy, according to the White House.

In addition to working with other countries to bring new sources of LNG to Europe, the effort announced this morning – which will be overseen by a joint US-EU task force – will be to help the continent reduce demand of natural gas over the next two winters. through energy efficiency measures and the production of clean energy.

A senior administration official speaking to reporters said today’s announcement would help accelerate Europe’s move away from Russian gas. He also said it would advance efforts to phase out the gas in the United States, which has a goal of halving greenhouse gas emissions by 2030.

Energy was a key talking point between Biden and other world leaders during urgent talks yesterday about Russia’s escalating war in Ukraine.

“Tomorrow, together with President Biden, we will present a new chapter of our energy partnership,” said Ursula von der Leyen, President of the European Commission. “This is additional LNG from the United States for the European Union, replacing the Russian LNG that we had until now, an important step forward.”

The European Union receives 40% of its gas and more than a quarter of its oil from Russia. Germany, the bloc’s largest economy, depends on Russia for about half of the coal and gas needed for heating homes and the power industry.

In a plan announced earlier this month, the EU said it would cut its consumption of Russian gas by two-thirds by the end of 2022, mainly by increasing gas supplies to countries such as Norway. , Azerbaijan, the United States and Qatar.

The European Commission presented a proposal on Wednesday that would require member states to fill their gas storage facilities to at least 80% capacity by November 1. This will make securing alternative gas sources increasingly important. Europe has recently increased its gas imports from Russia as it tries to stockpile fuel.

Countries in the 27-member bloc have varying levels of dependence on Russian oil, gas and coal. This has led some countries to resist efforts to abruptly cut off Russian imports. German Chancellor Olaf Scholz has warned that Europe’s economy could plunge into recession if it acts too quickly.

While the Biden administration has encouraged the EU to break its dependence on Russia, officials have also said they recognize the challenge Europe faces.

In addition to his meeting at the European Council, Biden also met with the leaders of the Group of 7. In a statement, they pledged to support countries as they phase out their dependence on energy imports Russians.

The G-7 also called on oil and gas producing countries to increase their deliveries to the world market and named OPEC as a key part of this effort.

“We will work with them and all partners to ensure a stable and sustainable global energy supply,” the leaders wrote.

The statement also mentioned clean energy but did not include specifics, noting only that the crisis caused by Russia’s war in Ukraine reinforces the G-7’s resolve to limit the rise in global temperatures to 1.5 degrees Celsius. by accelerating the energy transition.

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Increasing LNG supplies to Europe would largely involve redirecting cargoes to other destinations as ramping up production volumes could take years, according to a note from Goldman Sachs. The capacity of the American terminals is currently at maximum.

Although some of this reallocation has already taken place, sustaining it may prove difficult as next winter approaches. Much of the redirected supply has been driven by European gas prices which command a premium, rather than policies, Samantha Dart, head of natural gas research at Goldman Sachs, said in an email. .

“As a result, we believe contracting out some of this flexible supply for the rest of the year would help support European gas supply,” she said.

Building the infrastructure needed to increase long-term natural gas exports would take several years, analysts say. But that, in addition to securing long-term supply contracts for natural gas, could lock in years of planet-warming emissions.

US Energy Secretary Jennifer Granholm acknowledged those concerns yesterday during a press conference at the International Energy Agency in Paris.

“But there’s also a flip side to that, which is that it’s accelerating the move away from fossil fuels, at least relentless fossil fuels, and the movement toward technologies that do that,” she said, pointing to methods of capturing and sequestering the carbon or hydrogen produced. with renewable energies.

These technologies, however, are not commercially available.

Currently, there is not enough infrastructure to transport hydrogen at scale, and it could take years to build, said Lindsey Walter, deputy director of Third Way’s climate and energy program. At best, hydrogen is still years away from substantially replacing Russian gas in Europe.

“We know that the EU has quite ambitious targets around hydrogen, as it should be because it will be crucial to decarbonize industry, aviation, freight, all those applications that you cannot easily electrify” , she said. “It must be recognized that we are not yet producing clean hydrogen on a large scale today.”

Research from Rystad Energy, based in Oslo, Norway, estimated that Europe would need around 54 million tonnes of hydrogen by 2030 to replace gas and coal in the continent’s power sector.

“Europe is currently on track to produce 3 million tonnes of green hydrogen per year by 2030, so the gap is considerable,” he said.

Green groups fear that US and European officials are largely focused on increasing LNG exports in response to Russia’s war. The years it will take to develop new fossil fuel export infrastructure would be better spent building clean energy sources, said Mitch Jones, chief policy officer at Food & Water Watch.

“President Biden should firmly reject any plans to accelerate gas export terminals here in the United States,” he said in a statement. “Corporate polluters are brazenly taking advantage of this crisis to secure decades of dependence on dirty energy, which will further devastate frontline communities and abandon hope for bold climate action.”

This story also appears in Thread of energy.

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