Europe urged to invest in LNG infrastructure as winter gas crisis looms –

Network operators have called for investments in liquefied natural gas (LNG) infrastructure to avoid supply shortages as gas flows from Russia hit record highs ahead of scheduled ten-day maintenance of the Nord Stream 1 gas pipeline.

Gas flows from Russia have been regularly decline in recent monthsfalling to 31% of EU imports in April this year, from 45% in the same period last year.

The EU aims to have its gas reserves 80% full by November, and many countries are now counting on increased LNG imports from the United States and Qatar to fill the void.

But rising imports also require investment in new LNG infrastructure, which risks remaining stranded as Europe strives to decarbonise its economy and reduce its dependence on fossil fuels.

“Frankly, the cost of stranded assets is probably quite small compared to the cost of being cut off in mid-winter,” said Alex Barnes, visiting fellow at the Oxford Institute for Energy Studies who spoke at the conference. a recent EURACTIV Event.

Others believe that the gas crisis should be seen as a turning point in the consideration of infrastructure costs. “An infrastructure that made sense for security but did not make sense for business was not built,” noted Tomáš Prouza, special envoy of the Czech Ministry of Trade and Industry.

“We have to change and we have to invest in security. This is something I think we finally understand,” added Prouza, whose country currently holds the rotating EU Council presidency for six months.

These calls have also found an echo in Berlin.

Yasmin Fahimi, the new leader of the main German union DGB, had warned of a “serious emergency” on Sunday July 3.

“Because of gas shortages, entire sectors of industry are threatened with permanent collapse: aluminium, glass, the chemical industry. Such a collapse would have massive consequences for the entire economy and jobs in Germany,” she told the daily. Image.

A complete cut in Russian supply to Germany in August would lead to a demand destruction of 20-25 billion cubic meters (bcm) of gas, which represents 27% of the country’s consumption in August 2021, analysts have said. . Bloomberg.

In recent months, the German government has spent billions to acquire floating LNG terminals ahead of the winter season and passed emergency laws to speed up the construction of new gas import infrastructure. Without LNG imports, Germany is guaranteed to enter a gas shortage next winter, according to projections by the federal network agency.

Climate advocates, meanwhile, have warned against increased investment in LNG, saying new infrastructure will lock Europe into fossil fuels for many years to come and increase the risk of overcapacity as well as blocked assets.

A article published in natural energy July 4 hammered home the point, recalling that “natural gas is a fossil fuel with a vastly underestimated climate impact that hampers decarbonization through carbon lock-in and locked-in assets.”

German LNG accelerator law criticized by environmental NGOs

The German government, in a hurry to reduce its dependence on Russian gas, is about to enact a law that will accelerate the construction of liquefied natural gas infrastructure. Germany will then be able to import LNG from anywhere, which worries environmental NGOs about extending its dependence on fossil fuels even further.

Hydrogen to the rescue

To address long-term sustainability issues, the European Commission and the gas industry are pinning their hopes on the repurposing of LNG infrastructure to hydrogen.

“Increasingly in Europe, governments, infrastructure operators and industry are researching and turning to hydrogen as a solution to truly meet the 2050 horizon. [climate] goals,” said Pieter van Aartsen, board member of industry body Gas Infrastructure Europe, which supported the EURACTIV event.

“The prospect for the gas lines is to be able to use them for hydrogen imports in the future,” he said. “These pipes can be, varying a bit from country to country, be reused for hydrogen to a very large extent,” he added.

In Brussels, EU policymakers toed the same line. “We have to make sure everything we build is hydrogen ready,” Czechia’s special envoy said.

In his REPowerEU Package Adopted on May 18, the European Commission calls for “accelerated efforts” to deploy hydrogen infrastructure, saying that total investments are “estimated at between 28 and 38 billion euros for internal EU pipelines and between 6 and 11 billion euros for storage”. .

By March 2023, the EU executive intends to map preliminary hydrogen infrastructure needs, based on input from EU member states, energy regulators, as well as utility operators. gas infrastructure at European and national level.

However, experts have wondered about the cost of converting LNG terminals to hydrogen.

“Converting an LNG terminal to liquid hydrogen is a technical challenge,” said Arno Büx, commercial director of LNG terminal operator Flyxus.. “An economically viable business model…is far from imminent,” he said. Told Bloomberg new.

Policy makers are aware of this. “As far as I know, the LNG terminal itself is only suitable for gas,” said Patrick Graichen, a senior German official who spoke to EURACTIV in April.

Rather than hydrogen, ammonia should play a key role in converting LNG terminals to new, clean energy uses and prevent them from becoming stranded assets.

A chemical traditionally used in the fertilizer industry, ammonia can also be used as a carrier to store or transport hydrogen, or as an alternative transportation fuel in its own right.

According to Büx, the pipes and tanks used for LNG could work with ammonia. The cost of upgrading them is around 15% of the price of building a new LNG terminal, he said.

> Watch the full EURACTIV event below:

[Edited by Frédéric Simon]

Mary I. Bruner