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"Höegh Esperanza" will serve as a floating platform to land and regasify LNG
Höegh Esperanza, Germany's first LNG terminal, moored at Wilhelmshaven on ThursdayImage: Hauke-Christian Dittrich/dpa/picture alliance

To quit Russian gas, EU burns billions on LNG

Julia Merk | Michel Penke
December 16, 2022

The European Union is investing billions in infrastructure in its effort to replace Russian fuels with liquefied natural gas. This could prove to be a dead end — both for taxpayers and for the climate.

https://p.dw.com/p/4JxnY

On March 5, just over a week after Russia invaded Ukraine, European Commission President Ursula von der Leyen expressed concern that the Kremlin might turn off the bloc's gas tap. "The EU must get rid of its dependency on fossil fuels," she wrote on Twitter. Von der Leyen then praised Spain, which she called "a frontrunner here, with its large renewables share and LNG capacities."  

It would not be the last time that von der Leyen appears to have placed liquefied natural gas within the category of renewable energies. The problem is that LNG is also a fossil fuel: It is pumped out of the ground — in some cases fracked — and in the end burned in ways that are destructive for the climate. This conflation by von der Leyen, who spearheaded the European Green Deal, the EU's road map to decarbonization, could cost the bloc ecologically and financially.

At the Economist's Sustainability Summit in March, UN Secretary-General Antonio Guterres called fossil fuels "a stupid investment, leading to billions in stranded assets." Countries must "accelerate the phaseout of coal and all fossil fuels," Guterres said. "This is madness. Addiction to fossil fuels is mutually assured destruction."  

And yet the EU is currently investing billions of euros into fossil fuel infrastructure that will either become obsolete or much more expensive to maintain if the bloc does not intend to further exacerbate the climate crisis.  

LNG is booming and costs are high 

The largest gas consumer in the EU is Germany, followed by Italy, the Netherlands, Slovakia and France, according to Eurostat. These countries are now trying to replace their gas imports from Russia with supplies from other sources.  

"Since the beginning of the war, LNG imports to Europe have increased by 58%," said Paula Di Mattia Peraire, a gas analyst with Independent Commodity Intelligence Services (ICIS). Because of this, Germany, Greece and Italy in particular — as well as Ireland, France, the Netherlands and Poland — are expanding their infrastructure to receive LNG.   

"There is a lot of investments going on in Europe regarding LNG," Peraire said. "If all these projects materialize — around 15 new projects till the end of 2024 — that will bring the regasification capacity up by 70 billion cubic meters per year." 

A particularly large amount of government money is flowing into coastal terminals where cooled LNG is offloaded and heated until it can be injected into pipeline networks. Currently, there are too few of these terminals — especially in the North Sea and Baltic Sea — to meet the European Union's gas needs.

Furthermore, instead of flowing from east to west, LNG gas will have to flow from Spain, France and the Netherlands to Central and Eastern Europe. However, as gas pipelines are mostly one-way streets, a "reverse flow" is only possible to a limited extent. The German capacities, which are geographically central within Europe and therefore key to the network, would have to be at least doubled for this to happen, according to the Fraunhofer Institute.  

An LNG tanker in the Rotterdam port in 2011
LNG tankers are to supply gas to the EU in the future to replace Russian gas. Image: Lex van Lieshout/ANP/AFP/Getty Images

Another heavy toll would come in commissioning a fleet to ship gas to Europe. LNG tankers, easily recognizable by their spherical tanks, can hold up to 175,000 cubic meters of liquefied gas, the equivalent of 90 million cubic meters of less-dense pipeline gas. So, to replace the annual 167 billion cubic meters of Russian gas, about 1,800 shiploads — or five per day — are needed for the European Union. According to the Institute of Shipping Economics and Logistics, this would require 160 new tankers at a unit price of $220 million (€212.5 million), for a total of $35.2 billion.  

'An emergency now' 

The European Union has announced its intent to become climate-neutral by 2050. Germany is aiming for 2045. If the EU burns more LNG, however, emissions will rise. 

"We have an emergency now," said Ganna Gladkykh, who researches clean-energy transitions for the European Energy Research Alliance (EERA). "Even the International Energy Agency says there should be zero fossil fuels investment, zero investment in fossil fuel infrastructure. Then we will be able to reach the climate goals." The EU's pumping billions of euros into gas infrastructure is contrary to that. "It does not make sense to invest in LNG and in Europe particularly," Gladkykh said. 

High-cost hydrogen hopes 

Gases produced in climate-friendlier ways are intended to mitigate the problem. Instead of fossil gases, ammonia and especially liquid hydrogen are to be processed within a few years. Should that happen, the stated intent is to repurpose the tankers, terminals and transit pipelines for the new fuels — a plan many are skeptical about.

"Whenever they say the infrastructure is hydrogen-ready, this is the way of comforting the public," Gladkykh said. "The story line that policymakers are selling is that: 'We invest in LNG. We are aware that it's fossil fuels. But don't you worry ... it will become greener, because we will have improvement in hydrogen technology and then we will just receive hydrogen through it." 

Because hydrogen is more explosive and therefore more dangerous, the transition would require different alloys and materials — as well as "a significant additional investment," said Rainer Quitzow, research group leader at the Institute for Advanced Sustainability Studies. "The switch to hydrogen is not settled," he said.  

The International Renewable Energy Agency estimates that the additional cost of replacing pumps, valves, instrumentation and safety systems could be as much as 20% of the cost of building an LNG plant. The current tankers and terminals could not handle hydrogen, which must be transported and stored at -260 degrees Celsius (500 F) — 100 C cooler than LNG. 

In addition, all hydrogen must first be generated sustainably by wind power or solar energy and transported to Europe, where the elements are insufficient to meet the need.

Man wearing reflective vest stands over a vast field of solar panels in the Egyptian desert
Sun-rich countries such as Egypt could cheaply convert solar energy into hydrogen — which the European Union needsImage: Ute Grabowsky/photothek/picture alliance

Quitzow said he saw "a risk if we build infrastructure that no longer makes sense if we want to achieve our climate goals." That would come at the expense of efforts to slow warming. "Once you have terminals and plants," he said, "it might be hard to get away from them — precisely because you have invested so heavily."  

Pipeline vs. LNG: Which is worse for the climate? 

The conventional extraction of natural gas releases fewer emissions than fracking. Unlike Russian pipeline gas, gas from Qatar or the United States must first be liquefied before it can be transported. To do this, the gas is compressed by pressure and then "depressurized" again, cooling down further each time. In the process, as much as 8% to 25% of the energy yield is lost through the operation of the compressors.  

Then, the LNG has to be shipped across the ocean. The longer the distance, the bigger the carbon footprint. Gas from Australia shipped to Europe would have five times the "climate transport costs" of gas from Algeria.

Russia's LNG plans on hold

Russia intends to liquefy and sell gas, as well. But, even in the event of a swift end to the invasion of Ukraine, Russia's share of the gas market within Europe is likely to continue to decline for political reasons. The Kremlin will most likely have to write off its multibillion-dollar gas pipeline infrastructure to the European Union and turn its attention to a need for liquefaction plants and terminals for Russia to send gas to countries such as China and Japan.  

International sanctions following the invasion of Ukraine will limit Russia's ability to assemble the necessary technical infrastructure, however. Most Western partners abandoned their cooperation with Russia.

EU energy independence

In their respective reports, scientists at the think tanks Agora Energiewende and E3G calculate how the European Union could reduce its gas demand and become independent of Russia within "one to four years." Twenty percent could be replaced by implementing the European Commission's "Fit for 55" plan. Another 45% could be achieved through heat pumps, insulation and an expansion of green energies. Just 35% would then have to be imported from other countries, amounting to about 50 billion cubic meters of gas — for which the existing infrastructure is sufficient.  

Edited by Henrik Böhme and Milan Gagnon.

Check out the data sources for this analyis.

Michel Penke Data journalist@michelpenke
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