Study: EU climate goals could curtail expansion of LNG capacity

An LNG tanker ship arriving in the Lithuanian port of Klaipeda.
An LNG tanker ship arriving in the Lithuanian port of Klaipeda. Source: Eesti Gaas

Europe's energy crisis raises the question of how to reduce gas dependence on Russia. A recent study analyzed the suitability of liquefied natural gas (LNG) from the United States for European countries. This varies from country to country. While importing the U.S. LNG is a viable option for Poland and the Baltic states, there are questions about the compatibility of U.S. gas with the European climate goals.

Europe's dependence on Russian gas began in the 1960s when Austria and the Soviet Union signed a gas supply agreement. After the fall of the Soviet Union, it was extended, and Russia became a reliable energy partner for the European Commission until the early 2000s. The situation changed in 2006 and 2009, with disputes over gas supplies between Russia and Ukraine.

Energy market diversification

Over 43 percent of Europe's gas was imported from Russia in 2020. Several European countries were eager to reduce their reliance on Russian gas even before Russia launched a large-scale military action in Ukraine in February of this year.

"The issue is even more relevant now. It concerns primarily the diversification of import countries and the reduction of gas imports from Russia," said Javad Keypour, a PhD student at the Tallinn University of Technology (TalTech) and energy expert at the Stockholm Environment Institute (SEI.)

Igor Krupenski, a lecturer at the Department of Energy Technology (TalTech), who was not involved in the study, agreed that LNG would help to diversify the energy market: "Europe was largely dependent on a single supplier for gas, oil and coal. It is estimated that 30 to 50 percent of these fuels originated in Russia. This was a substantial risk."

Krupenski said that the increase in natural gas prices over the past year and a half has increased the demand for LNG. When natural gas was cheap, LNG was not as competitive because, compared to piped gas, it is expensive to liquefy and transport. "Nonetheless, we must realize that there is a great deal of competition for LNG carriers, as we are not only competing with other European, but also with Asian countries," Krupenski added.

Quantitative method

Unlike many previous studies, Keypour looked at the issue of gas supply in Russia and Europe using quantitative methodologies: "We developed a calculation-based index that takes into account economic, sustainable supply security and infrastructure factors."

"Even though the study was conducted a year and a half ago, before the war," the author said, "the results are still relevant." Six member states that accounted for 80 percent of total gas imports from Russia to Europe at the time of the study, were examined in greater depth.

It became apparent that Poland and the Baltic states would benefit most from converting to LNG. Among European countries that could benefit from the U.S. LNG "only Italy and Poland had their own LNG terminals at the time of the study, for the others it would be necessary to rely on connections with neighboring countries," Keypour added.

Although this research effort was designed to develop a holistic index for measuring the security of gas supply, the researchers concluded that it was difficult to include and evaluate all critical factors. While economic and technological considerations are generally prioritized, environmental issues must also be considered.

As it is difficult to quantify both environmental and supply security concerns at the same time, the study concluded that the results should be further interpreted in light of the fact that the United States' LNG is primarily derived from unfriendly shale gas sources, and thus importing US LNG may be perceived as a violation of EU climate policies.

Potential conflicts of interest

Moreover, Keypour said that economic and political reasons could make LNG adoption difficult.

"While liquefied gas (LNG) from the United States is increasing the security of supply index in several countries, infrastructural limitations may pose a challenge. In a situation where countries need to use the transit infrastructure of neighboring countries, these countries may at some point need to spare capacity for themselves [resulting in the conflict of interest]," Keypour explained.

The European Union's climate goals could curtail the capacity expansion needed for importing additional LNG

One solution would be to increase the European transit capacity for liquefied gas. However, there are uncertainties as to whether this would be in line with the European Union's climate goals, given that U.S. LNG is not generated from environmentally friendly raw materials.

"The use of EU subsidies to construct the necessary gas-transportation infrastructure could prove problematic in the future," Keypour said. Using EU financial aid for gas projects would be problematic if it is a matter of supply security and disregards decarbonation.

Igor Krupenski added that natural gas is a fossil fuel, but one of the cleanest.

LNG, or liquefied natural gas, is produced by cooling natural gas to minus 162 degrees. As a result, the gas volume is drastically reduced allowing it to be easier transported.


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Editor: Kristina Kersa

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