Europe must coordinate infrastructure plans to secure gas supplies and avoid fossil lock-ins – EURACTIV.com

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Governments across Europe are investing in infrastructure for the production and transportation of natural gas to replace imports from Russia. This is justified to a certain extent, but risks overexpansion and fossil lock-in, write Friederike Altgelt and Martin Albicker.

Friederike Altgelt is senior expert for hydrogen and synthetic energy carriers at the German Energy Agency (dena). Martin Albicker is Senior Expert Industry at dena.

Russia’s war against Ukraine has disrupted energy markets around the world. Europe has been the target of deliberate shortages since 2021, with several countries being completely cut off in recent months. This endangers the security of supply for households and industry and threatens to plunge Europe into the worst recession in decades. Gas shortages also lead to a recovery in coal-fired power generation and thus to significantly higher emissions.

Europe must therefore urgently prepare for a possible termination of gas imports by Russia.

The REPowerEU package emphasizes the need for the EU to become independent of Russian fossil fuel imports “well before 2030” – recent developments prove that this needs to be achieved much sooner. The package emphasizes energy savings through improved efficiency and accelerated renewable energy adoption to reduce and replace natural gas consumption in power generation, industry and heating. The third pillar is diversification of supplies to replace Russian gas.

This will no doubt require some new gas infrastructure, particularly in Central Europe, including land-based LNG terminals and floating Storage and Regasification Units (FSRU), which have advantages in terms of permitting requirements, lead time and costs. It will also likely require some additional exploration activity in Europe and/or LNG exporting countries (including, unfortunately, other autocracies).

At the same time, however, it is important to avoid over-expanding gas infrastructure capacity as this would result in:

  • Waste money on “stranded assets” that would be better spent elsewhere
  • will lead to an oversupply of gas production and transport capacities in a few years with dwindling European demand, which will make fossil gas attractive again as a “bridging technology” in Europe and beyond, lead to sustainably higher global consumption and reduce the pressure for decarbonization
  • damage Europe’s international credibility in climate protection
  • are in many cases too late to remedy the current supply shortage

It is challenging to navigate between contingency measures to avoid acute gas shortages in the coming months and precautions to avoid over-investment in fossil fuel infrastructure in the years to come.

Any capacity expansion should therefore be based on demand forecasts based on ambitious decarbonization scenarios at the European level. In particular, the need to invest in new gas infrastructure must be well justified with a factually identified supply gap, taking into account expected falls in demand.

The current bonanza of new European gas developments raises doubts as to whether this practice is being followed consistently. An assessment carried out by the European Network of Transmission System Operators for Gas (ENTSOG) on behalf of the EU Commission came to the conclusion that it would be possible to avoid Russian gas imports through a combination of demand reductions, as part of the “Fit only for the 55 inch package (Ff55). “limited” expansions of gas infrastructure beyond those already planned prior to Russia’s invasion of Ukraine.

However, the number of newly proposed or revived gas infrastructure projects across Europe has already surpassed 20 since February, with a planned capacity of more than 150 billion. In comparison, the EU’s total annual needs are about 400 billion cubic meters, of which 150 billion Cubic meters were supplied by Russia in 2020 and 20216.

But by the time all new and revived projects come online, total EU gas demand will be significantly lower than it is now: the European Commission expects the Ff55 package’s proposals, such as renewable energy and efficiency gains, to result in a strong 27% fall in natural gas demand in Europe by 2030 if fully implemented.

The REPowerEU package and national measures will further reduce demand. High natural gas prices will represent an additional “push” effect towards alternative energy sources/carriers.

Therefore investments with a long lead time or duration or high required investments in the infrastructure should be avoided. This also means prioritizing accelerated exploitation of existing gas fields connected to existing infrastructure over exploration of new ones.

It would also help Europe stay on a path consistent with the Paris Agreement goals, which – according to decarbonization strategies such as those outlined in the IEA’s “Net Zero by 2050” scenario – are compatible with large-scale Exploration of new fossils are not compatible deposits.

Close European coordination is necessary in order to optimally integrate existing capacities into the planning of infrastructure expansion, to minimize the necessary expansion and to avoid duplication of projects. European planning should be binding and implemented on time.

The revised EU Climate, Energy and Environment Guidelines on State Aid (CEEAG), adopted earlier this year, require member states to demonstrate that new investments in gas infrastructure do not create a lock-in effect for the use of natural gas, B .by showing that they are ready for the use of hydrogen and how they contribute to the achievement of the Union’s climate targets.

These provisions give the Commission a gatekeeper role in assessing the compatibility of new public investments in gas extraction and infrastructure with the Paris decarbonisation commitments. It is vital that these provisions are respected and not watered down.

However, these evaluations consider the effects of individual projects in isolation and lack comprehensive planning at European level. To coordinate these processes, the EU energy platform set up in April 2022 for purchasing gas, LNG and hydrogen should be further developed.

To this end, it should bring together experts and stakeholders from EU institutions and national governments, taking into account existing and planned infrastructure and projected future gas needs.

This should be implemented as soon as possible. Timely involvement in the early stages of planning new projects would allow the EU to focus its efforts on achieving energy independence without wasting money or jeopardizing its climate commitments.

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