This article is part of a special report on Climate Solutions, which looks at efforts around the world to make a difference.
ISLE OF GRAIN, England — The calm waters at the entrance to the River Medway seem more suited to sailboats and other pleasure craft, but some of the world’s largest ships make their way to a pier here.
Simon Culkin, the import terminal manager at the facility called Grain LNG, jokes about making sure none of these ships are driven by a “learning driver.”
The behemoths, some of which are more than 300 meters long, carry loads of liquefied natural gas. Once the ships are locked onto a rack of pipes on the jetty, their ice-cold fuel flows into huge 160-foot-long concrete-lined storage tanks.
When full, these colossal cylinders hold an almost unimaginable amount of energy – enough, estimates Mr. Culkin, to power southern England for 10 days. Upstream is London, an economic powerhouse and a huge energy consumer.
In recent months, energy markets in Europe have experienced the greatest disruption in memory, as well as record prices, due to tensions with Russia over Ukraine. But LNG, largely sourced from the United States, has cushioned the blow in Britain and has been a lifeline for Europe.
But while the imports have furthered the European Union’s goal of reducing its dependence on Russian energy, growing dependence on the fuel also has potentially negative implications, including uncertainty about the future and concerns about its impact on the climate.
“Countries will have to source some gas if they don’t get supplies from Russia,” said Doug Parr, chief scientist and policy director at Greenpeace UK. “The climate risk is that there is a lockdown in new gas infrastructure that is proving quite difficult to retire,” he added.
European LNG imports are up more than 50 percent in the first five months of 2022 from a year earlier, according to Bernstein, a Wall Street research firm. Britain saw a sharp increase in LNG imports in the winter months, with January the highest ever recorded.
Britain is relatively better off than much of the rest of Europe in energy security, as it produces significant amounts of gas from offshore fields, while most members of the European Union have little production of their own.
“Historically, LNG has been the UK’s marginal supplemental fuel,” said Jack Sharples, a research fellow at the Oxford Institute for Energy Studies, a research organization.
Britain sends some of the gas received at its three terminals to the continent via pipelines under the North Sea.
The increase in liquefied gas has helped Europe to make up for the shortages of gas from Russia. Increased LNG imports are the key facet of the European Union’s strategy to reduce dependence on Russian gas.
Europe’s shift from fossil fuels
The European Union has started a transition to greener forms of energy. But financial and geopolitical considerations can complicate the effort.
While Russia has long supplied a wide range of energy products to Europe, Moscow’s stranglehold on the supply of gas used for heating, cooking, power generation and industry has grown exponentially, supplying about a third of Europe’s energy supply in recent years. consumption.
“We simply cannot rely on a supplier that explicitly threatens us,” said European Commission president Ursula von der Leyen earlier this year when she outlined a proposal to make Europe independent of Russian energy.
A large number of shippers have sent fuel to Europe, but the biggest increases have come from the United States, which eight years ago has grown from a standing start to one of the three largest LNG gas production sites in the world due to the massive growth in shale gas production. exporters, along with Qatar and Australia. Sometimes LNG has exceeded the flow of Russian gas. About half of the ships docked at Grain LNG in the past year came from the United States.
In February, President Biden agreed to ensure that at least 15 billion cubic meters of gas, equivalent to about 10 percent of Russia’s imports, would reach Europe this year, a target that has already been met.
Unlike most natural gas, which comes through pipelines, LNG can be transported anywhere where there is investment in the facilities needed to cool it to liquid, a multi-billion dollar investment, so it can take it to places like the Isle of Grain with its mazes can go. of equipment to turn it back into a vapor.
“The key is flexibility,” said Paul Sullivan, head of systems capacity and risk at National Grid, the utility that owns the LNG terminal.
LNG is an energy source that can quickly make a difference. Cooling natural gas to minus 260 degrees Fahrenheit reduces its volume to one six-hundredth of the volume as gas. According to an industry estimate, a large tanker can carry enough fuel to light 70,000 homes for a year.
But even as Europe embraces LNG with disclaimers from leaders like Ms. von der Leyen about eventually phasing out gas, climate activists worry it could invest many billions of euros in an expensive new fossil fuel program – one that, like Mr Parr said is then difficult to retire.
That is already happening. European countries are rushing to build facilities to receive LNG After the Russian invasion of Ukraine, Germany is in the perilous situation of being the largest buyer of Russian gas yet not having LNG receiving terminals just in case Moscow shuts off the fuel, because it signals that it can.
Berlin now plans to build as many as four receiving units. Finland, Estonia, Italy and the Netherlands are all considering building or expanding existing terminals. Some of these units are likely to be floating installations that can be towed to another location when their lease expires.
The liquefied gas has a high price. In most years, the main markets for LNG are Asian countries such as Japan, South Korea and China. In the first five months of 2022, Asian imports fell 8 percent, in part due to dwindling demand from China due to Covid lockdowns.
What’s helping to shift gas from Asia to Europe isn’t so much promises from politicians like Mr Biden, but astronomical prices – currently about nine times higher than they were two years ago.
“European prices need to rise to attract shipments from Asia to Europe to fill the gap left by Russia,” said Neil Beveridge, an analyst at Bernstein. “That requires really high prices.”
Futures prices were around $40 per million British thermal units, an industrial measure. In energy terms, that’s equivalent to over $200 a barrel for oil, roughly double the current price for Brent oil, the international benchmark.
European natural gas prices are also about six times what US customers pay.
European companies that use large quantities of gas are at a competitive disadvantage. Earlier this month, CF Industries, a major fertilizer producer based in the United States, said it plans to close one of its two British plants, whose process relies heavily on gas, as futures markets suggest such plants in Europe will be expensive. “for the foreseeable future.”
There are concerns about gas shortages in Europe this winter that would not only keep prices high but lead to all sorts of unwanted options, including burning more coal and, as a last resort, rationing gas by closing factories.
There seem to be no quick or easy solutions to Europe’s energy problems. There simply isn’t enough LNG around or likely to come online in the next few years to replace all Russian exports to Europe.
While the current high prices are likely to lead to the construction of more LNG facilities, especially in the United States, it will take at least five years to build new export facilities, so it will take time to fill every gap left by Russia.
Investors will also be unsure whether to proceed. Europe’s intentions are difficult to fathom. Ms von der Leyen recently visited Egypt and Israel, which have large gas fields, in an effort to drum up new supplies. The agreement reached to speed up gas supplies to Europe was also dampened by the language warning that gas consumption in the European Union was expected to start declining by 2030, perhaps too early to provide certainty to investors considering billions of dollars into LNG facilities. .
“It’s very mixed signals from the EU,” said Massimo Di Odoardo, vice president of gas research at Wood Mackenzie, a consultancy.
The current high LNG price could lead Europe to move away from gas even faster than previously planned and to build more wind and solar energy facilities. If Europe is serious about meeting its emissions reduction targets, “the longevity of Europe’s LNG demand is at stake,” said Mr Di Odoardo.
National Grid hedges its bets. The company is adding another storage tank, but it is also looking to a greener future with facilities to import or make hydrogen, a potentially cleaner alternative to natural gas, and other futuristic energy sources on the massive 600-acre site.
The plains here contain not only the gas transshipment facilities, but also several power stations and an import terminal for jet fuel, all within easy reach of London. For Mr. Culkin, it’s an energy cornucopia that “isn’t that easy to find.”
