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How the energy crisis could reinforce Europe’s gas addiction

Clean energy sources are overall cheaper and less susceptible to geopolitics than gas. But it is proving difficult to break the fossil fuel habit.

By Nick Ferris

The blame for rising energy bills can be placed squarely on gas. Politicians, climate activists and energy experts have mainly reacted to the increased energy costs by advocating for an energy transition. They highlight the lower prices and energy security benefits of renewables, such as wind and solar power, compared to gas. The reality, however, is a little different, as parts of Europe plan to increase rather than decrease their reliance on gas.

Data from the analytics firm GlobalData shows that some 90GW of new gas-fired electricity capacity is in the pipeline across Europe, around 20GW of which is already under construction. In the UK, as much as 30GW of new capacity is being proposed, although only a small share has been approved for development. If given the green light this would be a significant amount of gas: the UK’s entire electricity capacity was 76GW in 2020. 

Germany is Europe’s largest generator of electricity, and the country’s new coalition government has embarked on an ambitious decarbonisation programme aimed at generating 80 per cent of the country’s electricity from renewables by 2030. Germany plans to reach net-zero emissions by 2045. However, at the same time Germany’s chancellor, Olaf Scholz, has reiterated his commitment to “new gas-fired power plants”. 

Analysis from the think tank Carbon Tracker has found that Poland’s aim to reach net zero by 2050 has been derailed by new plans for gas power.

One of the ways in which Europe is trying to reduce its reliance on Russian pipeline gas — a task made all the more urgent given the possibility of Moscow invading Ukraine — is by importing more liquefied natural gas (LNG) from countries such as the US, Qatar and Australia. Between 2000 and 2020, European LNG imports nearly quadrupled, and 13 new LNG terminals are under development across the continent in addition to the 29 that already exist. The UK started importing LNG in 2005 and now receives nearly a fifth of Europe's imports. 

“The gas market crisis is becoming a bonanza for the fossil gas industry rather than an opportunity for the EU to phase-out this unreliable, expensive and climate-damaging fuel,” says Juliana Gaertner from Global Witness, a not-for-profit organisation. “New investments in LNG terminals will fail to protect the millions of Europeans that have been driven into energy poverty this winter and make a farce of EU climate commitments.”

Indeed, research shows that the continent’s existing infrastructure is more than capable of meeting future energy demand needs, while new pipelines and LNG terminals would likely see countries continuing to import gas long after mid-century net-zero targets. 

Robbie Andrew from the Cicero Center for International Climate Research in Oslo, Norway, suggests that such a large pipeline of gas infrastructure is not necessarily bad news for climate action. Larger infrastructure plans are usually “based on forecasts made a number of years ago,” he says. “Big industries don’t always move quickly, and it will take time for them to respond to climate pledges.” Indeed, many of the more short-term plans to boost LNG imports are aimed at ensuring there is enough gas to meet current consumer needs. 

Raphael Hanoteaux from the think tank E3G, underlines recent pro-renewables policy signals. The UK government, for example, announced in February that it will hold renewables auctions for funding through the Contracts for Difference (CfD) scheme every year instead of every two years, to allow utilities to develop solar and wind power more rapidly. The UK's aim is for a fully decarbonised electricity system by 2035. An EU-US summit held in Washington, DC, in February also emphasised the need to boost LNG supplies only “in the short term”. 

The inclusion of gas in the EU’s green energy taxonomy, a classification system of environmentally sustainable economic activities, is regrettable from a climate governance point of view, says Hanoteaux. It is unclear, however, how significant its impact will be — many investors are not in favour of gas being given any kind of green light by the taxonomy. 

Nonetheless, policy signals for the oil and gas extraction industry over the longer term are far from clear. While many countries discuss potential new policies only a handful have signed up to the Beyond Oil and Gas Alliance, a treaty launched at Cop26 to end the production of these fossil fuels. 

The UK has not signed up and is busy consulting on a new “climate compatibility checkpoint”, after a 2021 industry review found that “continued [oil field] licensing can in principle continue in alignment with UK climate objectives”. Research from NGO Friends of the Earth published last autumn found that at least 40 new coal, oil and gas extraction projects were waiting for approval.

This line of thinking would seem to run contrary to the conclusion by the International Energy Agency that to reach net-zero emissions globally by 2050 “no new oil and natural gas fields are required beyond those that have already been approved for development”. Indeed, if such projects were to go ahead, they would produce hundreds of millions of tonnes of carbon for many years to come. 

[See also: As bills soar, the future looks bright for Big Energy]

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