ourEconomy: Opinion

US and Russia eye Europe’s energy crisis, doubling down on gas

To achieve energy stability, the EU needs to resist US and Russian efforts to sell more gas and fully transition to renewables

Dominic Kavakeb
1 November 2021, 3.34pm
The US is on track to become the world’s biggest exporter of liquefied natural gas
Bob Daemmrich / Alamy Stock Photo

As winter approaches alongside soaring gas prices, many people across Europe are facing the stark choice between heating and eating. But for the Kremlin and boardrooms in Texas, this European misery is an opportunity to entrench the region’s dependence on imported gas. Locking Europe further into gas would not just have disastrous consequences for the climate, it would ensure Europe remains reliant on a crisis-prone energy source for decades to come.

Since coming to office, President Biden has laid claim to the climate fight – setting out an ambitious domestic agenda, whilst challenging world leaders to do the same. But new research from Global Witness shows that the US is on track to become the world’s biggest exporter of liquefied natural gas (LNG) in just two years’ time. Fuelled by an expected boom in exports over the next decade, the US will overtake Australia and Qatar for LNG exports by 2023, with an increase of 121% by 2030 according to the energy consultancy Rystad Energy.

This projected rise in gas exports, combined with the European crisis, has fossil fuel companies in the US seeing dollar signs. Tellurian, which is in the process of building a $15bn LNG export terminal, described the prospect of energy poverty in Europe as a “good thing for American LNG”. A recent industry editorial in OilPrice.com characterised Europe as “ripe for the taking”, whilst an industry analyst told the Wall Street Journal that the crisis presented “an opportunity”.

The US isn’t alone in attempting to exploit Europe’s woes to push more gas. Since the onset of the crisis, Russia has been accused of choking the European gas supply as leverage to gain approval for its Nord Stream 2 pipeline. Although Russia initially denied the claim, it has been less coy in arguing that the pipeline could cool gas prices. President Putin recently suggested that Nord Stream 2 approval could deliver 10% more gas to the EU.

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However if Nord Stream 2 operates at full capacity, it could emit almost three billion tonnes of carbon dioxide between 2022 and 2050, according to new calculations from Global Witness. This would amount to almost one per cent of the Intergovernmental Panel on Climate Change (IPCC) estimated remaining global carbon budget to keep warming below 1.5°C.

With gas responsible for more European carbon emissions than coal, and with the EU’s need to reduce gas consumption by 90% by 2050 to meet its climate targets, flooding the market with more gas would be a climate disaster and an ineffective solution to the energy crisis.

The best way to protect Europeans in the short term is by providing progressive protections to those most vulnerable to the soaring gas prices, such as ensuring companies cannot simply turn off supplies if consumers are unable to pay.

Longer-term planning should focus on ensuring that 2021 is the last cold winter for millions of Europeans. An over-reliance on gas that is at the mercy of volatile markets and controlled by outside forces, like the Russian state, has led Europe to this situation. Instead, European governments must harness the power and resources of the European Green Deal to renovate buildings, upgrade homes to clean heating and build new wind and solar infrastructure. A modern renewable energy system would provide security of supply that is not affected by geopolitics, manipulated markets or finite resources.

Rather than enter a race to the bottom with Russia, the US needs to focus on the same future – one that President Biden, and most recently his own secretary of state, Antony Blinken, claim to pursue. With China already having taken the lead in developing and exporting renewables, now is the chance for the US to become a leader in tomorrow’s energy technology and end its support for a fossil fuel industry rapidly approaching obsolescence.

We stand at a moment in history where the twin crises of climate and energy meet. Doubling down on the source of both these crises – a reliance on fossil fuels – will only exacerbate the current problems, whilst putting humanity on course for climate catastrophe.

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