The United States on Friday announced an agreement with European leaders to increase natural gas shipments to help wean Europe off Russian energy. And Germany has set an ambitious target to halve its Russian oil and coal imports this year and break free from its reliance on Russian natural gas by mid-2024.
Germany’s targets, which were set by its vice-chancellor, represented a remarkable turnaround in Europe’s largest economy, which has long relied heavily on Russia for energy. Just a few months ago, Germany was still aiming to buy even more natural gas from Moscow through a new gas pipeline called Nord Stream 2.
But President Vladimir V. Putin’s invasion of Ukraine forced the leaders of Germany and other European countries to tear up the energy playbook they had been using for years, if not decades, in just one month. German Vice Chancellor Robert Habeck told a briefing in Berlin that his country was moving away from Russian energy at an “insane pace”.
President Biden is seeking to encourage similar moves from other European countries, in part by offering the United States as an energy supplier.
The deal he announced, in Brussels earlier on Friday, lacked many details but had big goals: The United States would send an additional 15 billion cubic meters of liquefied natural gas to Europe this year, or about 10 12% of current annual US exports. to all countries. By 2030, the president said, the United States would aim to increase supplies to up to 50 billion cubic meters per year.
The moves surprised many in the US energy industry. Oil and gas executives who have become accustomed to being pilloried for their contributions to climate change have suddenly been called upon to help free European allies from Russian energy. While the industry was still unsure how Europe would make such a giant pivot, executives were clearly relishing their new cast as saviors rather than villains.
“I have no idea how they’re going to do this, but I don’t want to criticize them because for the first time they’re trying to do the right thing,” said Charif Souki, executive chairman of Tellurian, a company American gas company. producer planning to build an export terminal in Louisiana.
Mr Biden and European Commission President Ursula von der Leyen said many details would be worked out by a task force dedicated to reducing Europe’s dependence on oil and gas Russians in a way that would not compromise the climate policies of either partner.
Among the things they failed to address was the lack of sufficient port capacity to ship and receive more gas on both sides of the Atlantic. The effort could also be difficult because the Biden administration cannot simply order U.S. exporters to sell gas to European buyers or set prices acceptable to those buyers.
“We’re going to have to make sure families in Europe can get through this winter and the next as we build infrastructure for a diverse, resilient and clean energy future,” Biden said.
The European Union is heavily dependent on energy imports from Russia, which is a major producer of oil, diesel, coal and, perhaps most importantly, natural gas. This addiction has become a growing problem as the European Union seeks to punish Mr Putin. Russia supplies around 40% of Europe’s natural gas, and a significant portion of it is shipped by pipeline through Ukraine.
Germany has long been one of Russia’s biggest customers. Having decided to close its nuclear power plants, Germany is betting more and more on natural gas. Because it got relatively affordable gas by pipeline from Russia — and some from the Netherlands, Norway and other suppliers — it refused to build terminals where liquefied natural gas could be imported.
Germany also imports almost a third of its crude oil from Russia. It has tried to reduce its consumption with generous subsidies for electric cars and greater investment in public transport.
The war in Ukraine accelerated these German efforts under Chancellor Olaf Scholz, who heads a coalition government of conservatives, liberals and environmentalists. This year, Germany restarted plans to build gas import terminals and suspended final approvals for Nord Stream 2, a near-complete pipeline that would have supplied it with Russian gas.
“Every supply contract that is terminated hurts Putin,” Habeck said on Friday.
Later in the day, EU countries agreed to jointly purchase and store natural gas. They have set a goal of filling 80% of their underground gas storage facilities by November to guard against supply interruptions in winter, when gas consumption increases for heating.
In the United States, gas exporters have already shifted their sales to Europe from Asia in recent months, largely because prices in Europe have been higher than almost anywhere else in the world due to the rising tensions with Russia and, more recently, the war in Ukraine. Nearly 75% of USLNG exports have gone to Europe so far this year, up from 34% in 2021.
Charlie Riedl, executive director of the Center for Liquefied Natural Gas, a trade group, said he believed 15 billion cubic feet of US gas exports to Europe could be achieved relatively easily. He said two-thirds of that total could come from diverting shipments that would otherwise be destined for Asia, and the rest could come from recent federal approvals for additional production from existing U.S. LNG export terminals. .
“Obviously this is a positive sign that Europe is trying to wean itself off Russian gas,” Riedl said.
Energy executives say the Biden administration could help increase gas flow by streamlining approvals for new U.S. export terminals, where natural gas is cooled into liquid and pumped into ocean tankers. Washington and the European Union could also provide loan guarantees for US export terminals and European import terminals. There are about a dozen U.S. export terminals that have gained regulatory approval but have yet to secure financing to build. A dozen new European import terminals are under construction.
Executives complain that it takes longer to obtain permits for pipelines and export terminals than to build them.
Export terminals require investments of up to $10 billion, while import terminals cost around $1 billion to build. The United States currently has seven export terminals and Europe has 28 large-scale import terminals.
Environmentalists have slammed Mr Biden’s announcement because they fear it could commit the US and Europe to using fossil fuels for decades longer than they claim is sustainable given the rising cost of climate change.
“There is no way to increase USLNG exports and meet the imperative climate commitments that the US and EU have promised,” said Abigail Dillen, president of Earthjustice, an advocacy organization. Environmental Law. She warned that the buildup of LNG infrastructure would “lock in expensive fossil fuel dependency and dangerous pollution for decades to come.”
U.S. and European officials also agreed to seek ways to reduce greenhouse gas emissions from LNG infrastructure and pipelines and reduce methane emissions from gas operations. They said they would step up energy efficiency initiatives, such as deploying heat pumps and using clean hydrogen technologies to replace fossil fuels, as well as accelerating planning and approvals for renewable energy projects such as offshore wind and solar energy.
The Biden administration has banned Russian energy imports as part of a broader set of sanctions against Mr Putin, a relatively easy step for the United States to take because he is a net exporter of energy. ‘energy. Some U.S. lawmakers would like the European Union to stop buying oil and gas from Russia altogether, but that prospect has been dismissed by several European leaders, who see it as a financially disastrous move that would hurt Europe more than to Russia.
Some energy experts have said a further escalation of the war, such as a move by Mr Putin to use chemical, biological or nuclear weapons, could leave the EU with little choice but to ban the purchase of Russian energy.
“We want, as Europeans, to diversify away from Russia, towards suppliers we trust, who are friends and who are reliable,” said Ms von der Leyen from the European Commission during the meeting. announcement with Mr. Biden. “Therefore, the United States’ commitment to supply the European Union with at least an additional 15 billion cubic meters of LNG this year is a big step in that direction, as it will replace the LNG supply we currently receive. of Russia.”
Still, oil and gas executives said Mr. Biden and Ms. von der Leyen should be patient and recognize that decisions about who sells gas to whom would be made across the negotiating tables by private companies, not by politicians. Ultimately, exporters will seek to sell their gas to buyers willing to pay the highest price.
“It’s a capitalist system,” said Mr. Souki, the Tellurian executive. “It’s people like me who make those decisions. The government cannot tell us where to send the gas.
Matina Stevis-Gridneff, Christopher F. Schuetze and Monika Pronczuk contributed report.