In July 2021, the EU released FIT FOR 55, an agressive set of measures to reduce its carbon emissions by 55% in 2030 compared to 1990 levels (note 1).
One year later, geopolitics has changed and strongly interfere with Europe’s climate ambition. Reaching carbon neutrality in 2050 remains a must do but the journey is getting bumpy.
Gas supply limitations
No one missed that the contraction in Russian natural gas supply (40% of EU gas imports) has caused a + 85% price increase in June 22 compared to February 22 in Europe (Over past 12 months, prices jumped by more than 200%). The fear of missing gas for next winter sustained the demand thru an accelerated filling of gas tanks. This adds to post COVID strong industrial rebound, keeping gas prices high and forcing Europe to chase for alternatives.
Long term impacts
US liquefied gas supply is now ramping up to fill the gap. Let’s have a look into the overall carbon footprint of such a flip in European gas supply. Devil is in the details.
The energy involved to liquefy, transport and re-gasify one m3 of natural gas over 1 km by ship is twice as much as the pipeline option benchmark. Considering that extraction of US shale gas is about 10 times more energy intensive that European drillings (note 2) (& adding the increased distance), the overall carbon footprint for extraction & transport of liquefied US shale gas is about 20 time bigger than Russian one.
In a nutshell, US liquefied shale gas is almost as bad as coal as shown on below chart.
The European capacities to re-gasify LNG are limited and a a race has started to equip harbors with more LNG tankers. Building such onshore infrastructures are costly & time consuming.
Return on investment suggests their use will align with standards for such industrial infrastructure lifetime (over 30 years). This is going against Europe ambition to reduce carbon emissions out of fossil fuel use by 50% in 2030.
Short term impacts
Overall, 90% of Gas is used for energy worldwide, 1/3 of it for electricity and 2/3 for heat generation.
Price records on natural gas has brought coal power plants to become competitive again. That was even the case in Europe despite the strong ETS carbon taxes.
As pointed out by the IEA (note 3), the operating costs of US and European coal power systems were significantly cheaper than gas fired ones in 2021 fueling their demand.
That switch from gas to coal ended up in a +16% increase of carbon emissions in Europe and USA in 2021 (250 Mega Tons of CO2 surplus).
Current geopolitical context is sadly accelerating that trend as show the predictions for an increased use of coal power plants in the short term.
Again, this not aligned with the targets.
More than ever, it is becoming urgent for Europe to schedule & implement a gradual reduction in its natural gas use. It will not only limit energy spendings, but reduce its dependance and support carbon emissions reduction.
Supporting consumers -such as cap on prices- is a no brainer when it comes to take immediate measures. This being said, state money shall then be quickly directed to efficiency investments.
Reinforcing thermal isolation of buildings and replacing gas boiler by heat pumps stand as particularly well suited investments to limit gas expenses. That later would allow to substitute 8% of the overall Russian gas import as shown by Energy monitor (note 4)
Maximizing low carbon production within the electrical mix would amplify those gains.
On a broader scale, this plan shall apply to oil as well since worldwide ressources are on decreasing trend (Per Rystadenergy “Total recoverable oil worldwide is now 9% lower than last year, threatening global energy security” see note 5).
Rare enough to be mentioned, major European energy suppliers called for an urgent sobriety with energy use (“EDF, Engie, Total CEOs Urge Energy Savings to Prepare for Winter”, see note 6)
It’s better to get prepared for scarce oil ressources than enduring its decline.
Such drastic changes are difficult and long to implement within stable societies. History shows they quicker kick in during crisis times.
It looks like the stars are getting aligned to shift gears.
Note 1: https://www.consilium.europa.eu/en/policies/green-deal/fit-for-55-the-eu-plan-for-a-green-transition/#:~:text=Fit%20for%2055%20refers%20to,line%20with%20the%202030%20goal.
Note 2: source ADEME & Carbone 4
Note 3: source IEA: https://www.iea.org/reports/global-energy-review-co2-emissions-in-2021-2
Note 4: https://www.energymonitor.ai/tech/electrification/ditching-gas-boilers-for-heat-pumps-will-take-eu-well-beyond-next-winter
Note 5: https://www.rystadenergy.com/newsevents/news/press-releases/total-recoverable-oil-worldwide-is-now-9-lower-than-last-year-threatening-global-energy-
Note 6: https://www.bloomberg.com/news/articles/2022-06-26/edf-engie-total-ceos-urge-energy-savings-to-prepare-for-winter