Europe’s rush to LNG could turn into ‘world’s most expensive and unnecessary insurance policy’

Published

2 years ago

March 23, 2023

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A new floating storage and regasification unit considered crucial to Italy’s energy independence arrived in Tuscany on March 19, 2023. The Golar Tundra project is a key part of Italy’s plan to reduce its reliance on Russian gas following the invasion of Ukraine.

Filippo Monteforte | Afp | Getty Images

Europe’s rapid buildout of liquefied natural gas infrastructure is on track to far exceed demand by the end of the decade, according to new research, with more than half of the region’s planned LNG assets seen at risk of becoming idle.

The European Union has pledged to wean itself off Russian fossil fuels by 2027 in response to President Vladimir Putin‘s full-scale invasion of Ukraine, with many member states fast-tracking plans to bring in alternative sources of gas from countries such as the U.S. and Qatar.

Several countries including Germany, Italy, Greece, the Netherlands and France have announced new LNG projects or the expansion to existing ones in response to the shutdown of Russian gas pipelines.

The scramble to cover future energy needs, however, puts European countries at risk of wasting colossal sums of money, according to the Institute for Energy Economics and Financial Analysis.

Europe must carefully balance its gas and LNG systems, and avoid tipping the scale from reliability to redundancy.

Ana Maria Jaller-Makarewicz

energy analyst for IEEFA Europe

IEEFA, a U.S.-based think tank, said in research published Wednesday that Europe’s appetite for new LNG projects could massively outstrip demand in the coming years.

The continent’s LNG terminal capacity is set to exceed 400 billion cubic meters (bcm) by 2030, IEEFA said, citing current infrastructure buildout plans. This is up from 270 bcm at the end of last year. IEEFA included the U.K., Norway and Turkey in its analysis.

By contrast, demand for LNG across Europe is projected to range between 150 bcm, according to IEEFA, and 190 bcm, according to S&P Global Commodity Insights.

IEEFA said the mismatch between Europe’s future LNG demand and import facilities could result in 200 bcm to 250 bcm of unused capacity by 2030 — equivalent to roughly half the EU’s total gas demand in 2021, which was 413 bcm.

“This is the world’s most expensive and unnecessary insurance policy,” said Ana Maria Jaller-Makarewicz, energy analyst for IEEFA Europe and author of the analysis.

“Europe must carefully balance its gas and LNG systems, and avoid tipping the scale from reliability to redundancy. Boosting Europe’s LNG infrastructure will not necessarily increase reliability — there’s a tangible risk that assets could become stranded,” Jaller-Makarewicz said.

Risk of stranded assets

The highest risk of stranded assets was seen in Spain (50 bcm), Turkey (44 bcm) and the U.K. (40 bcm), while IEEFA said it expects a 36% utilization rate of Europe’s LNG terminals by the end of the decade.

A spokesperson for the European Commission, the EU’s executive arm, was not immediately available to comment.

Speaking earlier this month, the EU’s energy policy chief called on EU countries and companies to stop signing new contracts to buy Russian LNG as it seeks to reduce its energy dependence on the Kremlin.

“I encourage all member states and all companies to stop buying Russian LNG, and not to sign any new gas contracts with Russia once the existing contracts have expired,” EU energy commissioner Kadri Simson said on March 9, Reuters reported.

Several European countries including Germany, Italy, Greece, the Netherlands and France have announced new LNG projects or the expansion to existing ones in response to shutdown of Russian gas pipelines.

Michael Sohn | Afp | Getty Images

The EU’s big LNG capacity bet has also sparked environmental concerns, with research published late last year from Global Energy Monitor warning that plans to double the bloc’s LNG import terminal capacity threaten to derail climate goals while also doing little to address the energy crisis.

Analysts at GEM noted at the time that most of the LNG contracts secured by EU buyers were scheduled to start from 2026 and continue for 15 to 20 years.

To be sure, the burning of fossil fuels such as coal, oil and gas, is the chief driver of the climate crisis.

Environment

What makes a Honda a Honda? Prologue engineers help us find out!

Published

13 hours ago

November 16, 2024

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What makes a Honda a Honda? Prologue engineers help us find out!

On today’s informative episode of Quick Charge, we’ve got Honda engineers Jason Hwang and Emilio Sanchez to talk us through some of the things that make the GM Ultium-based Honda Prologue EV feel like a real Honda, and why that matters.

Jason and Emilio talk about some of the choices they made to make the Honda Prologue and Acura ZDX feel different from its GM-branded cousins, and explain why this was much more than a case of badge-engineering. Give it a listen, then let us know what you think of the Prologue and ZDX in the comments.

Today’s episode is sponsored by BLUETTI, a leading provider of portable power stations, solar generators, and energy storage systems. For a limited time, save up to 52% during BLUETTI’s exclusive Black Friday sale, now through November 28, and be sure to use promo code BLUETTI5OFF for 5% off all power stations site wide. Learn more by clicking here.

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The Eastern US’s first CFI-funded EV charging hub comes online

Published

16 hours ago

November 15, 2024

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The Eastern US's first CFI-funded EV charging hub comes online

CF EV charging — Photo: Joint Office of Energy and Transportation

The first EV charging hub funded by the Charging and Fueling Infrastructure (CFI) Program in the Eastern US is now online in Deerfield, Massachusetts.

The town installed the region’s first DC fast chargers (four ports), along with four Level 2 chargers, at 59 North Main Street in South Deerfield.

These new charging stations, funded with $2.46 million from the CFI program, are conveniently located near Interstate 91 in Franklin County, the most rural county in Massachusetts, which serves drivers from Connecticut up to the Canadian border.

The hub also features local and regional bus stops and designated bike lanes with secure onsite bike racks. The chargers are meant to cater to everyone: from local residents and visitors to municipal EVs and commercial vehicles that service the region’s businesses, like those in food and beverage manufacturing.

Gabe Klein, executive director of the Joint Office of Energy and Transportation, sees this as a model for future projects:

Multi-modal charging hubs in communities are key to giving more people the choice to ride and drive electric. The Town of Deerfield is showing leadership in building out convenient charging infrastructure that brings new transportation choices to rural and disadvantaged communities while supporting local commerce.

In recent years, Deerfield has experienced increased climate change-driven flooding from nearby rivers, including the Deerfield River, the Connecticut River, and the Bloody Brook. The project incorporates environmental engineering designed to mitigate and adapt to the effects of flooding and climate, including the installation of permeable asphalt and rain gardens, planting of native trees, grasses, and shrubs, and the creation of new greenspace in the center of Deerfield.

The Biden-Harris administration’s CFI Grant Program is expanding EV infrastructure nationwide. It offers grants for projects that complement and expand upon the initiatives of the NEVI program in urban, rural, and disadvantaged and low-income communities. So far, the CFI Grant Program has allocated over $1 billion to nearly 100 projects across the US, encouraging private investments and expanding the EV charging network to make EV ownership more practical and convenient.

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Environment

Kia’s new low-cost EV4 was just spotted in the US for the first time

Published

17 hours ago

November 15, 2024

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Kia's new low-cost EV4 was just spotted in the US for the first time

Kia’s upcoming EV4 electric sedan was just spotted testing in the US for the first time. The low-cost EV is expected to make its big debut by the end of the year. Here’s a look at the new model.

The EV4 will round out Kia’s new “EVs for all” master plan launched last year. Kia showcased three new models, the EV3, EV4, and EV5, during its first annual EV Day in October 2023.

During the event, Kia outlined its new global strategy to “lead and accelerate the EV revolution” with a wide range of models priced from $30,000 to $80,000.

Kia plans to rapidly expand its lineup with a series of smaller, lower-priced models. It launched the EV9, its first three-row electric SUV, which is already proving to be a hot seller in the US. Starting at under $55,000, the EV9 is still a great deal compared to others in its class, but Kia plans to go even lower.

The EV3 and EV4 are expected to be among the most affordable electric vehicles when they arrive in the US.

Kia’s new EV4 is now testing in the US

Ahead of its official debut, Kia’s new EV4 sedan was recently caught driving on US streets for the first time.

The latest image from KindelAuto doesn’t reveal much more than what’s been shown in the past, but the fact that it’s now testing in the US is significant.

Kia EV4 caught on US streets for the first time (Source: KindelAuto)

Kia’s EV3 is already on sale in Korea, starting at around $30,000 (42.08 million won). Earlier this week, the company said its new compact SUV is now available across Europe, starting at around $38,000 (36,000 euros) with a “segment-leading range” of up to 375 miles (WLTP).

Next up will be the EV4. Kia is expected to officially reveal the new EV by the end of the year, with deliveries starting in 2025. It could be as soon as next week at the 2024 LA Auto Show.

The interior will feature Kia’s advanced new ccNC infotainment system with dual 12.3″ navigation and driver display screens. An otherwise minalimalistic design is expected inside.

Kia’s EV4 will also be available in a hatchback variant. Although the hatch is likely aimed at European buyers, it was also recently spotted testing in the US for the first time.