April 15, 2024
How the US Can Make Money, Help the Climate, and Hurt Russia

From the onset of the Second Russo-Ukrainian war in 2022, US liquefied natural gas LNG exports were critical to ensure Europe’s supply security. US hesitation does not help.

By 2023, over 60% of US liquefied natural gas (LNG) exports were heading to Europe. This seamlessly replaced Russian pipeline gas and kept the continent’s homes heated and its businesses running.

A continual flow remains critical for sustaining European energy security, meaning the White House’s January 26 decision pausing new LNG export licenses — while it does not affect current supplies to Europe — sends a very negative signal that is likely to encourage pro-Russian forces to seek to reopen gas flows from the east.

Much of the clamor for restricting US LNG exports flows from climate concerns. However,  natural gas in fact emits much less carbon dioxide than coal. It is also required to balance renewables. And LNG exports also provide a better climate alternative than coal for developing countries.

Nonetheless, there clearly remains a climate problem with LNG. That problem is methane. Natural gas production and distribution can result in leaks of methane, a potent greenhouse gas. Although methane has a shorter shelf life (approximately 20 years) than carbon dioxide, it is 80 times more harmful. 

And yet the US can integrate both its security and climate concerns by promoting secure US LNG and by ensuring the progressive removal of all Russian gas from the European continent. 

For now, the LNG export pause sends a strong negative signal to Europeans trying to rid the continent of Russian gas. 

For example, European energy ministers met in Paris in February to discuss restricting Russian LNG supplies. There is a non-trivial danger that some European states now will resist terminating such supplies using the excuse of the US export pause. 

They will argue that Russia is still the largest supplier of LNG to the EU after the US and will question whether there will be sufficient American LNG to meet their needs.

The US has become the world’s largest LNG exporter, business is booming and allies are enthusiastic buyers. Some reports say the pause will last 12-14 months, thereby delaying a decision until after November’s presidential election.

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The US decision also raises questions about the EU target of terminating all Russian pipeline gas supplies by 2027. Those Russian supplies still make up approximately 10% of European gas imports. 

How far are EU states going to be willing to close down Russian gas pipeline exports to Europe if US LNG exports cannot be expanded? 

There is already evidence that Turkish entities are working with Russia to circumvent the EU’s efforts to wean the bloc off its use.

There are also influential voices in Germany willing to forget Russia’s two-year-old war of aggression against Ukraine. 

Last year, Saxony’s prime minister called for the repair of the Nord Stream pipelines and the resumption of Russian gas supplies. Such demands are likely to grow if there is no guarantee of continued and expanded US LNG supplies. Also the costs of repair are relatively small, of the order of $500m-$1bn. 

One can see the argument of the German “Russia-Understanders” that will be played here: ‘If the Americans cannot be relied upon to increase LNG supplies, then repairing the Nord Stream pipelines is a cheap option to rapidly increase gas imports.’

There are other issues, not least that the main alternative supplier is Qatar. It is subject to Middle Eastern geopolitical risk and already has to re-route LNG shipments from the Red Sea to round the much more expensive route around the Cape. If neither the US nor Qatar can be relied on, then one can see why some Europeans will start thinking about doing deals with Russia again.

What is frustrating about the White House decision is that there is a way of reconciling its energy security and its climate objectives. The US natural gas industry, which has been criticized for methane leaks, could be the subject of stricter control. Russia, which is historically indifferent to ecological concerns, is a longtime polluter and cannot be pressured to stop. 

The White House should consider a twin-track strategy. The US would lift the export pause and guarantee access to additional LNG supplies. In return, it should seek express EU legislation promptly banning all Russian pipeline gas into the continent by the EU’s existing target of 2027. 

In parallel it should work with the EU to progressively ban all Russian LNG into all of Europe. This approach would guarantee European supply security while cutting out much dirtier Russian natural gas. 

The positive climate impact of such a strategy is reinforced by the fact that Russian gas fields in Western Siberia that supply Europe have no alternative pipeline links to China. The Kremlin thus has no other customers and may not have for many years to come. Together, the US and EU can effectively shut down those huge fields.

The US needs to wake up and get moving. This is a great opportunity. It should take it.

Professor Alan Riley is a Visiting Professor at the College of Europe, Natolin, Poland, and a Non-Resident Senior Fellow, at Atlantic Council, Washington DC.

Europe’s Edge is CEPA’s online journal covering critical topics on the foreign policy docket across Europe and North America. All opinions are those of the author and do not necessarily represent the position or views of the institutions they represent or the Center for European Policy Analysis.

Europe’s Edge

CEPA’s online journal covering critical topics on the foreign policy docket across Europe and North America.

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