U.S. LNG exports up by 272% as EU and U.S. host High-Level B2B Energy Forum
U.S. liquefied natural gas exports up by 272% as EU and U.S. host High-Level Business-to-Business Energy Forum.
In their Joint Statement of 25 July 2018 in Washington D.C., President Juncker and President Trump agreed to strengthen EU-U.S. strategic cooperation with respect to energy. They came in particular to an understanding on the benefits of expanded exports of U.S. liquefied natural gas (LNG) to the EU gas market.
Since the first cargo in April 2016 U.S. LNG exports to the EU have been increasing substantially and have seen a steep rise after President Trump and President Juncker’s meeting in July 2018 increasing by 272%. As a result, March 2019 recorded the highest volume ever of EU-U.S. trade in LNG with more than 1.4 billion cubic metres.
Today, top energy business executives from both sides of the Atlantic meet in Brussels to discuss further ways to enhance LNG trade, the role that competitively-priced U.S.-LNG can play on the EU market and the growing opportunities for using LNG in the transport sector. This High-Level Energy Forum, opened by EU Commissioner for Climate Action and Energy Miguel Arias Cañete and U.S. Secretary of Energy Rick Perry, gives American and European businesses the opportunity to chart further actions to fully harvest commercial opportunities in the LNG trade. These will range from new infrastructure for upstream development, liquefaction and re-gasification to pipeline network distribution as well as new business models and financial instruments in a changing market. It also provides U.S. and European decision-makers from companies in the LNG sector with match-making and deal-making opportunities.
The gathering, which is a clear signal of the strengthened of EU-U.S. cooperation in the field of energy, provided a further occasion for EU Commissioner Miguel Arias Cañete to meet with the U.S. Secretary of Energy Rick Perry and discuss broader aspects of EU-US energy relations.
Speaking after the meeting, Commissioner for Energy and Climate Miguel Arias Cañete said: “Energy security is one of the key success stories of our transatlantic cooperation and one where we both have a keen mutual interest. It is therefore our common objective to further deepen our energy cooperation. Natural gas will remain an important component of the EU’s energy mix in the near future as we move towards cleaner sources of energy. Given our heavy dependence on imports, U.S. liquefied natural gas, if priced competitively, could play an increasing and strategic role in EU gas supply.”
U.S. Secretary of Energy Rick Perry said: “Today’s discussion follows on last July’s joint statement by President Trump and President Juncker on strengthening our strategic energy partnership. We share a history of transatlantic cooperation, through good times and bad, and together we promote our heritage of freedom. The strength of this relationship can particularly be seen in energy. When it comes to natural gas, we each have what the other needs to derive tremendous mutual benefit from advancing our energy relationship.”
Increased imports of U.S. LNG contribute to the EU’s goal of diversification of energy supply. Competitive, fluid and stable, the EU gas market is the second biggest single gas market in the world after the U.S.
European gas imports are projected to increase in the years to come as its domestic production is decreasing, while demand is projected to remain at a comparable level as gas has been identified as an important transition fuel in the EU’s efforts to decarbonise its economy.
Development of liquefied natural gas capacities in the EU
The EU has well-developed liquefied natural gas import capacities, with about 150 billion cubic meters currently spare. At the same time, given their strategic importance for diversification and supply security, current capacities are being expanded and new capacities are being developed. Most recent developments include:
The signature of a grant agreement between the Polish government and the Polskie LNG company for the extension of the Liquefied Natural Gas (LNG) terminal in Świnoujście, in north-western Poland on the Baltic Sea coast, on 24 April. The EU invested almost €128 million from the European Regional Development Fund in extending this terminal, this comes on top of €224 million already invested under the previous funding period.
The final investment decision of the LNG terminal on the island of Krk in Croatia in January 2019. The EU has contributed with a total of €124 million(including €108 million for the terminal and €16 million for the evacuation pipeline).
The EU is also supporting capacity developments in Greece, Spain, Ireland, Sweden and Cyprus, a detailed table is available online. The EU estimates that by 2022 all Member States (but Malta and Cyprus) will have access to three sources of gas and 23 Member States will have access to the global LNG market.
Increase of LNG Imports from the U.S.
Since July 2018, cumulative EU imports of liquefied natural gas from the U.S. have increased by 272%.With a share of 12.6% of EU-LNG imports in 2019 so far, the U.S. is Europe’s third biggest supplier of LNG, while Europe has emerged the primary destination of the U.S. LNG in January to February this year ahead of Asia. The European Union is ready to facilitate more imports of liquefied natural gas from the U.S., if the market conditions are right and prices competitive. This will allow U.S. exporters to further strengthen their position on European markets whilst contributing to the EU’s objectives of security of supply and diversification.
Current figures show that:
In the nine months since the 25 July 2018 Joint Statement, cumulative EU imports of U.S. LNG are up by 272% relative to the period beforehand, a total of 10.4 billion cubic meters (bcm).
In terms of the EU’s total imports of LNG, the U.S. share was 13.4% over the last six months, compared to 2.3% before the Joint Statement.
Since early 2016, the EU has received more than 110 LNG cargoes from the U.S. In 2017 Europe represented more than 10% of total U.S. LNG exports, up from 5% in 2016. In the 2018 calendar year, some 11% of US LNG exports went to the EU market. However, in the 9-month period since the Joint Statement (August 2018 – April 2019), this share rises to nearly 30%.
Congo oil auction: Perenco is interested, local communities want it out
The Anglo-French oil company Perenco has filed expressions of interest in two of the Coastal Basin blocks on offer in the giant oil auction the Democratic Republic of Congo (DRC) launched last July. Oil Minister Didier Budimbu visited the zone last Saturday to inaugurate new Perenco installations. A recent Greenpeace Africa field mission to the Coastal Basin, where the company has been present for nearly a quarter of a century, reveals strong opposition by local communities to any further fossil fuel activity, after years of pollution and abuse.
“No political elite in Kinshasa would accept to live in the oil-drenched ecosystems where Perenco drills, or accept the poverty and intimidation that constitute its legacy,” said Patient Muamba, Greenpeace Africa forest campaigner. “The DRC government must listen to its people and block Perenco from bidding to expand its toxic enterprise in the country.”
DRC’s only operating oil company, Perenco, is currently being sued in France by Friends of the Earth France and Sherpa in order to repair environmental damage. The firm is also being investigated by France’s National Financial Prosecutor’s office for “corruption of foreign public officials” in Africa. The multinational has a dark record in Gabon, Peru, and Guatemala, and is recently responsible for an oil spill in the UK.
The Congo oil auction has faced a barrage of criticism from Congolese and international scientists and NGOs as a potential cataclysm for human rights, the rule of law, biodiversity and the climate. Although deadlines for submitting expressions of interest have been extended twice, without explanation, it appears to have been shunned by Big Oil so far. Exploration contracts, most of which are to be signed during an election year in DRC, require the immediate payment of juicy signature bonuses.
Last month, just before the announcement of Perenco’s expressions of interest, Greenpeace Africa visited the three blocks of the Coastal Basin, a zone rich in mangroves located in the territories of Muanda and Lukula (Kongo-Central province), to talk with fishermen and fisherwomen, farmers, traditional leaders, young people, and local NGOs.
The pernicious impact of the oil industry is felt across the area and opposition among local communities is palpable. It echoes that of communities visited by Greenpeace Africa during three previous field trips since last July to six designated oil blocks in Equateur, Tshuapa, Haut Lomami, and Tanganyika provinces.
Only two days before our arrival, a huge fire broke out in Mangroves National Park, in a storage area for fuel imported from Angola. The Park is an internationally-recognized biodiversity hotspot, home to sea turtles, manatees and hippos. The oil explosion reduced approximately 500 m² of mangroves to ashes and caused significant water pollution. While Perenco wasn’t involved in the incident, it demonstrates the risks of expanding the oil industry in this ecosystem.
The company is infamous among locals. On 19 April Muanda was paralyzed by city-wide protests on various issues, some avenues barricaded with burning tires. Similar protests have been going on for years, often met by violent repression. Recently, residents have been demanding that a USD 10 million payment by Perenco be invested in the electrification of the city.
The villages lie within the Matamba-Makanzi II block, for which the Nigerian firm Century Energy Services and a certain “Kebo Energy” have filed expressions of interest. Perenco has filed expressions of interest for the Nganzi and Yema II blocks.
In Malela, a resident says no one there is aware of the existence of the oil auction: “We don’t understand why the government has to treat us as if we don’t exist and have no right to know what is planned for our lands.”
Already, restrictions imposed by the Congolese Institute for Nature Conservation (ICCN) for protecting the area’s biodiversity, are making life difficult for fishermen and fisherwomen. Some fear oil exploration would impose further restrictions.
In Kimbanza and Malemba, residents complained that no one from the Oil Ministry had come to consult them. They knew their area might be at risk – about a decade ago the oil company Surestream had carried out unsuccessful seismic studies in the area. Now they reject any new oil development.
One resident, who worked for Perenco for decades, wonders: “How can the government approve this kind of project without telling us anything?”
Malemba residents are working on a management plan for their community forest concession, awarded in January, which they hope will block any land grabbing by a government-backed Perenco: “No one will come and take our land away from us, we already have legal rights!” says one community member.
Inhabitants of Matamba-Makanzi, which lies within the Yema II block, say they received a visit from individuals presenting themselves as Oil Ministry officials, but the latter told them absolutely nothing about any oil tender. They were only looking for guides to accompany them to the boundary between the Yema II and Matamba-Makanzi II blocks.
Neither villagers nor local civil society groups are aware of any environmental impact assessment done in the past 25 years
Activists in the area listed the complaints that Friends of the Earth France and Sherpa have brought before the French courts. Several scientific studies, investigations from Congolese and international civil society organisations and the Congolese Senate have revealed the installation of wells and flares near homes and fields, oil spills, waste incineration, the dumping of sludge and toxic waste in rivers, and land erosion.
One of the local activists says: “The exploitation of oil impoverishes us and makes us suffer. Young people are being used for useless work. I’d never work for Perenco – even if it were the only employer in Kongo Central!”.
Perenco did not respond to the issues raised by local communities when contacted by Greenpeace Africa.
Australia has raised its climate targets and now needs to accelerate its clean energy transition
Australia is taking positive steps to increase its climate and clean energy ambitions. The International Energy Agency has reviewed Australia’s progress and recommends that it continues to strengthen its policies and long-term plans to ensure it meets its targets.
Today, Australia is a major exporter of both fossil fuels and the critical minerals used in many clean energy technologies. A successful clean energy transition would support the country’s economic diversification and industrial growth while providing long-term resilience against global energy market shocks, according to the new IEA report.
Since the IEA’s last review in 2018, Australia has passed the Climate Change Act in 2022, which doubles the target for emissions reductions by 2030 and sets the goal of reaching net zero emissions by 2050. The Australian government also signed up to the Global Methane Pledge in 2022, joining 130 governments who are collectively targeting a reduction in methane emissions of at least 30% by 2030.
In recent months, the Australian government has presented a host of policy strategies to fast-track the country’s energy transition. The IEA review welcomes these strategies, including the Rewiring the Nation Plan, the National Energy Transformation Partnership, and National Energy Performance Strategy.
“Australia is an important player in global energy markets that is helping to meet today’s needs while advancing the transition to clean energy,” said IEA Executive Director Fatih Birol. “I welcome Australia’s efforts to drive progress on low-emissions hydrogen and supplies of critical minerals – and its leadership on working with partners, including through the IEA, to strengthen the diversity and resilience of clean energy supply chains. Our new report sets out the steps Australia can take to accelerate its own clean energy transition securely and affordably.”
The report finds that Australia can make sufficient progress on emissions reductions by 2030 to align with the goal of net zero by 2050. However, stronger efforts are needed to improve energy efficiency and boost clean energy investment. A whole-of-government approach is needed to end the country’s high reliance on fossil fuels. The IEA review calls for an updated net zero emissions reduction plan for 2050 to guide implementation across all parts of government. A national energy and climate information system is also needed to track progress towards reaching these targets.
Greater energy efficiency efforts in transport and residential buildings can help bring forward Australia’s peak in emissions and mitigate rising energy bills. The IEA review estimates that a 60% productivity improvement would be needed for a net zero aligned trajectory. The new National Building Code and the Electric Vehicle Strategy are critical steps forward in this regard.
Australia’s renewables deployment has a positive outlook thanks to the success of rooftop solar, ambitious targets, and increased funding at federal and state levels. Three million Australian households, the equivalent of one in three, have solar PV installations, together accounting for 17 gigawatts of capacity.
Power sector decarbonisation efforts need to be stepped up considerably, as Australia aims to increase the share of low-carbon power generation by 2030 – with 82% to come from renewable energy, up from 27% today. This will require an accelerated implementation of renewable energy zones, faster permitting of grid related projects, and additional coal retirements.
The Covid-19 pandemic, supply chain disruptions, and Russia’s invasion of Ukraine created a new set of energy security challenges for all IEA members, including Australia. In 2022, Australia’s domestic gas and electricity markets experienced supply disruptions and rising prices. The Australian government has enacted laws and programmes aimed at boosting fuel security at home. Based on lessons learned from recent energy crises, investment in clean energy infrastructure, grids, energy system flexibility, and fuel availability should be key priorities for Australia’s orderly transition.
One of Australia’s security challenges is its exposure to frequent and extreme weather events. The energy sector – from production and generation to transport and distribution – will need to be more resilient to better cope with ever more disruptive storms, flooding, wildfires, and heat waves. Australia has yet to complete a comprehensive assessment of climate change impacts on the energy sector outside of electricity. A national-level energy sector plan that lays out future steps for climate resilience is needed.
Australia also has the potential to play a key role in providing critical minerals and new technologies for clean energy transitions globally. It produces cobalt, rare-earth elements, and lithium, of which it is the single largest producer. In 2022, Australia’s Hydrogen Energy Supply Chain (HESC) project produced and transported liquified hydrogen to Japan, the world’s first such shipment. Australia has a broad range of demonstration projects for low-emission hydrogen and carbon capture and storage development, which are also critical for the decarbonisation of industrial sectors where emissions are hardest to reduce.
IEA analysis on wide range of fuels and technologies for Japan’s G7 Presidency
New reports on hydrogen, steel, renewables integration and natural gas – as well as work on critical minerals and road transport emissions – help inform G7 energy and climate agenda
The IEA has produced a wide range of new analysis on key energy and climate topics for Japan’s Presidency of the G7, including reports on hydrogen, steel, renewables integration and natural gas – as well as contributions on critical minerals, clean energy supply chains, energy efficiency and reducing emissions from road transport.
The different analytical outputs are helping inform governments of leading economies ahead of the G7 Ministers’ Meeting on Climate, Energy and Environment in Sapporo, Japan, on 15-16 April and the G7 Hiroshima Summit on 19-21 May. They were requested by the Japanese government to support discussions among G7 countries and provide insights and direction for the G7 energy and climate agenda. But the reports offer valuable analysis that is not limited to the G7 and can help inform policy making in countries around the world in these areas.
On hydrogen, the report Towards Hydrogen Definitions Based on Their Emissions Intensity seeks to improve transparency on the emissions intensity of hydrogen production in order to bring much-needed clarity and facilitate investment. Most large-scale projects for the production of low-emissions hydrogen are facing important bottlenecks. Issues such as uncertainty about future demand, an absence of necessary infrastructure, and a lack of regulatory clarity are preventing project developers from taking firm investment decisions.
Using colours to refer to different production routes – or terms such as “sustainable”, “low-carbon” or “clean” hydrogen – obscures many different levels of potential emissions. This terminology has proved impractical as a basis for contracting decisions, deterring potential investors, the report notes. By agreeing to use the emissions intensity of hydrogen production in the definition of national regulations about hydrogen, governments can facilitate market and regulatory interoperability. The new report aims to assist governments in doing so by assessing the emissions intensity of individual hydrogen production routes so that governments can decide which level aligns with their own circumstances.
On steel, the report Emissions Measurement and Data Collection for a Net Zero Steel Industry, continues work undertaken during Germany’s G7 Presidency in 2022. The implementation phase for achieving a net zero steel industry will require robust methodologies for measuring emissions at the site- and product-level, together with data collection frameworks to facilitate comparison and track progress.
Following an evaluation of existing methodologies and frameworks for the steel industry, the report provides “net zero principles” to guide potential next steps for their development and implementation, together with specific policy recommendations for G7 members.
On renewables integration, the report Managing Seasonal and Interannual Variability of Renewables explores the integration of variable renewables such as wind and solar in future power systems where their share of annual electricity generation rises beyond 70%. Thanks to the successful use of flexibility resources – from stronger grids and interconnections to demand-side measures, affordable storage and dispatchable power supply – many countries have already securely and efficiently integrated significant shares of variable renewables in their electricity generation.
As wind and solar continue to grow as a proportion of generation, system level surpluses and periods of lower generation will eventually expand beyond hour-to-hour or daily variations to seasonal timescales. The report examines the potential flexibility needs for this, focusing on four different climatic regions and highlighting the potential role of existing thermal power capacities and of hydropower plants in providing seasonal flexibility and capacity during critical periods of the year. At the same time, it notes that as energy systems transition towards net zero emissions, all flexibility services will need to be fully decarbonised.
On natural gas, the report Outlooks for Gas Markets and Investment looks at the uncertainty around natural gas supply and demand, using insights from the scenarios underpinning the World Energy Outlook 2022, as well as a selection of other global scenario-based assessments. In the context of the current global energy crisis and efforts to tackle climate change, the report considers the key drivers affecting prospects for natural gas – with a particular focus on emerging and developing economies in Asia.
These are some of the latest instances of the IEA’s long-running work with the G7 to develop policy advice on energy security and clean energy transitions.
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