The Role of US Natural Gas in the EU’s Energy Security and Climate Action
The Russia-Ukraine crisis and European energy security dominated the agenda, with the two sides agreeing to intensify their cooperation to ensure sufficient energy supplies for Europe. This intensive diplomacy, along with high natural gas prices in Europe, has resulted in a massive shift of liquefied natural gas (LNG) cargoes to Europe from the United States and other countries, helping to offset lower pipeline gas supplies from Russia.
During the Energy Council meeting and at other events during her visit, EU Energy Commissioner Kadri Simson stated that the EU would like to increase the amount of LNG it receives from the United States and asked what steps the European Commission could take to make the EU market a more attractive destination for US cargoes. At the same time, however, her comments indicated that EU has short-term needs and that does not expect to require more natural gas after the current supply challenges are overcome, as more renewables and greater energy-efficiency measures under the EU Green Deal will decrease gas demand.
This mixed message—“We want your gas now, but will not need it later”—was analogous to that in the joint statement of President Joe Biden and European Commission President Ursula von der Leyen on US-EU cooperation on energy security on January 28. This underlined how the two sides are working jointly to ensure sufficient natural-gas deliveries to the EU to avoid supply shocks, while noting that LNG is a short-term answer to “enhance security of supply while we continue to enable the transition to net zero emissions.” Similar language about LNG being a short-term answer “as countries move away from fossil fuels” was included in the joint statement of the US-EU Energy Council.
This unclear signaling about the role of US natural gas in the EU’s energy mix does not make the latter a more attractive market. Nor is it helpful to achieving the EU’s energy-security objectives. The risks posed by Russia’s dominance of Europe’s gas supply is clearer than ever and will remain even if demand declines in coming years. More renewables and energy efficiency will reduce the EU’s dependence on energy imports but it will not change the fundamental dynamic of reliance on Russian gas supplies for many years.
Unclear signaling about the role of US natural gas in the EU’s energy mix does not make the latter a more attractive market.
Diversification of supply should remain a paramount goal. Ten European utilities have long-term contracts with US LNG suppliers, which provide security of supply and better prices in tight market conditions. Brussels should encourage EU utilities and other users of natural gas to sign more long-term supply deals for US LNG, especially with new projects that would increase total global supply and provide alternatives to Russian gas. If EU countries end up needing less US LNG as the energy transition advances, they can sell excess cargoes in the global market. Demand for natural gas in Asia, where the energy transition will depend heavily on switching from coal to gas, is likely to grow for many years.
Clean-energy technology was also a key topic at the Energy Council meeting, including on energy efficiency in buildings, wind power, and renewable hydrogen where EU-US cooperation is already strong. Particularly noteworthy was the agreement by Washington and Brussels in a relatively new area for transatlantic cooperation: reducing methane emissions. The United States and the EU decided “to initiate work on a common tool for life-cycle analysis of methane emissions for hydrocarbon suppliers that will advance global efforts to move towards consistency and accuracy of the measurement, reporting and verification of greenhouse gas emissions.” They will also partner “in the development of more uniform international methane emissions testing methodologies.”
Curbing methane emissions quickly has become a central focus of achieving global climate goals and the United States and the EU are leading this effort. Their latest commitments follow their leadership at UN Climate Conference last November in launching the Global Methane Pledge to reduce emissions globally by 30 percent by 2030. Several life-cycle assessments have shown that US LNG exports to Europe have lower greenhouse-gas emissions than use of European coal or pipeline gas from Russia for power generation. This is another reason why the United States and EU should cooperate to bring more US LNG to Europe beyond the short-term.
Transatlantic cooperation on clean energy and on reducing emissions from the current principal sources of energy is a good-news story. It would send a stronger message if the United States and the EU unambiguously acknowledged that US natural gas helps increase the energy security of European countries and reduces their greenhouse-gas emissions.