LNG is a key component of the EU’s energy mix

The EU will not achieve its long coveted goal of energy sovereignty without the inclusion of natural gas, writes Carlo Fidanza.
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The desire to achieve the targets of the Paris Climate Change Agreement, together with the known instability of the oil-producing countries, requires the EU to continue implementing a strategy that reduces its dependence on oil. There is no doubt that, among alternative energy sources, gas, and in particular Liquefied Natural Gas (LNG), can play a major role.

LNG has significant benefits both in terms of cost and in greenhouse gas emissions. It is particularly suitable for heavy-duty vehicles that have to cover long distances. Its use enables this particular type of transport to comply with the limits laid down in the EURO VI emission limits legislation.

It is also an interesting option for maritime transport, enabling ships to comply with the new sulphur limits: 0.1 percent for the Sulphur Emission Control Area (SECA) and - since 2020 - 0.5 percent worldwide.

“The European Green Deal will become even more detached from reality if the necessary investments for the use of natural gas in all types of transport are excluded”

Near the end of 2019, LNG became the EU’s second-largest source of gas for the first time, accounting for 28 percent of imports. Currently, many EU Member States have significant LNG import capacity, which means they have the infrastructure to receive imports from producers outside the EU. Among the latter, Qatar has maintained its traditional position as the largest LNG supplier, while Russia and the United States have risen to second and third respectively.

Further development of an alternative fuels market requires state participation along with EU coordination. This public support is fundamental for creating sufficiently adequate refuelling infrastructure.

Here, the EU adopted the Alternative Fuels Infrastructure Directive, which sets out a scheme of common measures for deploying the relevant infrastructure in order to minimise both dependence on imports and the negative environmental impact of transport.

This Directive sets minimum requirements for the construction of refuelling infrastructures. Unfortunately, the Directive’s provisions, currently under review, have not delivered significant results in all Member States.

For example, regarding the maritime sector, the directive does not take into account the prevalence - especially in the Mediterranean - of so-called “city-ports”, in relation to the industrial and commercial ports, primarily located in the north of Europe. Related to the problem of the availability of suitable sites is the evolution of ships and their supply needs. Even here, some of the provisions of the Directive must be implemented through greater investment.

In the Strait of Messina, in Italy, a modern LNG ferry has already been operating for 17 months. However, it must continue to use diesel because it is not possible to refuel with LNG in either Sicily or Calabria. As is the case in the truck sector, the ferry industry - of which Italy has the largest number of vessels in the world - requires significant fleet renovation. To do this, I believe will require substantial co-financing from the EU budget. While we are moving towards cleaner sources, natural gas must remain a key component of the EU’s energy mix for the future.

“While we are moving towards cleaner sources, natural gas must remain a key component of the EU’s energy mix for the future”

The transition to a more decarbonised world needs to be developed gradually and according to the principle of technological neutrality. Based on this, the adoption by the European Investment Bank (EIB) of its new energy lending policy, which foresees the phasing out of fossil fuel loans with a limited transitional period for projects in the area of natural gas, is a matter of concern.

Following my parliamentary question on the issue, the European Commission confirmed that the EIB would continue to approve projects already under evaluation until the end of 2021. Because of the health emergency and economic crisis caused by the COVD- 19 pandemic, it is also quite clear that EU budget priorities need to be redirected.

The Commission should scale down its pre-crisis regulatory ambition and review its political priorities. Faced with the risk of a complete economic collapse and devastating social effects across the EU, the pursuit of utopian ideals in the name of ideological environmentalism would be unthinkable and irresponsible.

The European Green Deal is likely to turn into a list of new bans, adding further red tape, taxes and charges of all kinds that risk putting European companies at a market disadvantage compared to those global competitors operating without environmental and social concerns.

The European Green Deal will become even more detached from reality if the necessary investments for natural gas use in all types of transport are excluded. The EU needs to support a European natural gas supply chain, diversify sources of supply and reduce energy dependence on third countries. Without natural gas, European energy sovereignty will never be achieved.

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Energy & Climate
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