A new report from the San Francisco-based Global Energy Monitor (GEM) imparts that a proposed 35% increase in the EU’s gas import capacity will threaten climate goals. It will also create a EUR87 billion stranded asset risk, it adds. Pipelines and LNG terminals under construction or planned would, if all built, increase gas import capacity by at least 222 billion cu m per year—equivalent to the annual consumption of the EU’s three largest gas consumers, Germany, Italy, and the Netherlands.
The proposed expansion is contrary to the EU’s December 2020 pledge to reduce emissions 55% by 2030, the study finds and is irreconcilable with findings by the European Commission that climate goals depend on a 36% reduction in EU gas consumption from 2020 to 2030.
The Europe Gas Tracker Report found that pipelines in construction or pre-construction would cost an estimated EUR71 billion, while LNG import terminals in construction or pre-construction would cost an estimated EUR16 billion. The report also found that EUR5 billion worth of gas projects were cancelled or shelved in 2020, while another EUR25 billion worth of projects have been delayed as sponsors struggled to obtain funding amid historically low oil and gas prices and rising public alarm about climate change.
According to Mason Inman, GEM’s Program Director for Oil & Gas, their research shows that gas infrastructure in the EU continues to be built and planned at a rapid pace, enough to raise the bloc’s gas import capacity by 35%. But the EU’s ambitious climate targets require gas consumption to drop sharply by 2030 and continue dropping through 2050. If this gas build-out goes ahead, the EU is likely to see emissions exceed their targets—or to wind up spending billions of euros on gas infrastructure that isn’t needed, he said.
Greig Aitken, GEM’s finance researcher said that EU public finance has delivered for the European gas industry over the last decade, to the extent that CO2 emissions across the EU from fossil gas are now almost as high as those from coal. “Further financial support for fossil gas infrastructure brings huge climate and stranded asset risks, which the European Investment Bank and funding lines under the Commission’s control are now recognising. Private sector financial institutions must now follow suit and introduce measures to end their support for further fossil gas expansion which Europe and the climate clearly do not need, he said.
Meanwhile, Laurence Tubiana, CEO of the European Climate Foundation, commented that the EU Green Deal and 55% target, natural gas demand in Europe needs to start declining today, otherwise billions of private and public funding on stranded assets will be wasted.