Home News Why Greece is investing heavily in U.S. natural gas

Why Greece is investing heavily in U.S. natural gas

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A decade ago, when a severe financial crisis forced Greece to rethink its economy, it invested heavily in green energy. Since then, Greece’s energy transition has been so rapid that it “almost feels utopian,” said one Greek environmentalist.

Wind turbines and solar panels dot the mountain ridges and dry islands, and now provide nearly two-thirds of the country’s electricity.

But now Greece is deliberately turning back to fossil fuels, just not for domestic use. This time, Greece is betting it can become one of Europe’s main suppliers of natural gas, much of it from the United States.

Both Greece and the European Union have provided subsidies for the construction of new pipelines across the country that will connect to a brand new import terminal, bringing natural gas to large swathes of central and eastern Europe in the coming decades.

Greece’s investment is part of a wave of global gas investment with major implications for climate change. Nearly $1.5 trillion will be spent on building pipelines and terminals in the coming years, according to Global Energy Monitor. 20% of that spending is in Europe.

The world’s turn to gas illustrates a hedge that increasingly defines global climate talks: Even as countries Agree that we must move away from fossil fuels Almost all major economies are promoting natural gas as a “transition fuel” as quickly as possible.

Gas proponents argue that it burns cleaner than coal and oil and is more reliable than renewable energy sources such as wind or solar. Critics counter that renewables are getting cheaper and gas is simply unreliable, and that Europe should have learned from the energy crisis that erupted after Russia invaded Ukraine, spending trillions of dollars on gas, draining government coffers and sending electricity prices soaring.

Natural gas poses a climate threat in two ways. Burning natural gas produces carbon dioxide, the main greenhouse gas that causes global warming. Large but unknown amounts of natural gas also leak into the atmosphere without being burned, contributing strongly but less permanently to global warming. These concerns prompted the Biden administration to announce this year that it would ban the use of natural gas in the atmosphere. Suspension of new export terminal permits Also assess their impact on the climate.

Under the arrangement, Greece received billions of dollars in subsidies for gas infrastructure, but the greater rewards were political rather than economic. Greece positioned itself as the center of European energy security and played a key role in the West’s strategy to isolate Russia.

The real money makers are American natural gas companies. Since Russia invaded Ukraine, U.S. exports of liquefied natural gas (LNG) to Europe have more than doubled, to a trade valued at nearly $100 billion.

In Greece, the latest focus is on a floating gas terminal off the country’s northern coast. The facility was once a giant oil tanker, but now it is immobile, held in place not only by an anchor but also by connections to undersea pipelines that stretch across Europe.

The first LNG shipments arrived from the Gulf Coast in April, and the terminal operator hopes more than half of the supply will come from the United States.

Geoffrey R. Pyatt, a former American ambassador to Greece and Ukraine, said at a conference in New York City this month that the terminal was “very important to me.” Mediterranean Energy Supply Private EventMr. Piatt is now the State Department’s top energy official.

Piatt told attendees that the United States is the “unrivaled global champion” in natural gas exports and assured them that American companies are “deeply committed to engaging in the region.” He also said he was “eager to see” American fossil fuel companies work with Greece and nearby Cyprus to develop their own offshore gas fields.

Piat, who knows both Greece and Ukraine well, has helped Greece gain its new status as an import hub. A major factor is urgency. For obvious reasons, Ukraine is set to let a treaty that allowed Russian gas to flow over its territory lapse this year.

He and other U.S. officials lobbied European countries to use new Greek terminals and pipelines, promoting U.S. liquefied natural gas as a natural alternative to Russian gas (which, unlike Russian oil, is not banned in the European Union).

“It’s sad to say, but the war gave us this need,” said Kostis Sifnaios, head of Gastrade, the company that operates the new floating terminal. “If I think about the money the U.S. is putting into Ukraine, Bulgaria, Moldova and so on, they have to get something back, don’t they? That’s why you see so much U.S. LNG coming into the region.”

Sifnaos recalled that Piat and other officials “actively lobbied countries like Serbia, Bulgaria and North Macedonia to encourage them to book gas” from the new terminal. Even Ukraine was a potential customer.

But the real market is in the Balkans and Central Europe. Balkan countries such as Bulgaria and Serbia have lagged behind the rest of continental Europe in the transition to renewable energy.

Energy analysts and environmentalists worry that easing access to natural gas could hamper the build-out of renewable energy and make poorer countries more vulnerable to the price shocks that have hit gas markets in recent years.

“Europe has basically not invested in the Balkans for the past 20 years,” said Antonio Tricarico, a regional expert at ReCommon, an organization that studies European fossil fuel interests. “While it seems like they are getting attention now, they are actually being ignored again, this time being lured by gas rather than helped by renewables.”

In a remote forest near Greece’s border with Albania, workers set off a series of rapid explosions that streaked along a wide road that cut through the forest. The explosives were to help dig a trench for a new pipeline. Just a few dozen yards away, another trench cut through the forest, stretching a new pipeline from the gas fields of the Caspian Sea through Greece and into Italy. Soon, another pipeline will be built to connect this network of pipelines to neighboring North Macedonia.

Institute for Energy Economics and Financial Analysis and the EU’s Internal Energy Regulator European LNG demand forecast The peak is expected this year, largely because even as Europe’s largest economies invest in gas, they are also rapidly building renewable energy. Europe is expected to see nearly three times as many Its required liquefied natural gas import capacity.

If these predictions prove correct, Europe is currently spending public money on gas projects it knows will not make money in the name of geopolitics.

To some extent, this is already true. EU decides to allocate US$180 million Regarding the construction of the Greek floating gas terminal, the EU said that “without aid measures, the project will not be economically profitable.”

“Without public subsidies, this would be difficult to do,” Mr Tricarico said.

Despite the uncertain economic prospects for natural gas in Europe and protests from climate activists, Greece has proposed building at least one more floating gas terminal alongside its first.

“Building a second terminal is simply too much,” said Theodota Nantsou, head of Greece policy at the World Wildlife Fund, which has filed an injunction with a Greek court to prevent more public money from flowing to gas infrastructure. “I just don’t understand why we should continue to subsidize fossil fuels with taxpayers’ money,” she said, noting that Greece’s entire grid ran on renewable energy last year, albeit for only a few hours.

Greece’s own demand for gas has fallen so much that one of its old import terminals, on the tiny island of Revithoussa outside Athens, was largely idle on a recent day. But that’s partly because it serves only the domestic market, not cross-border shipments, and because Greece’s electricity needs are increasingly met by wind and solar.

At Revithoussa, high summer temperatures caused some of the liquefied gas stored in the facility’s giant tanks to return to gaseous form. Keeping gas liquefied requires a lot of energy, so terminal operators have opted to burn off the excess gas through flaring, a process that experts say is wasteful and polluting and should be avoided whenever possible.

Meanwhile, bookings for the new floating dock across the Aegean are strong, Mr Sifnaos said, thanks in large part to diplomatic efforts.

Despite U.S. and European hopes to use Greece to isolate Russia economically, at least some of the gas that enters Europe through Greece still comes from Russia. Countries that straddle the geopolitical divide between the West and Russia, such as Hungary and Slovakia, have said they will continue to buy Russian gas even if the pipeline through Ukraine is shut down.

“If they order from Russia, we won’t say no,” Mr. Sifnaos said.

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