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Greece is betting big on liquefied natural gas from the US

When a devastating financial crisis forced Greece to rethink its economy a decade ago, the country bet big on green energy. Since then, Greece’s energy transition has been “almost unimaginable” fast, says one Greek environmentalist.

​Mountain ranges and arid islands are covered with wind turbines and solar panels ​that today provide nearly two-thirds of the nation’s electricity.​​​

But now Greece is deliberately returning to the use of fossil fuels, just so as not to burn them domestically. This time it is betting that it can become one of Europe’s main suppliers of natural gas, with much of it shipped from the United States.

Both Greek and European Union subsidies have funded new pipelines spanning the country and connecting to a brand new import terminal that will bring gas to a vast region of the Central and East Europe for decades to come.

The investments in Greece are part of a wave of natural gas investments around the world, with significant consequences for climate change. According to Global Energy Monitor, in the coming years, nearly one and a half trillion dollars will be spent on building pipelines and terminals. Twenty percent of that spending is in Europe.

The world’s pivot to gas speaks to a kind of hedging that increasingly defines global climate negotiations: While countries have unanimous agreement on the need to transition away from fossil fuels As quickly as possible, most major economic powers consider gas a “transition fuel.”

Its proponents argue that gas is cleaner than coal and oil and more reliable than renewable energy like wind or solar. Critics counter that renewable energy is increasingly affordable and gas unreliable, as Europe should have learned by spending trillions of dollars more on it. in the energy crisis following Russia’s invasion of Ukraine, which depleted government coffers and sent electricity prices soaring.

Natural gas is a climate threat in two ways. Burning it produces carbon dioxide, the main greenhouse gas warming the world. Large but unknown amounts of it also leak into the atmosphere without burning, where it has a powerful but short-lived planet-warming effect. These concerns have plagued the Biden administration this year Temporarily suspend licensing for new export ports while it assesses their impact on climate.

In this deal, Greece received billions of dollars in heavily subsidized gas infrastructure, but the bigger benefit was political, not financial. Greece sees itself as the center of European energy security and plays a key role in the West’s strategy to isolate Russia.

The real money will be earned by American gas companies. Since Russia invaded Ukraine, the United States has more than doubled its exports of liquefied natural gas, or LNG, to Europe, reaching nearly $100 billion in trade.

In Greece, the newest hub is a floating gas station off the country’s northern coast. The facility was once a giant oil tanker, but today it stands still, held in place not only by anchors but also by connections to undersea pipelines with branches stretching across Europe.

In April, its first LNG delivery arrived from the Gulf Coast. Terminal operators expect that more than half of its supply will come from the United States.

That station is “near and dear to my heart,” said Geoffrey R. Pyatt, a former U.S. ambassador to Greece and Ukraine. Private event on Mediterranean energy supplies. Mr. Pyatt is currently the State Department’s top energy official.

Mr. Pyatt told attendees that the United States is “the unrivaled global champion” of gas exports, and he assured them that American companies are “strongly committed to participating in the region.” He also said he was “excited to see” American fossil fuel companies partnering with Greece and nearby Cyprus to exploit their own offshore gas fields.

Mr. Pyatt, who is very familiar with both Greece and Ukraine, helped build Greece’s new status as an import hub. A key factor is urgency. Ukraine, for obvious reasons, will let a treaty this year allowing Russia to pump gas through its territory expire.

He and other American officials have lobbied European nations to use the new Greek terminal and pipeline, promoting American LNG as a natural alternative to Russian gas (unlike Greek oil). Russia, not banned in EU).

“It’s unfortunate to say this, but the war has created demand for us,” said Kostis Sifnaios, head of Gastrade, the company that operates the new floating terminal. “If I think about the amount of money America pours into Ukraine, Bulgaria, Moldova, etc., they have to be returned somehow, right? That’s why you see so much US LNG flowing into this region.”

Mr. Sifnaios recalled Mr. Pyatt and other officials “actively lobbying countries like Serbia, Bulgaria and North Macedonia and encouraging them to book” gas from the new terminal. Even Ukraine is a potential customer.

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

Energy analysts and environmentalists alike have raised concerns that reducing gas access could discourage renewable energy build-out and leave poorer countries among them vulnerable. more exposed to the price shocks that the gas market has seen in recent years.

“Basically, the Balkans have been ignored for investment by Europe for the past 20 years,” said Antonio Tricarico, regional expert at ReCommon, an organization that researches European fossil fuel interests. “While it may seem like they are getting the spotlight now, they are actually being overlooked again, this time because they are gas-fired rather than powered by renewables.”

On a recent day, in a remote forest near Greece’s border with Albania, workers set off a series of rapid explosions along a wide road through the forest. The explosives were intended to help dig a trench for a new pipeline. Just a few dozen yards away, another gash cuts through the forest, where a new pipeline passes through Greece on its way from gas fields in the Caspian Sea all the way to Italy. Soon, another pipeline will be built, connecting this network with neighboring North Macedonia.

The Institute for Energy Economics and Financial Analysis, as well as the EU’s internal energy regulator, LNG demand projects in Europe will peak this year, largely because although Europe’s biggest economies are investing in gas, they are also building up renewables at breakneck speed. By 2030, Europe is predicted to have nearly three times as much ability to import LNG at the necessary level.

If those predictions prove correct, Europe is now diverting public funding to gas projects it knows won’t make money, in the name of geopolitics.

To some extent, that is already true. inside The EU decided to grant 180 million USD as for the construction of the Greek floating gas terminal, they said that “the project will not be financially profitable without aid measures”.

“Without public subsidies, all of this would have been difficult to progress,” Mr. Tricarico said.

Despite the uncertain economics of gas in Europe and in the face of opposition from climate activists, Greece has proposed at least one more floating gas station, right next to the first.

“A second station would be excessive,” said Theodota Nantsou, head of policy at the World Wildlife Fund in Greece. WWF has filed an injunction with a Greek court to block further public funding of gas infrastructure. “I don’t understand why we continue to subsidize fossil fuels with taxpayers’ money,” she said, pointing out that last year Greece, if only for a few hours, ran its entire power grid with renewable energy.

Greece’s gas demand has dropped so much that the country’s previously existing import port, on a small island called Revithoussa just outside Athens, was barely operational for a recent day. But that’s partly because it only serves Greece’s domestic market, not cross-border shipments, and Greece’s energy needs are increasingly met by wind and solar.

At Revithoussa, the summer heat caused some of the liquefied gas stored in the facility’s giant tanks to revert back to gas. It takes a lot of energy to keep natural gas liquefied, so terminal operators have chosen to burn off excess gas by flaring, a process that experts say is wasteful and polluting and should be avoided if possible.

Meanwhile, at the new floating terminal across the Aegean Sea, Mr. Sifnaios said bookings were high, largely thanks to diplomatic efforts.

Despite the desire of the United States and Europe to use Greece to financially isolate Russia, at least some of the gas reaching Europe through Greece will still be Russian. Countries such as Hungary and Slovakia, which straddle the geopolitical divide between the West and Russia, have said they will continue to buy Russian gas even after the pipeline route through Ukraine closes.

“And if they order from Russia, it doesn’t mean we will refuse them,” Mr. Sifnaios said.


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