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Energy Policy Commitments Needed to Reduce Russian Energy Reliance

March 16, 2022 by Reece Nations
(Photo by Alexander Popov via UnSplash)

OAKLAND, Calif. — Energy analysts at the Breakthrough Institute published a report on Wednesday detailing policy recommendations to reduce global reliance on Russian energy following the country’s invasion of Ukraine.

Much of Europe and portions of Asia need to make a set of new energy policy commitments if they are looking to reduce their reliance on Russian fuel, according to the report. The analysts at the Breakthrough Institute contend that instituting the widespread changes needed to mitigate or reverse those dynamics will require policy commitments from the U.S., the European Union and others.

Currently, Russia is the world’s third-largest producer of oil and the second-largest producer of natural gas, according to the report. However, if the recommendations in BTI’s report are followed, the institute estimates that up to 45% of Russia’s approximately 200 billion cubic meters of gas exports to Europe could be offset in around one year.

Seaver Wang, associate director for Asia on BTI’s climate and energy team, told The Well News that Europe’s situation as a power-importing region is vastly different from that of the U.S., although the policy recommendations in the report explain how European countries could successfully maneuver themselves into engaging untapped reserves that are free from Russia’s influence.

As an example, the report points out that, while there is no ban on developing upstream infrastructure in certain regions like West Africa, Wang said, there effectively is one because international financial institutions like the World Bank have an aversion to investing in emerging economies.

“For countries like Mauritania or Senegal—because they’re low-income countries, it’s much more difficult for them to get access to financing because they’re seen as potentially less able to repay loans,” Wang told The Well News.

“But that’s why international development financing exists, to provide financing that the private sector otherwise would not be able to provide. And so, by saying that international development financing via the World Bank or the U.S. [International Finance Corporation] is not going to consider offshore oil and gas infrastructure, it’s essentially saying that these countries can’t do all that.”

One of the recommendations in the report calls for supporting new and expanded gas pipeline infrastructure between Europe and Africa. Doing so would require lifting restrictions on energy development in low- and middle-income countries, but in turn, it would add diversification to the global liquid natural gas supply.

Within one year, BTI estimates European imports of natural gas from sources other than Russia could increase by as much as 80 billion cubic meters over 2021 levels. In addition to fully utilizing existing pipeline imports of non-Russian oil and gas, the report recommends maximizing nuclear generation in Europe to offset some of the demand for Russian energy imports.

Additionally, supporting Europe’s independence from Russian-sourced liquid natural gas would entail integrating the Iberian Peninsula into the broader EU gas pipeline network through the expansion of the canceled Midi-Catalonia gas pipeline project in sections of both France and Spain. This pipeline alone could potentially displace roughly 4% of European imports of Russian gas based on 2021 trade volumes, according to the report.

“There is a fair amount of resistance from the French side — from politicians and regulators and then also environmental activists in some parts of the EU,” Wang told The Well News. “Generally, it wasn’t like it came up against a hard regulatory barrier so much as it was a lot of people raising sort of soft concerns around sort of environmental impact and land use impacts and so forth, which created a lot of political resistance.”

However, this short-term reorganization of the international gas trade is critical to lessening the continent’s reliance on Russian energy. Of the roughly 450 and 550 billion cubic meters of gas consumed in Europe annually, about 400 billion cubic meters is imported with 165 to 200 billion cubic meters sourced via Russian pipelines.

The U.S. is currently the world’s largest liquid natural gas exporter and exports more oil and gas than it produces, Wang said. While some oil and gas production exists in places like Norway and the North Sea and there is untapped oil and gas in places like Germany and Italy, the practice of hydraulic fracturing is banned in many of those European constituencies.

Consequently, the U.S. could step up to meet liquid natural gas demand in Europe as a counter to Russian-sourced energy. Doing so would require U.S. policymakers to prioritize the expansion of its liquid natural gas export terminal capacity.

Although the U.S. previously imported a small fraction of its energy from Russia, that demand was always artificial, Wang said. This artificial demand was due in large part to the “Merchant Marine Act of 1920,” also known as the Jones Act, which regulates maritime commerce in U.S. waters and between U.S. ports.

Provisions of the act require any goods or commodity shipped between U.S. ports be done with U.S.-based vessels operated and owned by U.S.-based individuals or companies, Wang said. Further, a shortage of liquid natural gas tankers that are Jones Act-compliant led the U.S. to import the gas from Russia to prevent shortages in places like Puerto Rico, Hawaii and New England.

“There are many inefficiencies at a national level introduced by the Jones Act,” Wang told The Well News. “For example, it’s more expensive for us to use U.S. ships to dredge canals and ports, which increases the cost of maintenance at U.S. channels and ports. So, therefore, [it also] indirectly makes ocean shipping and waterborne freight more expensive in the U.S.”

Repealing or significantly amending the Jones Act is one of the policy recommendations highlighted by the report. Additionally, addressing the underlying hindrances to efficiently moving liquid natural gas from port to port would provide increased flexibility in liquid natural gas shipments while also aiding other energy-related developments like offshore wind.

These recommendations are meant to be deployed in tandem with improved and expanded U.S. federal clean energy research, development and deployment. Russia’s invasion of Ukraine is not only a reason to transition away from importing oil and gas from the country by itself, it also signals an opportunity for governments to slowly transition away from fossil fuels in general.

Both U.S. and EU governments could help thwart Russia’s fossil fuel energy dominance by investing in low-carbon clean energy-enabling infrastructures, such as electrification, electricity storage and high-voltage transmission lines. This constitutes a step towards meeting climate change mitigation goals while also accelerating towards expanding the economic viability of clean energy.

In addition to altering the Jones Act, the report recommends policymakers look at revising the National Environmental Protection Act and the Endangered Species Act in order to expedite clean infrastructure deployment.

Another facet of the report’s policy recommendations for both the U.S. and EU governments entails sustaining and recommissioning both existing and closed nuclear power plants. A global nuclear renaissance could be achieved through the certifying, licensing and deploying of new light-water, small modular reactors and non-light-water reactor technologies.

Preventing the shutdown of European nuclear reactors could prevent 12 billion cubic meters of increased demand for Russian natural gas, while restarting temporarily offline reactors could reduce demand by a further 4 billion cubic meters. Exporting U.S. nuclear technology while establishing domestic production capacity in both the U.S. and Europe would sufficiently replace Russia as the main supplier of high assay, low enriched uranium fuel.

“It’s interesting because Europe is simultaneously in this crisis, but also simultaneously hesitant for environmental and political reasons to consider really easy and attainable solutions, particularly around nuclear power,” Wang said. “So, one thing I would highlight in our report is that Europe could very easily prevent an increase of around 12 billion cubic meters per year in EU natural gas demand if it stops closing nuclear power plants and continues to operate the plants that are operating today. And then if you could bring some of the plants that have been closed recently… you could avert another 44 billion cubic meters of gas [from Russia].”

Reece can be reached at reece@thewellnews.com.

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