No-one should be “fooled into thinking” that shipments of liquefied natural gas (LNG) can be relied upon to solve Europe’s looming energy crunch, a committee of peers has been warned.
During the latest session of the House of Lords Economic Affairs Committee’s inquiry into energy and investment, which took place on Tuesday afternoon (1 March), witnesses were quizzed on the reliability and affordability of supplies in the light of the ongoing Russian invasion of Ukraine.
Catharina Hillenbrand Von Der Neyen, head of research at thinktank Carbon Tracker, said the proposition “holds more than ever” that an accelerated transition to net zero is the best way to achieve energy security.
And she cast doubt on LNG imports as an alternative to European reliance on Russian gas, continued supplies of which are at risk as western countries seek to tighten sanctions on the country.
Von Der Neyen said: “We should not be fooled into thinking that LNG is going to solve the issue because LNG is a very, very fungible commodity.
“As particularly gas becomes a more global commodity, it becomes more prone to arbitrage and tankers being diverted very quickly. You have long-term contracts that dominate the market and when there is a supply crunch, the entire world competes for that remaining five to ten per cent of the market.”
She was backed up by Nina Skorupska, chief executive of the REA (Association for Renewable Energy and Clean Technology), who said the UK should be “doubling down” on efforts to boost renewable energy.
Christophe McGlade, head of the energy supply unit at the International Energy Agency (IEA) told the committee that the roll out of renewables can be accelerated because it is possible to build them out “very quickly”.
He also said that extending the life of existing assets, like aging bioenergy and nuclear plants would be an “incredibly important way” to avoid fossil fuel use.
McGlade also warned that dependency on certain suppliers of fossil fuels could increase if no new gas and oil fields are approved for development as the IEA has proposed in its roadmap for the transition to net zero by 2050.
He said: “In a scenario where we have no new fields, supply becomes concentrated in today’s largest producers.”