The United States and the European Union have struck a big agreement on liquefied natural gas in an effort to reduce Europe’s reliance on Russian energy.

The agreement calls for the US to supply the EU with additional gas by the end of the year, amounting to roughly 10 per cent of the gas it presently receives from Russia.

In response to Russia’s invasion of Ukraine, the EU has already stated that it will reduce its usage of Russian gas.

Russia presently supplies over 40 per cent of the EU’s gas needs.

The new agreement will see the United States and other countries supply an additional 15 billion cubic metres of gas on top of the 22 billion cubic metres supplied last year.

The new amount will account for approximately 24 per cent of the gas now received from Russia.

The ultimate goal is for the US and foreign partners to supply the EU with around 50 billion cubic metres per year.

To reduce reliance on Russia, more renewable energy will be generated, energy efficiency will be improved, and imports will be increased.

The agreement was revealed on Friday during US President Joe Biden’s three-day visit to Brussels.

Biden and European Commission President Ursula von der Leyen reviewed Russia’s invasion of Ukraine and offered new assistance to Kiev.

“Putin is using Russia’s energy resources to coerce and manipulate its neighbours,” Mr Biden told reporters in Brussels. “He’s used the profits to drive his war machine.”

He claimed that the long-term benefits of the agreement will offset the short-term suffering caused by reduced Russian gas supplies.

“I know that eliminating Russian gas will have costs for Europe, but it’s not only the right thing to do from a moral standpoint, it’s going to put us on a much stronger strategic footing.”

“We want, as Europeans, to diversify away from Russia towards suppliers that we trust that are friends and that are reliable,” President von der Leyen said.

She emphasised the objective of 50 billion cubic metres per year “is already replacing one-third of the Russian gas going to Europe today. So we are well on our path to diversifying away from Russian gas.”

Russia supplies 40 per cent of the EU’s gas. It must divert its energies elsewhere if it is to wean itself off of that dependency.

Gas is currently piped from Norway, but those pipelines are already at capacity. The North Sea provides minimal benefit to the EU.

New supplies will have to come from further afield, in the form of LNG (cooled and liquified gas).

However, there is already considerable rivalry for LNG supplies from nations such as Algeria and Qatar, which has driven up prices.

The 50 billion cubic metres of gas per year from the United States, which would be more than twice the existing amount, would undoubtedly be welcomed.

However, if Russian supplies were removed, it would still fall short of filling the void.

There are also concerns about how much gas the United States can supply, how rapidly it can raise exports to the EU, and how much those shipments will cost.

For many years, the EU has enjoyed cheap gas, but it appears to have realised that age is coming to an end.

Russia’s conflict with Ukraine has pushed energy prices to all-time highs.

Energy prices had already begun to rise before to the invasion as economies began to recover from the Covid crisis.

The invasion of Ukraine spurred the EU to commit to cut Russian gas consumption by two-thirds this year by increasing imports from other nations and increasing renewable energy.

According to the White House, boosting the usage of smart thermostats and heat pumps can result in immediate energy savings.

According to the EU, energy savings in homes can replace 15.5 billion cubic metres this year, while increased wind and solar deployment can replace 20 billion cubic metres.

The EU’s goal is to conserve 170 billion cubic metres of water by 2030 through energy efficiency and renewable energy.

(Adapted from Aljazeera.com)

Categories: Economy & Finance, Geopolitics, Regulations & Legal, Strategy, Sustainability