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Jumpstarting LNG in Europe

Liquified natural gas(LNG) storage tank and workers are reflected in a puddle at PetroChina’s receiving terminal at Rudong port in Nantong
From America with love. Source: Reuters

Today the United States, Germany and the European Union have the opportunity to open a new chapter in our longstanding relationship, one that can benefit the citizens of all nations and strengthen the security of the trans-Atlantic alliance.

That opportunity is in energy, jointly identifying competitive avenues to use America’s abundant natural gas to increase the EU’s energy diversity and thereby strengthen its energy security.

Governments throughout Europe have been seeking reliable – and diversified – sources of energy, and have worked together to advance a more energy secure Europe. That’s because having a diversified portfolio of energy means that no one country or corporation can disproportionately influence millions of Europeans; no single source or supplier can unduly sway the choices of free peoples.

In Germany, Chancellor Merkel has said she welcomes the idea of more US companies supplying Liquefied Natural Gas (LNG), a message that President Juncker reinforced for all of Europe during his visit to Washington, D.C., in July. And the US is capable of supplying LNG, for the benefit of Germans and all Europeans.

LNG can serve a critical role in supporting Europe’s longstanding energy diversification efforts, thereby strengthening its energy security, and reducing the overreliance on a single supplier of natural gas. LNG is also an ideal companion to renewables, a central part of Germany’s energy strategy. The sun and wind are attractive emissions-free sources, but they are intermittent, making them less reliable absent a technological breakthrough in battery storage to maintain a reliable supply when the sun doesn’t shine and the wind doesn’t blow. In contrast, LNG is a portable, flexible source of power with relatively few emissions and can help Germany expand renewables while maintaining reliability.

What’s more, LNG can now power ships, trucks, and trains. It is far cleaner than the heavy fuel oil used in many ships, so operators are beginning to convert to LNG to meet higher emissions standards. On rails and roads, LNG can reduce particulate emissions by two-thirds or more compared to diesel engines. While upfront costs are higher, many US trucking companies have recouped that investment in less than three years due to fuel savings – all while curbing pollution.

New innovations and technologies have made the US a fast-growing exporter of LNG. By turning US natural gas into LNG, which results in shrinking volumes by a factor of almost 1,000, industry and consumers can enjoy affordable access to that energy source, without the cost and impact of building new pipelines. As a result, US supplies have expanded quickly.

Of equal importance, the engineering prowess of the US oil and gas sector is leading to new efficiencies in the production of natural gas and in the mechanics behind transforming it into LNG. As a result, costs have plunged, and are expected to fall even further. Though energy security at times bears a cost, America remains committed to transparent, fair, and open markets. In full embrace of the western economic system, we are ready to support Europe’s energy need and out-compete the regions more opaque suppliers.

While Germany does not currently have an LNG terminal (unlike a few of its neighbors), there are several projects under consideration that would allow Germans access to this energy source. In the end, the market must determine how energy is sourced and used. The public sector can act as a catalyst for how LNG is developed and distributed, which is why we support the EU’s Projects of Common Interest that enhance diversification, such as LNG terminals and connecting infrastructure.

The global energy landscape has changed, and LNG is now a key component. Over the past decade, the US has grown its economy while reducing CO2 emissions and reliance on energy imports, thanks in large part to natural gas. Through LNG, Europe can share in America’s abundance and become more energy secure.

To contact the authors: columnist@handelsblatt.com

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