Germany’s global buying spree for liquefied natural gas could double consumer energy prices and cost it hundreds of billions of euros, particularly with renewably-produced hydrogen on track to out-compete LNG on price in as little as a decade, according to two recent analyses.
On Thursday, the E3G climate think tank reported that the country could pay an extra €200 billion this decade if it emphasizes LNG imports in favour of sustainable alternatives like energy efficiency, Bloomberg reports. And any benefits to that strategy will be short-lived, with green hydrogen poised to undercut global LNG markets in the next 10 years, according to a senior executive with French utility Engie SA, Europe’s biggest fossil gas infrastructure operator.
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The issue is sure to spill over into the corridor discussion at the COP 27 climate summit, beginning in two weeks in Sharm el-Sheikh, Egypt, with one Sudanese-British billionaire accusing rich countries of hypocrisy for trying to block African gas exports while climate advocates insist their continent won’t be “Europe’s gas station”.
E3G’s analysis concluded that investments in building energy retrofits alone would save more gas than Germany’s plans for new LNG terminals would deliver, Bloomberg writes. In its rush to end its dependency on Russian gas, the report warns that Germany could yoke the EU to fossil fuels for longer than necessary.
“Germany risks locking itself into extremely expensive gas deals that will hamper its energy transition and burden families, businesses, and the government,” said E3G policy advisor Mathias Koch. “By realizing the huge potential to save gas in its buildings stock, these high costs can be avoided.”
Those added costs will fall into even sharper relief as the cost of renewably-generated hydrogen falls—a process that has been accelerated by the global rush to accelerate decarbonization, said Thomas Baudlot, Engie’s CEO of energy solutions for Asia-Pacific.
“Green hydrogen today is not economically competitive against alternative energy sources, which will not be the case in 10 years’ time,” he told Bloomberg last week, adding that market demand for clean alternatives has been surging.
“We used to call our clients,” he said. “Nowadays the clients call us. And they want to go faster and bigger.”
Asia has traditionally been seen as a future growth market for LNG, and the market on which British Columbia’s NDP government has pinned its over-hyped hopes for a massive gas extraction and export industry. But “the global energy crisis is accelerating demand in Asia for renewable energy to replace costly fossil fuels.” Bloomberg says. “Part of Engie’s Asia expansion will include marketing green hydrogen to customers,” with a major new investment meant to position Australia as a regional production hub beginning in 2024.
With liquid hydrogen currently three times more expensive than LNG, Baudlot is advocating a kind of “all of the above” strategy until the prices of the competing technologies sort out. “It’s important to invest into all mediums,” he told Bloomberg .“And once those are more advanced, natural selection will happen.”
So far, “while the clean technology is still in early stages, 35 countries have a hydrogen plan and 17 are preparing one, helping reduce the cost of the electrolyzers needed to produce the fuel,” the news agency writes, citing BloombergNEF data. Meanwhile, early-stage green hydrogen projects are looking to convert their product to ammonia, a carrier that is less complicated and expensive to ship.
