Oireachtas Joint and Select Committees

Thursday, 2 June 2022

Joint Oireachtas Committee on Climate Action

Engagement with the EU Commissioner for Energy

Ms Kadri Simson:

The Deputy's three questions map to the landscape correctly. We have to deliver on all fronts, but we are relatively well prepared. In Europe, we faced our first gas disruption in 2009. Member states were not connected to one another via gas pipelines and there were few LNG terminals. Despite the fact that 40% of the pipeline gas that Europe consumed last year came from Russia, all member states that were customers of Russia's Gazprom had alternatives via reverse flow or because they had access to some LNG terminals. With the help of ENTSOG, which is a distribution system operator, DSO, organisation, we have prepared a map of missing interconnections or links. There are very few.

Our main challenge is that, if we have to replace 155 billion cu. m. of Russian natural gas, no other producer can provide us that volume. LNG terminals alone will not do the trick because we would have to find producers that were ready to scale up their production in a relatively short time. The US has been a great help. Since the beginning of this year, Russia has cut off several European countries, but they have not seen major disruptions because we have received record volumes of LNG to European LNG terminals each month. However, this is only possible while the disruptions are partial. Otherwise, we will have to replace gas with alternatives. Such alternatives could be clean gas. Our governments are announcing that they are incentivising farmers to produce biomethane and we already have more green hydrogen projects in the pipeline than we expected a year ago because the people involved can see the market case for such projects, given that natural gas is more expensive. Many companies that are consuming gas are considering alternatives and are willing to take up hydrogen instead of natural gas.

This brings me to the Deputy's first question on whether we are giving too much power to gas DSOs. With our gas decarbonisation and hydrogen package, we have shown that that is not our intent. We will create a dedicated alternative network for hydrogen that is not controlled by gas pipeline operators.

Our intention is to create a well-functioning market. This is a very nascent market right now but it will be built up in a transparent way from the beginning. Unbundling is one of the principles to promote in that regard.

Energy infrastructure is a national decision. If we build an energy terminal or rent a floating LNG vessel, we are doing our best to attract more volumes for this heating season. In the longer run, however, if our member states achieve everything proposed under Fit for 55, then by 2030 Europe will consume 30% less natural gas than we consumed in 2020. This is an extraordinary time and there is major pressure before this heating season but, in the long run, we will decarbonise and replace a significant share of our gas consumption with clean gases or we will start using gas in power generation for fewer hours. That means our consumption will come down because there will be more and more hours when all our consumption will be covered by renewables.

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