When a devastating financial crisis forced Greece to rethink its economy a decade ago, it bet big on green energy. Since then, Greece’s energy transition has been so rapid that it “almost seems utopian,” said one Greek environmentalist.
Mountain ridges and arid islands are covered with wind turbines and solar panels that today provide almost two-thirds of the country’s electricity.
But now Greece is deliberately turning to fossil fuels, just so as not to burn them at home. This time it is betting that it can become one of Europe’s leading suppliers of natural gas, much of which is shipped from the United States.
Both Greek and European Union subsidies have funded new gas pipelines running through the country and connecting to a new import terminal that will ship gas to a wide swath of central and eastern Europe for decades to come.
The investments in Greece are part of a flood of natural gas investments around the world, with important consequences for climate change. In the coming years, almost one and a half trillion dollars will be allocated to the construction of pipelines and terminals, according to Global Energy Monitor. Twenty percent of that spending is made in Europe.
The global turn to gas speaks to a kind of hedge that increasingly defines global climate negotiations: while nations have agreed on the need to abandon fossil fuels as quickly as possible, nearly every major economic power is promoting gas. as a “transition fuel”. “
Proponents argue that gas burns cleaner than coal and oil, and is more reliable than renewable energy such as wind or solar. Critics respond that renewables are becoming more affordable and that gas is anything but reliable, as Europe should have learned by collectively spending trillions of extra dollars on it during the energy crisis that followed Russia’s invasion of Ukraine, depleting government coffers and causing electricity prices to skyrocket.
Natural gas is a climate threat in two ways. Burning it produces carbon dioxide, the main greenhouse gas that warms the world. Large quantities, although unknown, also leak into the atmosphere without burning, where they have very powerful but short-term effects on global warming. These concerns led the Biden administration this year to suspend issuing permits for new export terminals while it assesses their effects on the climate.
In this deal, Greece gets billions of dollars in heavily subsidized gas infrastructure, but the biggest reward is political, not financial. Greece positions itself as central to European energy security and plays a key role in the West’s strategy to isolate Russia.
The real money will be made by American gas companies. Since Russia’s invasion of Ukraine, the United States has more than doubled its exports of liquefied natural gas, or LNG, to Europe, reaching a trade volume of nearly $100 billion.
In Greece, the newest centerpiece is a floating gas terminal off the country’s northern coast. The facility was once a massive tanker, but today it is stationary, supported not only by anchors but also by its connection to an undersea oil pipeline with branches stretching across Europe.
In April, its first shipment of LNG arrived from the Gulf Coast. Terminal operators expect more than half of their supply to come from the United States.
That terminal is “near and dear to my heart,” said Geoffrey R. Pyatt, former U.S. ambassador to Greece and Ukraine, speaking this month in New York City at a private event on energy supplies in the Mediterranean. Pyatt is now the State Department’s top energy official.
Pyatt told attendees that the United States is the “unrivaled global champion” of gas exports and assured them that American companies were “strongly committed to participating in the region.” He also said he was “eager to see” American fossil fuel companies partner with Greece and nearby Cyprus to exploit their own offshore gas fields.
Pyatt, who was intimately familiar with both Greece and Ukraine, helped engineer Greece’s new status as an import center. An important factor was urgency. Ukraine, for obvious reasons, will let a treaty that had allowed Russia to pump gas through its territory expire this year.
He and other US officials have pressured European nations to use Greece’s new terminal and pipelines, promoting US LNG as a natural replacement for Russian gas (which, unlike Russian oil, has not been banned in the EU ).
“It’s sad to say, but the war gave us the demand,” said Kostis Sifnaios, who runs Gastrade, the company that operates the new floating terminal. “If I think about the money the United States puts into Ukraine, Bulgaria, Moldova, etc., they’re going to have to get it back somehow, right? “That’s why you see so much American LNG flowing into this region.”
Sifnaios recalled that Pyatt and other officials “actively pressured countries such as Serbia, Bulgaria and North Macedonia and encouraged them to make reserves” of gas from the new terminal. Even Ukraine is a potential customer.
But the real market is in the Balkans and Central Europe. Balkan countries like Bulgaria and Serbia are lagging behind the rest of the continent in transitioning to renewable energy.
Energy analysts and environmentalists have expressed concern that easing their access to gas could discourage the construction of renewable energy and leave the poorest countries among them more susceptible to the price shocks that the gas market has experienced in recent years. last years.
“Over the last 20 years, Europe essentially bypassed the Balkans for investments,” said Antonio Tricarico, a regional expert at the Institute for Energy Economics and Financial Analysis. “While it may seem like they are getting attention now, in reality they are simply being ignored again, this time by getting hooked on gas instead of being helped with renewable energy.”
On a recent day, in a remote forest near Greece’s border with Albania, workers set off a series of rapid explosions that traveled along a wide path cut through the forest. The dynamite was intended to help dig a trench for a new oil pipeline. Just a few dozen meters away, another cut cuts through the forest, where a new oil pipeline crosses Greece on its way from the gas fields in the Caspian Sea to Italy. Another pipeline will soon be built, connecting this network with neighboring North Macedonia.
Mr. Tricarico’s organization, as well as the EU’s domestic energy regulation agency, project that LNG demand in Europe will peak this year, largely because although Europe’s largest economies are investing in gas, They are simultaneously developing renewable energy at a rapid pace. By 2030, Europe is expected to have almost three times more LNG import capacity than it will need.
If those forecasts turn out to be correct, then Europe is funneling public funds into gas projects that it knows will not make money, in the name of geopolitics.
To some extent, that is already true. On the EU’s decision to grant $180 million for the construction of the Greek floating gas terminal, he said that “the project would not be financially profitable without the aid measure.”
“Without public subsidies, all this could hardly be carried out,” Tricarico said.
Despite the uncertain economic proposition for gas in Europe and against protests by climate activists, Greece has proposed at least one more floating gas terminal, right next to the first.
“A second terminal would be simply outrageous,” said Theodota Nantsou, policy director for the World Wildlife Fund in Greece. WWF has filed an injunction in Greek courts to prevent further public funding from being allocated to gas infrastructure. “I just don’t see why we continue to subsidize fossil fuels with taxpayer money,” she said, noting that last year Greece, if only for a few hours, ran its entire electrical grid on renewable energy.
Greece’s own gas demand has declined so much that its only previously existing import terminal, which occupies a small island called Revithoussa outside Athens, remained virtually idle on a recent day. But that’s partly because it serves only Greece’s domestic market, not cross-border shipments, and Greek energy needs are increasingly met by wind and solar power.
At Revithoussa, the summer heat was causing some of the liquefied gas stored in the facility’s huge tanks to convert back into gaseous form. It takes a lot of energy to maintain liquefied natural gas, so terminal operators had opted to burn off excess gas by flaring, a process that experts say is wasteful and polluting and should be avoided as much as possible. of the possible.
Meanwhile, at the new floating terminal across the Aegean Sea, Sifnaios said bookings were strong, thanks in large part to diplomatic efforts.
Despite the desire of the United States and Europe to use Greece to financially isolate Russia, at least some of the gas reaching Europe through Greece will remain Russian. Countries like Hungary and Slovakia, which straddle the geopolitical divide between the West and Russia, say they will continue buying Russian gas even after the pipeline route through Ukraine is closed.
“And if they order it from Russia, it’s not like we’re going to deny it,” Sifnaios said.