Germany announces new LNG facility to move away from Russian energy

The German government has taken a further step towards reducing its dependence on Russian energy, reaching an agreement last week to acquire a fifth liquefied natural gas import facility. The new facility, a floating terminal with a five-year lease, will be the second in Wilhelmshaven, a port in northern Germany that is becoming a key energy hub.

The terminal will have the capacity to import approximately 6% of Germany’s gas consumption. By supporting these facilities, the government hopes to provide Germany, Europe’s largest economy, with substantial protection against any further cuts in Russian supplies.

Thursday’s deal is also a potential step forward for green power. The group of investors and companies behind the new LNG terminal aims to deliver green energy in the form of hydrogen to Germany and other countries on a scale that could make a difference in the fight against climate change, and the LNG agreement seems to give the group’s plans the imprimatur of the German government.

Robert Habeck, the economy and climate minister, announced the arrangement at a press conference in Berlin on Thursday with representatives of participating companies.

Russia’s cut in natural gas supplies in apparent retaliation for sanctions imposed over its war in Ukraine is forcing officials in Germany and elsewhere in Europe to go against their political instincts to bolster natural gas supplies – a fossil fuel – by building terminals and scouring the world for supplies.

Former Green Party leader Habeck is pushing the pill for his environmentally conscious constituents by saying much of the infrastructure being built to supply LNG could be reused to import hydrogen, which Europe supports as an important clean fuel of the future.

“By importing liquefied natural gas, we are making ourselves less dependent on Russian pipeline imports,” Habeck said in a press release issued by the companies. “At the same time, we are accelerating the import of green hydrogen in parallel.”

Even if this new project does not come online until after the winter, Habeck seemed optimistic that the Germans would not face crucial gas shortages in the coming months. As long as energy-saving rules are followed, he said, these measures will “hopefully and probably allow us to get through the winter without major disruptions”.

The group managing the new Wilhelmshaven terminal would begin its operations by importing conventional LNG at the end of 2023; it would then gradually switch to a liquefied gas obtained by mixing hydrogen extracted using solar or wind energy with carbon dioxide captured by industry.

“We are going to build the largest hydrogen and green energy terminal in the world,” said Marco Alverà, CEO of Tree Energy Solutions, a private company that is part of the group responsible for managing the new LNG facility. The company has already acquired a 370-acre strip of land in Wilhelmshaven and plans to eventually have six berths for ships on a jetty in the harbour. The French energy supplier Engie and the German electrician E.ON are also participating.

Alverà argues that Europe alone cannot hope to produce all the renewable energy it needs to phase out fossil fuels from domestic sources. His plan, instead, is to bring hydrogen generated from massive wind or solar farms built in countries like Egypt, Saudi Arabia, Australia or the United States to what it says to be very low cost.

Alverà also plans to reduce expenses by using existing infrastructure. For example, a large global fleet of LNG carriers can transport its fuel, he said.

The main owners of Tree Energy Solutions are Paul and Marcel van Poecke, brothers from the Netherlands with a long experience in investing in conventional energy installations, including oil refineries. The company recently hired Alverà, who was CEO of Snam, the Italian gas transportation company. He is a lifelong hydrogen fan and has written two books on the fuel’s potential benefits.

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