Greece focuses on ecology, but relies on gas from the USA for its neighbors

ALEXANDROPOULIS, Greece — When a crushing financial crisis forced Greece to rethink its economy a decade ago, it turned to green energy. Since then, Greece’s energy transition has proceeded so quickly that “it almost seems like a utopia,” said one Greek environmentalist.

The mountain range and arid islands are covered with wind turbines and solar panels, which now provide almost two-thirds of the country’s electricity.

But now Greece is deliberately turning back to fossil fuels just to avoid burning them at home. This time, we are betting that it may become one of the main suppliers of natural gas in Europe, most of which will be supplied from the United States.

Both Greek and EU subsidies have financed new pipelines crossing the country and connecting to a brand new import terminal that will transport gas to a wide swath of Central and Eastern Europe for decades to come.

Investments in Greece are part of a flood of investments in natural gas around the world, which has serious consequences for climate change. According to Global Energy Monitor, almost $1.5 trillion will be spent on building pipelines and terminals in the coming years. Twenty percent of this spending is in Europe.

The world’s shift toward gas highlights the kind of hedge that is increasingly defining global climate negotiations: While nations have agreed on the need to transition away from fossil fuels as quickly as possible, almost all major economic powers are promoting gas as a “transition fuel.” “

Its supporters argue that gas burns cleaner than coal and oil and is more reliable than renewable energy sources such as wind or solar power. Critics counter that renewables are becoming more affordable and gas is anything but reliable, something Europe should have learned by spending trillions of dollars extra on them during the energy crisis that followed Russia’s invasion of Ukraine, draining government coffers and causing a sharp increase in electricity prices.

Natural gas poses a climate threat for two reasons. Burning it produces carbon dioxide, the main greenhouse gas causing global warming. Large but unknown amounts of it also enter the atmosphere in unburned form, where it causes very strong but short-lived planetary warming effects. These concerns led the Biden administration to pause permitting for new export terminals this year while their climate impacts are assessed.

However, the United States is still by far the world’s leading gas exporter. These concerns did not stop the administration from pushing for Greece to become the new center for U.S. gas exports in Europe.

Under this agreement, Greece receives billions of dollars for heavily subsidized gas infrastructure, but the greater benefit is political, not financial. Greece is central to European energy security and plays a key role in the Western strategy of isolating Russia.

American gas companies will make the real money. Since Russia invaded Ukraine, the United States has more than doubled its exports of liquefied natural gas, or LNG, to Europe, bringing the trade to nearly $100 billion.

In Greece, the latest centerpiece is a floating gas terminal off the country’s northern coast. The facility was once a huge tanker, but today it is stationary, held in place not only by anchors but also by a connection to an undersea pipeline whose branches stretch across Europe.

In April, the first LNG shipment arrived from the Gulf Coast. The terminal’s operators expect that more than half of its supplies will come from the United States.

The 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 at a private event on Mediterranean energy supplies. Pyatt is currently the State Department’s top energy official.

Pyatt told participants that the United States is the “unrivaled global champion” in gas exports and assured that U.S. companies are “firmly committed to their involvement in the region.” He also said he “looks forward” to U.S. fossil fuel companies working with Greece and nearby Cyprus to exploit their own offshore gas reserves.

Pyatt, who knew Greece and Ukraine well, helped give Greece a new status as an import center. The main factor was urgency. For obvious reasons, Ukraine will allow the treaty that allowed Russia to pump gas through its territory to expire this year.

He and other U.S. officials lobbied European nations to use the new Greek terminal and pipelines, promoting American 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 demand,” said Kostis Sifnaios, who heads Gastrade, the company operating the new floating terminal. “If I think about the money that the United States pays into Ukraine, Bulgaria, Moldova, etc., they’re going to have to pay it back somehow, right? That’s why so much American LNG is flowing into this region.”

Sifnaios recalled that Pyatt and other officials “actively lobbied countries like Serbia, Bulgaria and North Macedonia and encouraged them to make reservations” for gas from the new terminal. Even Ukraine is a potential customer.

However, the real market is in the Balkans and Central Europe. Balkan countries such as Bulgaria and Serbia lag behind the rest of the continent in the transition to renewable energy.

Energy analysts and environmentalists have expressed concerns that making gas easier for them could discourage the development of renewable energy sources and make poorer countries among them more vulnerable to price shocks that have been seen on the gas market in recent years.

“For the last 20 years, Europe has basically bypassed the Balkans when it comes to investment,” said Antonio Tricarico, a regional expert at ReCommon, an organization that studies fossil fuel interests in Europe. “While it may seem like they are getting attention now, in reality they are being overlooked again, this time by relying on gas instead of relying on renewable energy.”

On a recent day, in a remote forest near Greece’s border with Albania, workers set off a series of violent explosions that spread along a wide path through the forest. The dynamite was intended to help dig a trench for a new pipeline. Just a few dozen meters away, another hole cuts through the forest, where a new, separate pipeline runs through Greece, leading from gas fields in the Caspian Sea to Italy. Another gas pipeline will soon be built, connecting this network with neighboring North Macedonia.

The Institute for Energy Economics and Financial Analysis and the EU’s internal energy regulatory agency estimate that the demand for LNG in Europe will reach its peak this year, largely because although Europe’s largest economies are investing in gas, they are also rapidly building renewable energy sources. By 2030, Europe is expected to have almost three times the LNG import capacity than it needs.

If these forecasts prove correct, Europe, in the name of geopolitics, is now allocating public funds to gas projects that it knows will not bring profits.

To some extent this is already true. The EU’s decision to allocate $180 million for the construction of a Greek floating gas terminal stated that “without the aid measure, the project would not be financially viable.”

“Without public subsidies, none of this would likely have happened,” Tricarico said.

Despite a shaky economic proposal for gas in Europe and despite the protests of climate activists, Greece has proposed building at least one more floating gas terminal, right next to the first one.

“A second terminal would be simply outrageous,” said Theodota Nantsou, head of policy at the World Wildlife Fund in Greece. WWF has filed an application to Greek courts to prevent more public funds from being allocated to gas infrastructure. “I just don’t understand why we continue to subsidize fossil fuels with taxpayers’ money,” she said, noting that Greece ran its entire electricity grid on renewable energy sources last year, if only for a few hours.

Greece’s gas demand has fallen so much that its only pre-existing import terminal, which is on the small island of Revithoussa just outside Athens, was largely empty on a recent day. However, this is partly because it only serves the Greek domestic market and not cross-border shipments, and Greek energy needs are increasingly met by wind and solar power.

At Revithoussa, summer heat caused some of the liquefied gas stored in the facility’s huge tanks to turn back into gaseous form. Maintaining liquefied natural gas requires a lot of energy, so the terminal operators decided to burn off the excess gas through flaring. It’s a process that experts say is wasteful and polluting and should be avoided whenever possible.

Meanwhile, at the new floating terminal in the Aegean Sea, Sifnaios said bookings are strong, largely due 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 still come from Russia. Countries such as Hungary and Slovakia, which find themselves on the verge of a geopolitical divide between the West and Russia, say they will continue to buy 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 refuse them,” Sifnaios said.

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This article originally appeared in The New York Times.