Natural gas is one of Russia’s biggest exports, and Europe is Russia’s biggest gas customer. Gas exports to Europe alone are worth tens of billions of Euro to Russia each year. Following Russia’s invasion of Ukraine, we must stop buying this gas. If not, we will be guilty of helping to fund Russia’s invasion of Ukraine, and possibly their next invasion in Eastern Europe too.
Stopping gas imports from Russia will not be easy though. Russia currently provides 40% of Europe’s gas, and it will be hard to find supplies to fill the gap. Indeed, some high-profile politicians (including Italian prime minister Mario Draghi) are opposed to sanctions on Russian gas. On the other hand, European Commission president Ursula von der Leyen has left the door open to gas sanctions: “all options are on the table”.
Russia has options on the table too, including stopping gas exports as a way to put pressure on Europe. Indeed, Gazprom, Russia’s state-owned gas utility, has already slowed exports, with gas prices in Europe rocketing as a result. Sanctions or no sanctions, Europe needs to prepare for much lower gas supplies from Russia.
This brings us to Ireland’s gas supply situation. We currently have only one gas field in production: Corrib. Today it supplies just under half of Ireland’s natural gas needs. But Corrib is getting old. Indeed, by 2025 it will provide less than 20% of our gas needs. The remainder must be imported via undersea pipelines from Britain. Technically, it’s North Sea gas, not Russian. But for practical purposes, Russian and North Sea gas are traded interchangeably across Western Europe. So a European gas supply crunch would hit Ireland just as hard as other countries.
What can Ireland do to prepare for a gas crunch? We have four main options: Produce more natural gas; build infrastructure to import liquified natural gas from other continents; produce more biomethane; or reduce demand. Of course, multiple strategies could be combined for maximum effect. So let’s consider each option in turn.
Ireland has natural gas reserves that could be tapped. For example, Providence Resources claim their Barryroe oil field could produce natural gas if developed. Moreover, areas adjacent to the Corrib gas field have strong potential for gas production. However, there’s not much the Irish government can do to increase gas drilling. This is because they recently banned new exploration licences, and existing licences are held by private companies. Such companies will decide to drill or not to drill on commercial grounds. Reversing the ban on new exploration licences would be politically difficult, as would providing subsidies to a fossil fuel company for drilling. Overall, new gas drilling is possible, but cannot be guaranteed.
Instead of drilling for natural gas in Ireland, we could import gas in liquified form (LNG) from the United States, Qatar, or Australia. Indeed, American energy company New Fortress Energy wants to build a €650 million LNG import terminal in Shannon. This would give Ireland access to diverse gas supplies on the global market. But the global LNG market is in short supply already. Worse still, such a solution will not be ready in the short term, while in the longer term Ireland plans to move away from large-scale natural gas usage for environmental reasons. Minister for Environment Eamon Ryan has made his position on the matter very clear, stating that a new LNG import terminal should not be allowed “under any circumstance”. Overall, LNG doesn’t make much sense for Ireland – if we’re going the fossil gas route, we might as well resume gas exploration licensing and produce the gas ourselves.
Biomethane is a totally different option that could go some way towards filling the gap in our gas supply. Biomethane is a direct substitute for natural gas that can be made from dung, sewage or food waste, and costs around €60 per MWh to manufacture. This compares well with today’s natural gas price of €115 per MWh, but not so well with the ~€20 per MWh typically seen before 2021. However, natural gas is now subject to an additional carbon price of €17 per MWh. So it would take very little additional incentive to make biomethane commercially attractive in Ireland.
If we go down the biomethane route, we must avoid the mistakes of other countries that have done the same. Germany provided lucrative subsidies for electricity generated from biogas (closely related to biomethane) during the 2000s. This resulted in the diversion of farmland away from food production specifically to grow crops to turn into biogas. The subsidies, being too high, were also very expensive for electricity consumers.
To avoid repeating Germany’s mistake, Ireland should offer to buy biomethane at a fixed price in the region of €60 per MWh. €60 per MWh would not be enough to fund the growing of crops specifically for biomethane production. However, it would be enough to incentivise biomethane production from dung, food waste, and sewage (espeically if paied with cheap credit). And Ireland’s booming cattle industry means we have a lot of dung to work with: Enough to cover around 40% of our current gas use if all of it could be collected. Of course, not all the dung is recoverable, but the potential is still significant. Importantly, the cost to consumers or the state would be modest. And in return, Ireland would get more stable gas prices, lower CO2 emissions, greater energy security, and a boost to our rural economy.
Aside from developing new gas sources, reducing consumption is a sure way to close the gap between gas supply and gas usage. There are two main ways that gas is used in Ireland: For electricity generation and for heating. Both uses of gas could be reduced substantially.
Around half of Ireland’s electricity is generated from gas, so there’s a huge opportunity there to reduce consumption. Over the last 20 years, renewables have come onto the scene in Ireland, with wind now providing around 40% of our electricity. So far, this has been at the expense of coal and turf power. But the expansion of wind and solar will eat into natural gas’s share next. In addition, Ireland’s first grid-scale batteries are now rolling out; over time these will reduce our dependence on gas-powered peaker plants. So with the transition from gas-generated electricity already underway, let’s consider some ways it can be accelerated in response to the current crisis.
First, we could relax regulations on the Irish electricity grid which favour generation from natural gas. For example, variable renewable power (SNSP) is currently limited to 75% of generation. The remaining 25% must come from (mostly gas) power plants. Eirgrid, the Irish grid operator, has been gradually increasing this limit year by year as they adapt their systems to handle ever higher renewable capacity. Increasing the limits too quickly could lead to grid instability. But given the current crisis, it would not be unreasonable to push the SNSP limit slightly further than we might otherwise. Such a move could provide immediate gas savings following a government instruction to Eirgrid.
In the medium term, Eirgrid is tendering for grid-scale batteries, which will eventually allow SNSP up to 100% without compromising grid stability. This process could be accelerated with emergency procurement, planning permission waivers, and grid connections. An upfront investment of €500 million would go a very long way here, and the resulting infrastructure would serve us well for many years into the future. Grid-scale batteries can be deployed extremely quickly (in a few months) if the will is there to do so.
Removing bureaucratic barriers to renewable energy is a quick and cost-neutral way to reduce gas dependency. In particular, rooftop solar can be rolled out very quickly, putting yet another dent in gas consumption within months. Currently though, solar deployment is slowed by outdated planning permission rules. The government are supposedly waiting for a report on how glint and glare from solar panels could affect aircraft, and what regulations might be required to avoid any risk. In the meantime, the government should bring in immediate planning permission exemptions for rooftop solar for all locations not within 10 km of an airport or airfield.
Ireland should also be rolling out the option of smart electricity tariffs. These tariffs allow consumers to access different electricity prices depending on the current wholesale electricity price. As prices tend to be lowest when there is surplus wind power available, smart tariffs would encourage a shift from peak-rate gas-fired electricity to off-peak surplus wind electricity.
Moreover, smart tariffs could make it viable to shift central heating from gas to electric during periods of strong wind and low electricity prices. During such periods, the electricity price often drops to 0 or lower. The potential impact of smart tariffs will only continue to increase as more and more wind and solar get rolled out across Ireland.
There may be opportunities to accellearate the rollout of utility-scale wind and solar too. A renewable energy acution will be running duing the first half of this 2022, and if there are sufficient bids then the contracted amounts of energy could be increased.
There are fewer quick ways to reduce gas demand for space heating. Home energy upgrades are one effective approach, and with the recently announced state subsidies they will have a large impact on gas consumption in the longer term. Gas boilers are due to be banned from new-build houses from 2025. With heatpump technology now mature, the phase-out could be brought forward to help taper down gas demand.
Finally, it’s essential that consumers get the pricing signal that encourages them to reduce energy consumption. This means that the government must refrain from reducing taxes on or providing subsidies for gas and electricity. There are plently of taxes that could be cut without cutting carbon taxes, and there are plenty of ways to get more money into peoples’ pockets without subsidising energy.
Europe must stop buying Russian gas and Ireland must pitch in by reducing our gas imports. Maybe in a few years we’ll have some output from a new Irish gas field. But in the meantime, we have a gas supply crisis that requires an immediate response from the Irish government. An assortment of emergency measures could reduce our gas deficit significantly. With Europe’s gas stores already running low, such measures must come as soon as possible.