Italy, Spain, Portugal: who will be the European gas hub

Italy, Spain, Portugal: who will be the European gas hub

At the same time that Prime Minister Meloni was in Algeria to claim Italy’s role as a “European gas hub”, in Paris the leaders of France and Germany celebrated themselves as the “locomotives” of the Old Continent. Among the agreements announced by Macron and Scholz during the summit was also that relating to the H2Med gas pipeline which will connect Portugal, Spain, France and Germany, supplying them with green hydrogen within this decade (with a transport capacity of two million tons when fully operational). Meanwhile, Germany has been working for months to be the natural gas hub: it has already installed three regasification plants in its ports on the North Sea and another 11 are under construction. The question then arises whether European energy policies (the short-term ones, which necessarily still rely heavily on fossil fuels, and the long-term ones which should lead to a complete decarbonisation of the economy) are in some way agreed, or whether instead is proceeding in random order.

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“Unfortunately there is no coordination,” explains Luca Bergamaschi, co-founder of the climate think tank Ecco. “And the result is what we are witnessing in these hours: initiatives that are the result of national logics in which everyone tries to carve out a role for themselves in a scenario of commercial competition”. According to Bergamaschi, the original sin must be sought in the EU Commission’s inability to say a clear word on natural gas when the green taxonomy was launched: an ambiguity interpreted as a ‘free everyone’, aggravated by the energy crisis triggered by the Russian invasion of the Ukraine. From there, a hunt for gas to replace that of Moscow began.

But the problem, more than gas, is represented by infrastructure, above all from the point of view of climate policies. If Algerian gas or American liquefied gas is burned, CO2 issued does not change. But if to do this it is necessary to build new gas pipelines or new regasification plants, the environmental impact grows dramatically. “From this point of view, Italy’s candidacy for European gas hub shows several advantages,” says Bergamaschi. “Our country can already boast a network of gas pipelines that go up the peninsula and connect it to the rest of Europe. Even if the feasibility of the reverse flow needs to be verified”. Yes, because pipelines arriving in Italy from France, Switzerland and Austria currently bring gas “into” Italy. And it is not certain that the flow can be reversed without major modifications to the systems. “Furthermore”, adds the co-founder of Ecco, “there are those who imagine taking advantage of the European hunger for gas to build the Adriatic backbone or new regasification terminals in Italy, or even to look for and exploit new deposits in the Mediterranean area. the European gas hub means this, then we’re not here, also because the projections of the European Union tell us that the consumption of natural gas will drop by 40% in the next 7 years: the risk is to build in Italy (but also in Germany ) a series of infrastructures that will soon become obsolete”.

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But will Italy be able to carve out the role of exporter of natural gas to Central and Eastern Europe as the Prime Minister hopes? “Only if the government is able to formulate a strong political proposal that is also the most competitive: ‘we make our existing infrastructures available to bring Algerian gas to you too'”, replies Bergamaschi. Another question remains: will Algerian gas be enough to replace Russian gas throughout Europe? “In a first phase, until 2024-2025, we will have to use it in Italy. Later we will be able to ‘export’ it. But in the meantime we will have had to reduce our consumption and have helped Algeria to become more efficient, so that it doesn’t have to extract more gas than it currently takes from its fields, perhaps by supporting its transition towards renewable sources, with a double advantage: the North African country would prepare for the future and could give up its gas needs to sell it to the Europeans”.

The detail is made explicit in an analysis published by Ecco in these hours. “The gas pipeline that connects Algeria to Italy, via Tunisia, has an unused capacity that would make it possible to absorb an additional 7 million cubic meters (cm3) of the Draghi government agreements (9 planned in total by 2024, of which 2 delivered over the course of 2022).Algeria also has a huge potential for recovery of waste gas (“flaring” – equivalent to 23% of additional non-Russian gas supply), which would otherwise end up in the atmosphere, for over 13 bcm If the share of renewables in the Algerian electricity system were to increase in one year, reaching a penetration of renewables of 15% through 14 GW of solar and wind plants, a further 3 bcm of gas would be freed up for export. ‘Algeria to increase gas exports without expanding the fossil sector”.

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