Europe’s sanctions on Russia in the wake of the Ukraine crisis are weak, and for good reason: Europe gets one-third of its natural gas from Russia. Europe doesn’t have many options to replace Russia’s gas, and Russia’s made it clear that they’re not afraid to turn off the taps when they’re not happy about something.

Talk about a playground bully. So what is Europe to do?

If you ask the U.S. oil and gas industry, the answer is the export of U.S. liquefied natural gas (LNG). Their argument is that expediting regulatory approval for LNG exports from the United States will provide Europe with a stable supply of affordable gas, thus eroding Russia’s stranglehold on the region.

Unfortunately, that argument is a stretch, at best. Currently, only one LNG export terminal has received full federal approval to begin construction, and that site won’t be ready until late 2015. Even if the federal government were to green light additional projects tomorrow, those too would not be ready until several years down the road, providing little relief to Europe in the near-term.

More importantly, even after robust LNG export infrastructure is in place, the U.S. government does not have authority to demand where those exports go. Those decisions lie in the hands of industry, and these folks aren’t in it for their altruism.

There is huge demand for LNG in Asia, particularly Japan, where the offloading price for LNG is ~$19 per MMBtu. Compare that to the offloading price in Europe, which currently stands at ~$10 per MMBtu. Simple arithmetic shows that there is significantly more profit to be made exporting gas to Asia. Further, if U.S. natural gas prices continue to rise closer to the $10/MMBtu mark–not completely unrealistic in the medium-term considering recent prices of $6/MMBtu–the price differential between what gas companies can make at home and what they can make in Europe may not justify exporting to that region.

As usual, market forces win. Europe cannot look to the United States to solve its Russia problem – if you don’t believe me, read what President Obama has to say about it. Instead, it needs to look inward, implementing aggressive energy policies at home to wean itself off of Russian gas. And it can be done.

In fact, it’s been done. In 2006 and 2009. Russia shut off gas to Ukraine—which affected all of Europe. Chastened, Europe responded by increasing imports from Norway and Qatar, building more LNG ports and improving pipeline connections across the continent.

Germany has been continuing that move to energy independence. Germany has set a national goal of powering 60% of its energy needs with renewable sources by 2050, and in recent years, this push has already begun to pay off. There have been days where solar alone has powered 40% of the country’s peak electricity demand.

Another leader is France, where over 75% of the country’s electricity demand is met by nuclear power. Though nuclear power is controversial in its own right, it is currently the most readily scalable “clean” technology available, and Germany may even be tempted to reconsider its nuclear decommissioning plan in light of current events.

Europe has proven that it can diversify its energy portfolio to avoid Russia’s fickle ways, but these efforts haven’t gone far enough. European leaders need to respond to this crisis with a swift, comprehensive energy plan that invests in as much domestic power generation as possible.

As the European Union knows, all solutions must be on the table in order to continue to dent Russia’s leverage and bully tactics. Traditional energy sources such as shale gas will certainly play a role in any plan–it’s an unavoidable necessity–but Europe must also double down on its commitment to renewable energy technologies such as solar, wind and hydropower.

This is no longer just a matter of being “green.” It’s a matter of developing smart, diversified energy policies that serve the long-term interests of European national security using the resources available today.

Your move, Europe.

See more at Antenna Group

Europe’s sanctions on Russia in the wake of the Ukraine crisis are weak, and for good reason: Europe gets one-third of its natural gas from Russia. Europe doesn’t have many options to replace Russia’s gas, and Russia’s made it clear that they’re not afraid to turn off the taps when they’re not happy about something. - See more at: http://www.antennagroup.com/american-lng-wont-solve-russias-energy-bullying/#sthash.ipc0JaVQ.dpuf

Europe’s sanctions on Russia in the wake of the Ukraine crisis are weak, and for good reason: Europe gets one-third of its natural gas from Russia. Europe doesn’t have many options to replace Russia’s gas, and Russia’s made it clear that they’re not afraid to turn off the taps when they’re not happy about something.

Talk about a playground bully. So what is Europe to do?

If you ask the U.S. oil and gas industry, the answer is the export of U.S. liquefied natural gas (LNG). Their argument is that expediting regulatory approval for LNG exports from the United States will provide Europe with a stable supply of affordable gas, thus eroding Russia’s stranglehold on the region.

Unfortunately, that argument is a stretch, at best. Currently, only one LNG export terminal has received full federal approval to begin construction, and that site won’t be ready until late 2015. Even if the federal government were to green light additional projects tomorrow, those too would not be ready until several years down the road, providing little relief to Europe in the near-term.

More importantly, even after robust LNG export infrastructure is in place, the U.S. government does not have authority to demand where those exports go. Those decisions lie in the hands of industry, and these folks aren’t in it for their altruism.

There is huge demand for LNG in Asia, particularly Japan, where the offloading price for LNG is ~$19 per MMBtu. Compare that to the offloading price in Europe, which currently stands at ~$10 per MMBtu. Simple arithmetic shows that there is significantly more profit to be made exporting gas to Asia. Further, if U.S. natural gas prices continue to rise closer to the $10/MMBtu mark–not completely unrealistic in the medium-term considering recent prices of $6/MMBtu–the price differential between what gas companies can make at home and what they can make in Europe may not justify exporting to that region.

As usual, market forces win. Europe cannot look to the United States to solve its Russia problem – if you don’t believe me, read what President Obama has to say about it. Instead, it needs to look inward, implementing aggressive energy policies at home to wean itself off of Russian gas. And it can be done.

In fact, it’s been done. In 2006 and 2009. Russia shut off gas to Ukraine—which affected all of Europe. Chastened, Europe responded by increasing imports from Norway and Qatar, building more LNG ports and improving pipeline connections across the continent.

Germany has been continuing that move to energy independence. Germany has set a national goal of powering 60% of its energy needs with renewable sources by 2050, and in recent years, this push has already begun to pay off. There have been days where solar alone has powered 40% of the country’s peak electricity demand.

Another leader is France, where over 75% of the country’s electricity demand is met by nuclear power. Though nuclear power is controversial in its own right, it is currently the most readily scalable “clean” technology available, and Germany may even be tempted to reconsider its nuclear decommissioning plan in light of current events.

Europe has proven that it can diversify its energy portfolio to avoid Russia’s fickle ways, but these efforts haven’t gone far enough. European leaders need to respond to this crisis with a swift, comprehensive energy plan that invests in as much domestic power generation as possible.

As the European Union knows, all solutions must be on the table in order to continue to dent Russia’s leverage and bully tactics. Traditional energy sources such as shale gas will certainly play a role in any plan–it’s an unavoidable necessity–but Europe must also double down on its commitment to renewable energy technologies such as solar, wind and hydropower.

This is no longer just a matter of being “green.” It’s a matter of developing smart, diversified energy policies that serve the long-term interests of European national security using the resources available today.

Your move, Europe.

- See more at: http://www.antennagroup.com/american-lng-wont-solve-russias-energy-bullying/#sthash.ipc0JaVQ.dpuf

Photo Credit: US LNG Exports and Russia/shutterstock