INCREASING IRELAND’S RELIANCE on fossil fuels like natural gas or liquified natural gas (LNG) would also increase the economy’s exposure to energy price volatility, an Oireachtas committee has heard.
Campaign groups Friends of the Earth and Global Witness have told the Oireachtas Committee on Environment and Climate Action today that any move to fast-track the development of LNG terminals in Ireland could heap more costs on Irish households.
But the committee also heard that, as a consequence of Brexit, Ireland is no longer compliant with European Union standards around energy security.
With Europe currently trying to wean itself off piped Russian gas following the invasion of Ukraine, wholesale natural gas prices have continued to tick up in recent weeks.
Over the past year, Irish utilities companies have been passing on these higher input costs to consumers in the former of higher household electricity and home heating bills.
The United States has promised to send more LNG to Europe to stabilise prices and make up for a potential loss of piped Russian supply.
Against this backdrop, the Government is under pressure to back the development of a commercial LNG import terminal in North Kerry amid heightened concern about Ireland’s energy security and energy price inflation.
However, campaigners are urging the Irish Government not to reverse its opposition to importing fracked gas from the US despite the challenges.
Crucially, increasing the economy’s reliance on fossil fuels by developing LNG infrastructure would not improve Ireland’s security of energy supply, nor would it necessarily bring down household bills, the committee heard today.
“Our core message for members today is that more gas does not simply equate to more security,” said Jerry MacEvilly, Head of Policy at Friends of the Earth Ireland.
“Our over-reliance on fossil fuels, in particular gas, is itself a security risk and it’s essential that the Oireachtas addresses it as such.”
Much of America’s LNG supply comes from fracking — a controversial drilling process associated with large-scale releases of methane; a greenhouse gas that plays a key role in man-made climate change.
MacEvilly said Ireland shouldn’t “risk reliance on LNG” given its climate obligations and the potential for carbon leakage from storage facilities.
“LNG would deepen Ireland’s import dependency and increase exposure to geopolitical disruptions and increasing gas prices,” he said.
“An LNG terminal will take years to be operational and secure shipments during a gas market crunch is not guaranteed.”
He said there had been a “misleading conflation” of issues around security of Ireland’s electricity supply and gas supply in the media in recent weeks.
Over half of Ireland’s electricity supply is generated through gas-fired power stations, two of which were off-line for much of 2021 for maintenance, heightening concern about the possibility of blackouts and widespread power cuts during the winter months.
“Near-term pressures on the electricity system, primarily caused by ageing gas plants, must not be used as an excuse to lock in more gas supplies,” MacEvilly said.
“To put it simply, the sudden arrival of more gas to an LNG terminal tomorrow would not alter current challenges with the electricity system.”
Tara Connolly, a Senior Gas Campaigner with campaign group Global Witness, told committee members that costs associated with developing LNG infrastructure could end up being passed on to Irish consumers.
She said many LNG projects across Europe have required “operational aid”, not just investment subsidies.
“One such example is a Croatian terminal on the island of Krk,” Connolly said.
In addition to securing public subsidies that covered 86% of the investment costs, the operators were guaranteed a security of supply levy — essentially an LNG levy to be placed on gas customers’ bills by Croatian gas grid operator. The levy would cover any shortfall in revenue from the running of the terminal.
She added, “Given Ireland’s access to piped gas from the UK, an Irish LNG terminal would be a last resort. So we can expect very low utilisation rates of such facility.”
But Aoife MacEvilly, Chair of the Commission for the Regulation of Utilities (CRU), said that since Brexit, Ireland is no longer compliant with European Union energy security requirements and LNG imports should be considered as a way of diversifying Irish energy supplies.
“We believe that LNG import infrastructure should be considered in line with our as part of the government’s review of security of supply for Ireland,” she said, along with green hydrogen and renewable energy sources such as solar and wind.
The overwhelming majority (73%, according to the most recent Gas Networks Ireland figures) of Irish gas demand, both for home heating and for electricity purposes, is met with supply from the United Kingdom via the Moffat Entry Point in Scotland.
The remaining 27% comes from the Corrib gas field off the coast of Erris Head in Co Mayo.
With less and less natural gas coming from Corrib each year, Ireland is increasingly reliant on the UK, MacEvilly said.
“We simply don’t meet the supply standard at the moment that’s required by the EU. And the importance of this has been further underlined in recent times, as I think we’ve all come to realise just how important our secure supplies of energy are,” she added.
MacEvilly said, “We used to meet compliance on a regional basis in tandem with the UK. [Since Brexit] we can no longer do so. So we are no longer compliant.”
Regarding fossil fuel price volatility, she said Irish energy companies and households will face those costs “no matter what”.
MacEvilly said, “LNG supplies tend to be more expensive and at a time when the market is tight, and a number of countries or regions such as, let’s say Europe or China may be competing for scarce supplies, it can bid the price up and the LNG supplies will go to whoever pays the highest price.
“That’s the reality in the commercial world. We will face that cost anyway because Europe is turning away from piped Russian gas.”
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