Down to Earth – Can Europe afford to wean itself off Russian gas?

The world economy has been rocked by the current energy crisis, but one industry in particular has been hit the hardest. Yara is a Norwegian fertiliser company and industry leader, with production sites around the world. Since the start of the war in Ukraine, which has seen gas prices skyrocket, the firm’s production costs have also gone through the roof.

Ammonia is the main ingredient required to make fertilisers for the farming industry. To make ammonia, the company heavily relies on gas. At Yara, 80 percent of the manufacturing costs are determined by the price of natural gas. 

“We are not in a position of economic equilibrium. We have had no other choice but to shut down some of our factories, in the city of Le Havre but also in Italy,” says Daniel Ménard, the director of a Yara production site in the French region of Brittany.

Yara has been on the hunt for alternatives that could replace gas for a long time now, long before the conflict began. But time is running out.

“Clearly, if you come back in a month, I can’t guarantee that this plant will be operating and will continue to produce fertilisers,” Ménard concludes.

Stocking up ahead of winter

Gas companies are required by law in France to store 85 percent of the country’s total consumption, starting in the spring until the reservoirs are full in November ahead of the winter season.

The massive reservoirs lie 500 metres below the surface, usually inside a natural geological structure, where the gas gets injected through pipelines.

A quarter of French gas supplies are stored in a rural area of southwestern France. 

“It’s a strategic tool,” explains Michel Boche, an engineer at Teréga, a leader in the field. “It allows us to secure gas supplies; it also allows us to meet seasonal demand and to cushion the effects of winter price hikes.”

Despite the crisis in Ukraine, the company’s storage campaign will go ahead as normal. For Boche, the continent is not yet facing an emergency.

“We can’t hurry the process and fill up our storage facilities too quickly,” he says, adding that France’s minimum storage requirement means that, compared to its neighbours, it is well prepared in the event that Russian suppliers decide to turn the taps off. The EU is even considering imposing similar restrictions on all member states.

Liquefied natural gas: Bad news for climate change

Stocking up will only avert a crisis. To wean itself off Russian gas, Europe will also need to diversify supply, starting out with liquefied natural gas, also known as LNG. It consists of 90 percent methane, cooled to a liquid state at -161 degrees Celsius. The fuel takes up about 600 times less volume, allowing it to be shipped from the US, Qatar, Australia, Algeria or Nigeria, but at a steep price. In its liquid form, the gas is four to five times more expensive.

But with a gas shortage looming, Europe plans to import 50 billion cubic metres of LNG every year – a solution that could backfire, according Maxence Cordiez, an energy analyst.

“There’s not enough liquefied natural gas in the world to replace the Russian gas that the European Union buys,” he says, since Asia and China in particular are draining the LNG market.  

In the long term, it also means massive investments in yet more fossil fuels.

“LNG emits more greenhouse gases than gas pipelines, mainly CO2 and methane,” Cordiez explains.

Biogas, a greener alternative?

What if plans to ditch Russian gas were in fact an opportunity to embrace a greener alternative? Biogas, a byproduct of agricultural waste, tops the list. 

Not far from the French city of Angers, thousands of tonnes of waste macerate inside massive blue tanks. The company Evergaz owns several such biomethane production plants. 

Evergaz collects all kinds of waste: manure, as well as agricultural waste like onion peels or discarded food. They mix it all together, heat it and let it ferment for 60 days along with bacteria, which break down the organic matter. The result is biogas.

The European Commission plans to double the production of biomethane before the end of the year. But things won’t change overnight. This green gas accounts for just 1 percent of gas consumption in France.

Frédéric Flipo, CEO and founder of Evergaz, is optimistic nonetheless: “We represent an alternative to Russian gas. By 2030 we will be able to replace 17 percent of French gas supplies imported from Russia.”

Until now, the price of biogas was a major obstacle: it’s four to times times higher than natural gas. The crisis has come to shake things up, even though Flipo acknowledges that scaling up production will require massive investments.

“It’s not a short-term solution on a national scale. But on a local level, near our production sites, it’s an immediate solution.”