Death knell for Shannon LNG as experts rule out commercial LNG in Ireland

Expert Review of Energy Security signals the end of Shannon LNG and other commercial fossil fuel projects in Ireland.

Consultants rule out commercial LNG, onshore or floating, and favour demand reduction, gas storage, electricity interconnection, more renewables and green hydrogen.

“Getting off fossil fuels the fastest way to security” says Friends of the Earth

Friends of the Earth has said the release of the expert review of energy security commissioned by Government signals the death knell of Shannon LNG and marks a significant step in ending all fossil fuel infrastructure in Ireland. The analysis, carried by CEPA technical consultants, assesses different measures to support energy security while meeting climate obligations. It will now form the basis of a public consultation before the Government makes final decisions. Their report rules out several measures, most notably:

• A commercially-operated or state-owned LNG import terminal on land, such as Shannon LNG, as it would “Likely result in the importation of fracked gas to Ireland…embedded emissions in LNG can exceed that of natural gas….no guarantee that stored gas volumes would be sufficient to cover a security of supply shock…”.

• A commercially-operated floating LNG terminal is also ruled out for the same reasons.

• Additional gas reserves from existing exploration licences, such as from Providence or Corrib, as “Additional domestic production of natural gas could lock Ireland into a high-gas energy market…Unknown volume of any potential additional natural gas discoveries.”

Instead, the report short-lists green hydrogen, demand response, electricity interconnection and storage as beneficial security measures. It only shortlists 2 possible gas infrastructure options which are temporary and limited in order to prevent gas-lock-in:

• A floating LNG terminal [1], operated as a back-up facility only rather than a commercial enterprise, because “Leasing a floating LNG terminal would enable security of supply benefits to be delivered without committing to a long-term dependence on gas while also reducing the risk of stranded assets.”

• A state-backed gas storage facility also operated as a back-up measure [2]  “As a back-up storage facility would only be used in the event of a shock, it would have a minimal impact on future market pathways whilst guaranteeing availability of gas in the event of a security of supply shock.”

The CEPA report includes other important statements:

• “Higher rates of electrification coupled with investment in significant renewable generation capacity should help to alleviate challenges in relation to gas security of supply by 2025 and 2030.”

• “GB’s access to global LNG markets means that that almost all GB gas demand can be met under the shock scenario”.

Commenting on the expert report, Jerry Mac Evilly, Head of Policy in Friends of the Earth said:

“This expert report provides a clear signal that Government is starting to finally recognise the real dangers of Ireland’s overdependence on fossil fuels, as well as the risks of locking Ireland into polluting gas if long-term infrastructure is allowed. The technical analysis correctly rejects risky commercial fossil fuel projects, including Shannon LNG. We now call on the Government to make the existing moratorium on commercial LNG [3] permanent in light of this analysis.

“While certain media commentators continue to wrongly frame energy security as simply equating to the availability of fossil fuels, the technical analysis recognises that security is about balancing supply and demand. It shortlists a range of options from demand reduction, to renewable generation, storage and green hydrogen. It also places Ireland’s energy security in the context of the threat from climate change and our related obligations. 

"It is encouraging to see the expert consultants debunk the myth that commercial LNG terminals act as storage. They note that 'As storage stocks would be driven by market fundamentals, there would be no guarantee that stored gas volumes would be sufficient to cover a security of supply shock'.

“There are still many uncertainties. Even temporary state-backed gas infrastructure, also shortlisted in the consultation paper, runs the risk of locking in polluting emissions if clear restrictions and decommissioning plans are not put in place at the outset. And the Government has not properly addressed how increasing gas and electricity demand from data centres runs the risk of undermining Ireland’s climate action and locking Ireland into expensive gas use.

“We also have to remember that not all parts of Government have fully woken up to the fact that we are facing an energy crisis of affordability, pollution and supply. The overall solution to these three problems, and the best way to protect households and communities in Ireland, is the same: reduce our dependence on fossil fuels as fast as possible. For families facing skyrocketing energy bills, the Government must start by increasing supports for energy efficiency and solar which will both enhance security and reduce bills for households.

“Ultimately we still have to a long way to go in order to bring Ireland’s addiction to expensive, volatile and dirty fossil fuels to an end. Vested interests are still misleading the public and will resist any disruption to their planned projects. As the UN Secretary General Antonio Guterres has said: ‘Investing in new fossil fuels infrastructure is moral and economic madness. Such investments will soon be stranded assets — a blot on the landscape and a blight on investment portfolios."

ENDS

Notes

1. Floating LNG or Floating Storage and Regasification Units (FSRUs) involves using a modified LNG tanker that is moored in or just outside of a port to receive, store and re-gasify Liquefied Natural Gas. These are quicker to develop than a standard large scale LNG terminal and crucially are not necessarily permanent given that the modified tanker can be moved elsewhere.

https://www.icis.com/explore/resources/how-can-europe-increase-its-access-to-gas/

2. Gas storage facilities generally involve injecting gas from the network into depleted underground caverns, such as was the case with (the now-decommissioned) Kinsale facility. The consultants also separately considered a GNI onshore slow-liquefaction storage facility i.e. withdrawing gas from the network and liquefying and storing this gas in tanks onshore so that it can be vaporised and re-injected at a later date.

3. In May 2021 the Government introduced a Policy Statement on the Importation of Fracked Gas which notes that “pending the outcome of the review of the security of energy supply of Ireland’s electricity and natural gas systems, it would not be appropriate for the development of any LNG terminals in Ireland to be permitted or proceeded with”.