“The European Union,and Germany in particular,is likely to increase investments in LNG terminals,but at the same time,increase investments in renewables and batteries,and in low carbon fuels such as hydrogen ammonia,” Mr Sharma said.
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Australian Strategic Policy Institute national security editor Anastasia Kapetas said there was no near-term prospect for Russia to find a replacement market if Europe turns off the tap to its gas,and it remains to be seen how far Germany,Europe’s biggest economy,would go in retaliation for invading Ukraine.
“Germany has completely overturned every single foreign policy principle that it’s really held for the last 20 years in the space of a week,” Ms Kapetas said pointing to Germany’s decision to fund arms and cut off a long term trade agreement by shelving the Nord Stream 2 gas pipeline with Gazprom.
“There was a deep European post-cold-war belief that trade would help secure peace,” she said. “But Europe has just reacted as if it’s very close to an external crisis.”
Australian National University Professor Frank Jotzo,a close watcher of European energy policy,said the German government had already reacted to Russia’s invasion with plans to “enormously” speed up its clean energy transition by 15 years to achieve a 100 per cent renewable electricity grid by 2035.
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Poland’s energy grid was undergoing a shift from fossil fuels to renewables,like Australia,“but presumably their emphasis will also now be to reduce reliance on imported gas and part of the short-term answer will be coal and of course nuclear”,he said.
Professor Jotzo said there was also a question mark over Germany’s planned nuclear phase-out,which kicked off in reaction to the 2011 Fukushima disaster,with the last three plants slated to close in 2022.
“It’s possible for that perhaps to be delayed in order to help backfill and increase domestic energy security,” he said.
Analysts said there’s “zero chance” Australia’s LNG exporters would have enough spare capacity or profit margin to send gas,surplus to the contracts of their Asian customers,to fill a shortfall in Europe.
The disruption to global markets is expected to keep gas prices high for the foreseeable future,including for Australia’s export markets.
Australia’s manufacturing sector that relies on gas for industrial processes is struggling to stay afloat with long-term east coast gas contracts at $10 a gigajoule. But the chief of Australia’s competition watchdog,Rod Sims,says it’s unlikely private gas producers would allow the price to rise significantly due to the threat of government regulation to help the industry cope.