Russia’s invasion of Ukraine has created any number of existential dilemmas for the world. One of the most critical revolves around energy. In the race to find alternatives to imported Russian oil and gas, should Europe compromise the fight against climate change by slowing the transition to alternative energy?
UN Secretary General Antonio Guterres raised the alarm this week: “Countries could become so consumed by the immediate fossil-fuel supply gap that they neglect or knee-cap policies to cut fossil fuel use,” he warned. “This is madness.”
On the surface, you can't really argue with Guterres. The freedom and independence of Ukraine, even the maintenance of the world order and the defense of liberal democracy, don’t amount to a hill of beans compared to the threat climate change poses. Sorry Ukraine, we can’t help you on that one if it’s going to bring the world closer to the day when cities are being swallowed up by the sea.
Whether it’s really a choice between madness and sanity we’ll get back to a minute. For now, however, it’s enough to say Israel faces the same energy dilemma as the rest of the West.
Back last December, in those balmy days when our only concerns were COVID and climate change apocalypse, Israeli Energy Minister Karin Elharrar announced that she was suspending new gas exploration for 2022 in order to concentrate her ministry’s efforts on renewables.
Elharrar’s decision was in line with the spirit of the time. The Glasgow climate change conference was still fresh in everyone’s mind. So was the slow pace at which Israel was developing alternative energy.
But, given the complicated dynamics of the global energy market, Elharrar’s move suffered a serious reality disconnect.
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The long-term transition the world must make from fossil fuels to renewables isn’t going to be a simple trajectory of less and less drilling and more and more solar farms. Before alternatives can fully take their place, the world will continue to need fossil fuels and, as fossil fuels go, gas is better than oil and coal.
The war in Ukraine doesn’t fundamentally change that dynamic, except possibly to give a little extra push to Europe’s green-energy plans. What it does change is from where Europe will get the fossil fuels it was already destined to burn anyhow.
So, Europe isn’t madly forsaking the future of the global environment to defend Ukraine by seeking alternatives to Russian gas.
Earlier this month, the European Union laid out its plans for kicking its Russian-gas habit, or at least a lot of it. Among measures like more renewables and cutting energy consumption, the EU wants to import more liquefied natural gas (which can be delivered by ship rather than pipeline but is far more expensive).
This war and Europe’s plan have generated a lot of uninformed excitement about the opportunities this offers for Israeli natural gas exports – Europe is desperate for gas, we have it, let’s make a deal.
It’s not so simple. The first problem is that Israel, even with all its partners in the East Mediterranean Gas Forum of gas producers and consumers, is a small player. We can’t even begin to supply enough gas to make up for the loss of Russian imports.
Last year, Europe imported 155 billion cubic meters of Russian gas while Israel’s Leviathan field, its biggest, could perhaps supply 10 BCM to 12 BCM. That means Israel is not going to get that much attention, much less financing, when there are sources like Qatar and Azerbaijan with vastly more reserves and, in the case of the latter, the means to deliver it by pipeline.
Alas, a pipeline Israel hasn’t got, and that is Israel’s second obstacle to coming to Europe’s rescue.
The pipeline Israel has been talking about for years with Greece, Cyprus and Italy that would run under Mediterranean waters always faced enormous technical, financial and political obstacles, and last January lost the support of the United States. Europe’s desperate need for new gas supplies fundamentally changes none of that. In any case, even if all these obstacles could be overcome, it will take many years before a pipeline could be laid.
More recently, Turkish President Recep Tayyip Erdogan has been talking about running a pipeline from Israel to Turkey that would link up with existing pipelines in Turkey delivering gas to Europe.
That has the advantage of being technically more feasible but has political problems of its own. It would have to run through Cypriot waters, and the Turks aren’t on speaking terms with the Cypriots. Moreover, it would make Europe even more reliant on Turkey. Europe, trading one mercurial despot for another.
There’s still the LNG option. Israel, in effect, is already exporting limited quantities to Europe by sending its natural gas to Egypt, where it is liquefied and re-exported. Those exports are considerable in Israeli terms and are growing, now that a second pipeline (on top of the one running through Sinai) through Jordan began sending more gas to Egypt last month.
But the LNG option is limited. Egypt has two LNG plants, through which Egypt exported/re-exported record amounts of gas already last year, and the plants are operating at full capacity. Increasing capacity can be done, but it will take three or so years and there is a ceiling to how much LNG Europe can or will take without new receiving terminals.
All that said, the Ukraine crisis will almost certainly provide Israel with LNG export opportunities it didn’t have before. Even more may come, hopefully under happier circumstances than another war. The market dynamics are constantly changing (Ukraine being Exhibit A) and those changes may, in the medium to long term, favor Israeli gas more than they do now.
In the meantime, it looks as if Elharrar
Elharrar should let the private sector energy companies decide if there’s an export market for Israeli gas. In the past, they were evidently skeptical and opted not to bid for licenses; going forward, they may look at the East Mediterranean and its complicated politics and continue to stay away. But I doubt it. Otherwise, why did Chevron buy Noble Energy in 2020 or Abu Dhabi’s Mubadala a stake in the Israeli Tamar field last year?