The lesson of Lithuania (and not only) on energy independence and the race for the Arctic
A community of states is growing around the Baltic Sea that has placed its value on innovation and energy independence. A network of connections binds the destinies of the many coastal countries, while the new Cold War rekindles the competition in the Arctic. Marco Dell'Aguzzo's article from the latest issue of the quarterly Start Magazine
"Independence" has become the watchword of a Europe which, only after the invasion of Ukraine last February, has discovered itself excessively tied to Russia for the energy that heats homes and lights up factories . "Independence" is also the name of a ship that already in 2014 – eight years before the war, sanctions and gas at over 300 euros per megawatt hour – entered service in the waters of the Baltic Sea with a precise function: to eliminate dependence on Lithuania from Gazprom fuel.
Independence is not just any ship. It is a FSRU, an acronym which stands for floating storage and regasification unit: in simple terms, it is a vessel which allows the liquefied gas (LNG) transported by LNG tankers to be returned to its gaseous state. Independence , with a capacity of 4 billion cubic meters a year, was to be Lithuania's energy security insurance, i.e. the infrastructure that would guarantee the country hot radiators and bright lights in the event of deterioration of relations with Russia. Vilnius had already experienced the weaponization of energy – that is, its use as an instrument of political pressure – by Moscow when in 1992 Boris Yeltsin suspended oil supplies. Years later the Lithuanians accused Gazprom, a company controlled by the Russian government, of abusing its monopoly by inflating gas sales prices. They lost the compensation case, but not the will to take that weapon away from Russia.
THE LITHUANIAN WAY TO ENERGY INDEPENDENCE
FSRU Independence has actually achieved its purpose, and Lithuania no longer buys Russian gas for domestic consumption. However, independence is easier for a small country that consumes just 2-3 billion cubic meters of gas a year (Germany about 90 billion, to make a comparison; Italy 70). Nonetheless, Vilnius thinks his approach can be successfully replicated across the EU: “If we can do it, so can the rest of Europe!” tweeted President Gitanas Nauseda. It is not simple, but the Lithuanian LNG + FSRU formula has been adopted by many major European governments to accelerate the detachment from Russia. LNG ships need relatively little time to be built and put into operation (one to three years, on average) and need fewer permits than plants on land. They also allow the buyer to free himself from the constraint of the gas pipeline and access the global LNG market, where he can choose the supplier he deems best and not the one imposed on him by geography. Lithuania selected Norway, the United States and Qatar; the other members of the Union will do much the same.
In 2021, the three Baltic countries received just 2.5 billion cubic feet of gas from Russia; five years earlier they imported around 6. Nikos Tsafos, energy consultant to the Greek prime minister and former CSIS analyst, wondered if lessons could be drawn from the path followed by the region for the rest of the continent. He came to the conclusion that the use of LNG had indeed been fundamental for independence from Moscow, but the more general reduction in gas consumption had been equally decisive. And that FSRU Independence is not the only key infrastructure for the Baltic: there is also the Incukalns storage site in Latvia.
THE SPIDERWEB OF CONNECTIONS
Equally crucial, then, are the connections. In May, the GIPL, the Poland-Lithuania interconnector, was inaugurated, built thanks in part to 266 million European funds. It will connect the Klaipeda and Swinoujscie terminals: the transport capacity from Lithuania to Poland will be 1.9 billion cubic meters a year, and 2 billion in the opposite direction.
In addition to gas there is electricity. In June, the Reuters agency wrote that European operators are ready to immediately implement the plan to bring Estonia, Latvia and Lithuania into the Union's transmission system. In theory, the Baltic countries should disconnect from the Russian network in 2025, after having completed the infrastructure upgrade (an investment supported by Brussels with 1.6 billion euros): both the European and Russian transmission systems operate at a frequency of 50 hertz, but while the Russian system is managed from Moscow, the European one is decentralized and everyone is responsible for the stability of his network. In July, Litgrid, the company that manages Lithuania's electricity transmission grid, said the Baltic countries are able to synchronize with the European system within 24 hours, should Moscow disconnect them from its own. At the end of June the operators of Estonia and Finland agreed on the launch of a third submarine electric cable between the two countries: it is estimated that it will be completed in 2035, with a capacity of 700-1000 megawatts (that of the two existing cables, combined, reaches 1000 MW).
GREEN ENERGY HUB IN DENMARK
The gas price and supply crisis has sparked the interest of central European governments in the Baltic. That of Olaf Scholz, in Germany, thinks it can receive LNG at the port of Lubmin, in the bay of Greifswald, within a few months. The Polish state oil company PGNiG wants to exploit the new Baltic Pipe gas pipeline – operational since October – to import more fuel from Norway. Already last year Poland and Lithuania tested the upgrade of the LitPol Link for merging their electricity grids. Denmark is planning a green energy hub on the island of Bornholm, which will connect the wind farms in the Baltic Sea (3 gigawatts of capacity, enough to power four and a half million homes) and Germany, through 470 km power cable.
INNOVATION LABORATORY
The Russian invasion of Ukraine has increased security concerns in the Baltic area, however in exchange for greater political-energy relevance and perhaps new economic opportunities for some innovative sectors. Paysera, a Lithuanian fintech startup founded in 2004, handled €6.5 billion in retail customer transactions in 2021. It has about 60,000 users in Ukraine and many are being added, Bloomberg wrote, because they are interested in transferring funds in euros and opening accounts in the territory of the Union. For financial companies active in Russia such as Wise – British but founded by two Estonians – the situation is less good, having had to suspend services in the country.
THE GREAT ARCTIC GAME
Moscow's aggressiveness then brought down the hopes of those who saw the Arctic as a place for cooperation between governments. On the contrary, the tensions born outside the region will transfer there and the Great North will become – or rather: it is already like this – yet another terrain of competition between the powers. The melting of the ice is creating new and long sea borders to protect. And hypersonic technologies require updating airspace defense systems: the White and Barents seas are the testing ground for Russian Zircons. But the Arctic also offers economic opportunities. There in the far north the distance between the continents is in fact smaller than in the south: an Internet cable passing under the Arctic waters would therefore guarantee greater data transport speed and better performing connections in the world. Laying and maintaining a cable in the Arctic is a difficult operation because the ice complicates the work, but there are companies that try just the same. The American Far North Digital, for example, is collaborating with the Swedish Cinia and with the Japanese Arteria Networks for a 14,000 km infrastructure linking Japan to Europe via the Northwest Passage: preparations should begin in 2023 , and the system is expected to enter service by the end of 2026.
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This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/energia/la-lezione-della-lituania-e-non-solo-sullindipendenza-energetica-e-la-corsa-allartico/ on Fri, 06 Jan 2023 06:31:04 +0000.