Last week, ten dozen gas experts and professionals gathered in Klaipeda, Lithuania for two days to attend the Baltic Gas & LNG Forum to share their expertise in pipeline gas, LNG and hydrogen issues. Bird & Bird was represented at the Forum by partner Laura Huomo, Head of Energy, Helsinki as the chair, and by partner Lars Kyrberg, Co-Head of Bird & Bird’s international Energy Network and Transmission Group, from Bird & Bird’s Hamburg office as a delegate.
To sum up the two days of the Baltic Gas & LNG Forum: These are interesting times. During the past few years, the world has changed incredibly fast, and in a way that maybe could have been predicted but was hoped not to materialise. Russia’s war in Ukraine has changed everything. Things that could, to some extent, be taken for granted became one of the main topics of the discussions at the Forum and these issues are now boosting the green transition in a way that is different and much faster than expected.
Green transition, at almost any pace, does not come easy. The existing facts, markets and infrastructure need to be appreciated and built on. The basic needs of the member states of the European Union must be acknowledged whilst also constantly pushing for innovative solutions on all fronts, toning down energy consumption, making new infrastructure available and securing gas molecules. While aiming for greater volumes of the renewable gases to reach market-level magnitude, the markets with fossil gas need to be supported in the current transition period towards a fully renewable/green future.
New European and national energy and climate strategies, Green Deal, hydrogen strategy, sector integration strategy, solar strategy combined with REPowerEU – all are signposts to where the development should be headed. What was examined during the two days of the Forum was the flexibility these signposts have (if any) and whether they would facilitate catering solutions for the current situation.
Driving energy security in the Baltics and the Nordics needs to be supported by clear regulations, policies, and practical guidelines on how to ensure European Union energy position and competitiveness. The gas sector needs to look both upstream and downstream. Going from macrolevel issues to microlevel – from upstream (securing gas molecules) to downstream (avoidance of internal and cross-border bottlenecks), finding creative distribution channels. One example of getting better gas flows into the area will be through the contemplated new Baltic- Finnish inter-TSO tariff agreement enabling tariff-free transfer within Finland and (with this agreement) the Baltic countries.
The energy markets need to be bridged and end-users educated to become active participants. European infrastructure needs to be future-proof and future-ready on all levels. Investors are looking for longer offtake agreements to participate in future-ready infrastructure financing. Market participants are used to spot agreements. This timing gap needs to be bridged for the investments to happen.
The gas space is waiting for guidance and actual plans from the European Commission, not just numbers on paper. While the ambitions are in a complete green transition, much of the market still relies on fossil fuels. The Green Deal in totality and the REPowerEU especially count on solar, wind and hydrogen as the vehicles going forward, but the currently reality and what makes the systems run cannot be ignored. The European Union will be better off aiming for stress-free, non-threatened molecules. The molecules can be made greener to support the green transition. With sufficient demand and molecule flow into the European Union, the European Union can become the prime market for gas/LNG.
For further information, please contact:
Laura Huomo, Partner, Bird & Bird
laura.huomo@twobirds.com
