Analysis: we may not see gas shortages, but we would feel the impact of any interruption in supply via higher energy costs
As the threat of a Russian invasion of Ukraine intensifies, it has brought into stark focus how much the EU and indeed Ireland relies on other countries to meet our energy needs. Ireland is one of the most fossil fuel dependant countries in Europe and is particularly exposed to geopolitical events which determine how much we pay to heat our homes and generate our electricity.
Any invasion of Ukraine and associated interruption of gas supply from Russia to Europe is unlikely to lead to gas shortages in Ireland, but we would instead feel the impact of the interruption via higher energy costs.
Russia is the largest supplier of natural gas to Europe. While a molecule of natural gas extracted beneath the frozen tundra in Siberia is unlikely to make its way into the Irish gas network, Russia's gas supply strategy has a major impact on energy prices in Ireland.
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From RTÉ Radio 1's News At One, energy analyst Justin Urquhart-Stewart on why European gas prices have hit a new record high
Gas prices increased significantly across Ireland and Europe through the second half of 2021, driven mainly by colder weather, low renewable output, and economic rebound after the pandemic. Russia was not the cause of the price increase, but is benefiting from it and, according to the International Energy Agency, could have done more to reduce it.
Natural gas is an important fuel in Ireland heating 700,000 homes and businesses and generating over half of our electricity. We are supplied by a combination of domestic production from the Corrib field which meets 30% of our gas needs and imports via two undersea pipelines from Scotland.
The impact of a long term interruption of Russian gas into Europe was studied in detail by our group in UCC. We used a computer model of the EU energy system to understand what would happen in each country if gas from Russia was not available.
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From RTÉ 1's Nine News, European countries call for co-ordinated response to surge in energy prices
Our research showed that, while gas would still flow across Europe, any interruption in supply would lead to higher electricity prices, It would also mean higher climate emissions as gas would need to travel further to reach the demand centres and older coal power stations would be used more to pick up the slack for less gas.
Europe has significant potential to import liquefied natural gas (LNG) via ships into places like the UK, Spain and France and this availability significantly helps to mitigate against interruptions in supply. Ireland does not have LNG capacity, but benefits from the UK resources which are diverse and secure.
Over a period of three to six months, the EU is likely to be able to survive a disruption to Russian gas imports. However, the picture becomes complicated when longer interruption is considered. Running the European economy for several years without Russian gas would be remarkably challenging.
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From RTÉ Radio 1's Morning Ireland, why are gas and oil prices jumping so much?
Europe would need to attract and pay for higher volumes of LNG, reopen older power stations for electricity demand and dramatically increase the production of renewable electricity. Ireland would not be immune from these increases as it would have to pay higher prices along with the rest of the EU to have access to gas.
The risk of a supply interruption has ignited the debate on whether Ireland should look for gas in Irish waters to increase our security of gas supply. To understand this, it is important to distinguish between a physical interruption, whereby an importing pipeline is cut off and a price risk, whereby gas still flows but becomes expensive.
The probability of physical interruption of gas to Ireland is very low and is more linked to what happens in London rather than Moscow from a geopolitical perspective. The gas pipeline infrastructure coming into Ireland has been fully reliable since commissioning in 1993 and there is also redundancy built into the network in case of a fault.
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From RTÉ 1's Nine News, US warns key gas pipeline won't open if Russia invades Ukraine
However, a physical disruption would be catastrophic for the country. Any domestic production or storage would be beneficial if it were to occur. Last year, the Government commenced a study to review these risks and understand mitigation options.
A price disruption is a more likely outcome for Ireland from any interruption in gas from Russia into Europe, but having indigenous production would be of marginal benefit in this case. Gas is sold at international market prices and it would not lead to lower prices for consumers in Ireland, except for forgoing the cost of transporting gas across from the UK, which is small.
The upcoming weeks will be telling. The longer the standoff between Russia and Ukraine goes on, the less severe any interruption would be as Europe is moving through a milder than average winter requiring lower than expected volumes of gas. If there is an interruption, gas will still flow to Ireland, but it won’t be cheap. This is the price to be paid for being one of the most fossil fuel dependant countries in Europe.
The views expressed here are those of the author and do not represent or reflect the views of RTÉ
