The Netherlands is playing an outsized role in keeping Europe warm this winter. When Russia invaded Ukraine back in February, it became immediately apparent to energy authorities that they would have to start making alternative plans. The Netherlands, with its central location and strong pipeline infrastructure and links throughout the continent, has been central to many of those plans.
A key piece of Dutch infrastructure is its system of LNG regasification terminals. LNG stands for Liquefied Natural Gas, which is cooled natural gas that can easily be transported in a much denser, liquid form. Thus, gas extracted from the ground in Texas can be piped to a gasification terminal, converted to liquid, and then put on a ship to anywhere in the world that has a regasification terminal. In the Netherlands, many of those ships are arriving from places like the United States, and the country is sending that gas onward to places like Germany.
The Dutch people, however, are not entirely on board with the country’s role due to environmental concerns. The country was key to the EU’s commitments to be a net-zero greenhouse gas emitter by 2050, and some reliance on natural gas was expected as part of that transition process to renewables. But a Dutch court recently forced Shell – a formerly Dutch company that has relocated its HQ to London – to reduce its production and sales of oil and gas. Thus, many parties are hesitant to let companies like Shell purchase and distribute LNG, even for a short-term emergency. After all, if the Netherlands has the LNG infrastructure, what is to stop them from continuing to import even after the war is over?
This is a problem throughout the world; as countries struggle to keep their people warm and the lights on all winter, they are ignoring the growing climate change issue. From an economic standpoint, this is fascinating. There are many studies that show how being financially insecure forces people to make bad decisions. Essentially, if someone does not have a strong financial background, it becomes impossible for them to make wise long-term decisions because they are forced to think almost entirely in the short run, such as how they are going to get food on the table that night. Because of the war, many countries quickly became energy insecure. They are focused on keeping their citizens safe this winter, but in the meantime, they are drastically scaling back on many green initiatives. Years of progress gone in a few short months. With a financial crisis looming for 2023, we will see if countries like the Netherlands will be able to bounce back from the compromises they have made for this winter.