It is difficult to see a silver lining to the war in the Middle East. But if there is one, it might be that the spike in energy prices will inject some realism into the debate around the building of a terminal in the Shannon estuary to import liquefied natural gas (LNG).
The official position is and remains that the proposed terminal will only be used to import LNG to create a national reserve as required by the European Union. It says much about the tricky politics behind the issue that we must justify doing something that is manifestly sensible and in our best interest by saying the EU told us to do it.
But opposition to the project is real and the Government has shown some smarts by splitting in two the legislation enabling the project.
One Bill will deal with how and where the terminal will be constructed. The second bit of legislation will deal with what it is used for. The strategy seems to be: let’s get it built and we will then argue about how we will use it.
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A certain creative ambiguity is already creeping into the process. The Department of Energy told the Oireachtas Joint Committee on Energy at the start of February that the terminal will be “for use only in the event of a disruption to gas supplies to protect Ireland’s citizens, economy and reputation from the possibility of energy curtailments. It is not intended for commercial use and will not act as a new entry point for gas into the system”. Plenty of wiggle room there.
[ Protracted war in Iran could pose ‘substantial’ shock to European economy ]
Since the committee met, the United States and Israel have attacked Iran. Even the most optimistic prognosis for the conflict – some sort of resolution in the coming weeks – will have a lengthy impact on energy markets and prices as damaged production facilities are brought back on line and tankers start their long journeys around the globe.
Other possibilities such as an ongoing blockade of the Strait of Hormuz or a fully fledged US invasion will have a much longer and more serious impact. The doomsters, including Tánaiste Simon Harris, are predicting an “oil shock” that will be worse than all the other ones to date put together.
European gas prices are up almost 80 per cent, but it will be some time before these hikes feed through to domestic bills.
The present situation pretty much meets all the criteria for accessing a national reserve. Pity we don’t have one. We depend on the UK for our gas and it doesn’t hold a significant reserve either. They do, however, have their own gasfields and access to Norwegian gas and, interestingly, LNG imports.
As with nuclear power and electricity, our current stance on LNG amounts to little more than virtue signalling.
You would imagine that the current crisis would expedite the construction of the terminal, given the consequences for our economy.
The first bit of legislation – the Strategic Gas Emergency Reserve Bill 2025 – has started its journey through the Oireachtas. It could take up to a year unless it is pushed through.
Once passed, it will allow the Minister to bypass the planning regime and approve the project after consulting An Coimisiún Pleanála. The argument for fast-tracking the legislation looks pretty compelling at this stage.
A site has been identified at Cahiracon, Co Clare. It is somewhere you will hear a lot about over the next while. Probably for the wrong reasons.
Opponents of the terminal are digging in for a fight and set out their stall at the recent committee meeting, even though the second piece of legislation – defining what it can used for – is not expected to start its legislative scrutiny until later in the year. A case of getting their retaliation in first.
An Taisce – the National Trust for Ireland – has come out swinging. It told the climate committee that the project could be in breach of Ireland’s own climate plan as well as European rules.
Aideen O’Dochartaigh, associate professor in DCU Business School, hit the nail pretty much on the head when she told the committee: “The Bill is a Trojan Horse that could allow other LNG developments and make us dependent on US fracked gas for energy security.”
It is hard to argue with this. But the world has changed dramatically in the last four weeks and we are facing a prolonged period of great uncertainty over the price and availability of the fossil fuels on which we are currently dependent.
That means two things. We need a reserve and we need access to diverse energy sources, including fracked gas if necessary. But it also means that the need to accelerate the development of our own renewable energy resources – most pertinently wind – is more pressing than ever.
To a certain extent An Taisce and others risk fighting the wrong war. A far more productive question might be if the Government can bypass planning to fast-track an LNG terminal then why can’t it do the same for offshore wind farms?
