Plans for the Skulte LNG project involved a facility with a regasification capacity of 4.1 billion cubic metres per year, similar to the volume of the Klaipeda terminal in neighbouring Lithuania.
An analysis by Latvia’s Ministry of Climate and Energy, which guided the government’s decision, concluded that the region has sufficient LNG import capacity as it stands and that ‘it is not possible to build a commercially self-sufficient liquefied petroleum gas natural gas terminals’. This announcement effectively means this fossil gas project has hit a dead end.
Civil society groups, who have been warning that the Skulte LNG project is not fit for purpose – at a time when the imperative is to end Europe’s dangerous dependence on fossil gas and when Europe is clearly overbuilding its LNG import capacity – have welcomed the decision by the Latvian government. But they also caution that relying on fossil gas from Estonia, an option the two governments are now exploring, is a false solution.
Environmental groups Green Liberty (Latvia), the Estonian Green Movement and CEE Bankwatch Network are now calling on the Baltic and Finnish governments to work together to double down on energy transition and create the conditions for phasing out fossil gas.
Liene Krauja, environmental expert with Green Liberty, says: ‘We are relieved that our government has taken the logical step towards sustainability and international cooperation by cancelling the Skulte LNG project. While at the beginning of Russia’s war on Ukraine this was deemed a project of national security, now it is clear that, with sufficient LNG capacities in the region, another fossil gas terminal would create overcapacity and strengthen the fossil gas market for decades to come. However, it is crucial that this cooperation does not lock us all in fossil fuel dependency – a joint energy system must be built along with the deployment of renewables. Only in this way can we avoid the worst consequences of the climate crisis.’
The proposal for an LNG import terminal in Skulte was first floated a few years ago and revived by the Latvian government last year in response to the fossil gas crunch triggered by Russia’s war on Ukraine. In late September 2022, the Skulte LNG project received national priority status via a special law intended to fast-track the planning and realisation processes by mid-September 2024. Two weeks ago, environmental groups petitioned Latvia’s Constitutional Court, contending that the special law is unconstitutional [1].
Earlier, the project was met with local protests amid concerns about financing, which led to media reports in January 2023 suggesting the state could build the terminal on its own.
A briefing published by Bankwatch and the Estonian Green Movement this month showed there is simply no room for any new LNG capacity in Finland and the Baltic region [2]. The combined capacity of existing and planned LNG infrastructure substantially exceeds demand in the four countries. So, any new LNG projects would either cement their dependence on fossil gas for decades to come or risk becoming stranded assets.
In 2022, Lithuania, Latvia, Estonia and Finland managed to slash fossil gas use like no other EU region. But to improve energy security and tackle the climate crisis, they must enhance regional cooperation by directing more investments towards energy efficiency, scaling up renewables and improving power connections between countries in the region to help ditch expensive and polluting fossil gas. The governments should recognise that, in the current situation, a terminal in Paldiski would be just as unnecessary as a terminal in Skulte.
Johanna Kuld, advocacy expert with the Estonian Green Movement, says: ‘The Latvian government’s decision finally brings some clarity to the chaotic LNG terminal saga in the Baltics. The Estonian government should follow Latvia’s example in acknowledging that additional LNG infrastructure in the region is simply unnecessary and publicly announce that the Paldiski LNG quay will not be utilised unless in an emergency. Increased energy cooperation should not prolong our dependence on fossil gas and does not excuse inaction in phasing out fossil gas.’
Gligor Radečić, fossil gas campaign leader at CEE Bankwatch Network, says: ‘The Baltic countries have shown great determination in cutting their fossil gas consumption. The Latvian government’s decision to abandon plans for LNG Skulte is a rational step in the direction of cutting fossil gas demand. This decision reflects an awareness that energy security and climate goals cannot be met by overreliance on fossil fuel imports.’
Notes to editors
[1] Environmental organisations appeal to Latvia’s Constitutional Court against the Skulte LNG Law https://www.zalabriviba.lv/wp-content/uploads/Press_release_SkulteLNG.pdf
[2] Briefing: LNG rush threatens Baltic energy transition https://bankwatch.org/publication/lng-rush-threatens-baltic-energy-transition-why-new-lng-infrastructure-is-a-false-solution-for-energy-security-in-the-baltics
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