Gas prices have hit an all-time high. We see that not only in our home energy bills, but also in the prices for LNG.
Rising gas prices
When it comes to the gas we use in the Netherlands, we mainly depend on gas produced abroad. That is true not only for the Netherlands, but for the European Union as a whole. Besides the Netherlands, other countries inside and outside the EU alike are being confronted with rising gas prices. Over the past several years, there seemed to be a surplus of LNG, but that has been less and less the case recently. Countries in Asia are willing to spend more on LNG than countries in Europe. Most of the LNG is being exported to Asia at the moment, therefore. So what is left is limited in supply, and anything limited in supply can command a higher price.
High gas prices used to be less of an issue in the Netherlands but the shutdown of gas extraction in Groningen has made us more dependent on gas from other countries. When it comes to importing gas, the Netherlands is entirely dependent on the market prices, because no long-term contracts have been concluded for the import of gas from abroad. The countries around us have indeed done so and have fixed rates for large percentages of their import. This is the case for 64% of the gas imported to Germany and 36% of the gas imported to Belgium. In these countries, too, gas prices are on the rise, therefore. But because some of the gas is bought in at old rates, the increase here is of a different magnitude. The Dutch government always assumed that supply on the market would result in good rates, but that is no longer the case.
And we can see that everywhere: in the household bill through the letterbox, but also at the LNG station. Prices are rising. There are efforts underway both at the EU level and the level of the Dutch government to push prices back down. These involve increasing supply (by using local fields in the North Sea, for instance, and the pipeline built from Russia to transport LNG to Europe), but also reserving 375 million to offset the rising gas prices.
Green gas and Bio-LNG
Another – long-term – solution is locally produced biogas. By stimulating the volume of biogas produced in the Netherlands and Europe and in so doing, increasing that supply, we become less dependent on other countries for our gas and our fuel. Because biogas – again, the same gas that we use for cooking and heating – is used to make Bio-LNG through liquification.
To further encourage the use of Bio-LNG in heavy road transport, the Bio-LNG platform is actively lobbying for extra stimulus schemes from the government. This could include low (or no) excise duty on Bio-LNG. Germany already has a similar scheme whereby trucks that run on LNG or Bio-LNG do not need to pay tolls. These kinds of schemes make the switch from diesel to a cleaner and more sustainable alternative even more attractive.