The recent boom in liquefied natural gas (LNG) imports in Europe has triggered the proliferation of new LNG import terminal projects, whether through new facilities or the expansion of existing ones. The expansion of LNG, which is highly polluting and emissions-intensive, locks the continent into a fossil fuel-based energy system and carries significant risks of creating stranded assets.
This situation raises questions about the credibility of power utilities such as ENGIE, Enel, and RWE, which are driving new LNG projects. Financial institutions supporting these companies must demand an immediate stop to the development of new import terminals and to long-term import contracts which provide for import volumes incompatible with the drop in demand and European climate objectives.
Since Russia’s invasion of Ukraine in 2022, LNG demand has grown, (1) leading to the significant development of import infrastructure in Europe (2) to enhance the continent’s maritime supply capabilities. 16 new terminal projects are planned by 2030 (3) across more than 10 countries. (4) Major power utilities like France’s ENGIE, Germany’s RWE and Italy’s Enel are involved in LNG expansion via import terminal projects or long-term supply contracts. (5) In this race for expansion, ENGIE is focusing on the extension of two import terminals in France: (6) the Montoir-de-Bretagne terminal and the Fos Cavaou terminal. (7) The company’s gas strategy additionally relies on long-term LNG import contracts extending beyond 2040. (8)
Are new import terminals already obsolete?
In Europe, LNG import capacity increased by 22% between 2021 and 2023 and is expected to grow by 62% by 2028 compared to 2021. (9) At the same time, gas consumption has declined by 19% and is projected to fall by 29% between 2021 and 2028. (10) LNG demand in Europe likely peaked in 2022 at a level already well below Europe’s existing installed capacity, with forecasts showing a continuous decline until 2028. (11)
Graph 1: Evolution of gas and LNG capacities and needs in Europe – IEEFA, Europe LNG Tracker, 2024
Europe, already facing overcapacity in LNG imports, is also likely to see terminal utilization rates continue to drop this decade. For instance, these rates fell from 62% to 38% between June 2023 and June 2024 in the EU-27.(12)
Policymakers continue to justify the implementation of new import infrastructure by citing the need for energy security, particularly to reduce European dependence on Russian gas. However, an analysis of the evolution of needs and capacities shows that these developments are not the solution. On the contrary, Europe is developing substantial LNG import overcapacities. European solidarity has also been invoked as a justification, (13) whereas the reality is that several European countries are building their own (over)capacities. (14)
What are the consequences of continued LNG expansion?
Investments in LNG expansion lead to systemic bottlenecks. Declining gas consumption, energy-saving efforts, and the rise of sustainable energy pose a high risk of current installations and planned projects becoming stranded assets (15) before long. This situation would result in inevitable financial losses for the financial players supporting these projects.
Another look ahead reveals that the development of LNG facilities that are likely to become obsolete but at the same time must be made profitable, combined with locking in imports through long-term contracts, deepens the European energy system’s dependence on fossil gas. This delays the transition to sustainable solutions and undermines the EU’s climate goals: fossil gas use is a major contributor to greenhouse gas emissions, and LNG can be even more emissions-intensive than coal. (16)
Another significant concern lies in the origin of imported gas and its extraction method. In 2023, 46% of European LNG imports came from the United States, (17) where gas is primarily extracted via hydraulic fracturing. (18,19) This method has significant environmental impacts, including groundwater pollution from chemicals, air pollution from extraction sites, and greenhouse gas emissions. Furthermore, due mainly to methane leaks, (20) US LNG has 20% to 45% higher emissions compared to pipeline gas, (21) and 28% higher emissions than coal.
Rather than focusing on the already available and necessary sustainable alternatives to fossil fuels, (22) Europe is risking creating LNG and fossil gas stranded assets and locking itself into an emissions-intensive, polluting energy system.
The responsibility of financial institutions in LNG expansion
By supporting companies like ENGIE, Enel, and RWE, which are driving the development of new LNG import terminals in Europe, financial institutions play a significant role in LNG expansion. These power utilities rarely rely on project financing for terminal development or expansion. Instead, they primarily depend on the “corporate” financing directly granted to them. When financial institutions like Société Générale, Crédit Agricole, or Caisse des Dépôts et Consignations support ENGIE, they fully endorse LNG import terminal expansion.
| Top 5 French banks (2021–2023)(23) | Amount granted to ENGIE (2021–2023), (US $) | Top 5 French investors (2023) | Total investments in ENGIE (2023), (US $) (24) |
|---|---|---|---|
| Société Générale | 546 million | Caisse des Dépôts et Consignations | 1,551 million |
| Crédit Agricole | 364 million | CNP Assurances | 420 million |
| BPCE Group | 305 million | BNP Paribas | 608 million |
| BNP Paribas | 248 million | Crédit Agricole (incl. Amundi) | 388 million |
| Crédit Mutuel | 214 million | Crédit Mutuel | 157 million |
Table 1: Main financial supporters of ENGIE
Therefore, ENGIE’s main investors, including Caisse des Dépôts and CNP Assurances, must now make financial support conditional on a public commitment by the company to halt current expansion projects for the Montoir-de-Bretagne and Fos Cavaou terminals and to stop signing new long-term LNG supply contracts which provide for import volumes incompatible with the drop in demand and our climate objectives. (25) A revision of ENGIE’s transition plan influenced by this demand, ahead of the “Say on Climate” vote scheduled for the 2025 Annual General Meeting, is an opportunity to ensure ENGIE’s credibility as it seeks to position itself as a major player in the energy transition.
Overall, financial institutions must demand that these companies commit to halting the development or expansion of LNG import terminals. This requires the major power utilities to implement transition plans aligned with the goal of limiting global warming to 1.5°C. Financial institutions must also require an immediate public commitment to cease signing new long-term import contracts which provide for import volumes incompatible with the drop in demand and our climate objectives.
