Why Greece Is Betting Big on American Gas

When a withering financial crisis forced Greece to rethink its economy a decade ago, it bet big on green power​. Since then, Greece’s energy transition has been so swift “it almost feels utopian​,”​ one Greek environmentalist said.

​Mountainous ridgelines and arid islands ​are covered in wind turbines and solar panels​ that ​today provide nearly two-thirds of the nation’s electricity.​​​

But ​now Greece​ is deliberately pivoting back toward fossil fuels, just not to burn at home. This time it’s betting that it can become one of Europe’s main suppliers of natural gas, with much of it shipped from the United States.

Both Greek and European Union subsidies have funded new pipelines that crisscross the country and connect to a brand-new import terminal that will send gas to a broad swath of Central and Eastern Europe for decades to come.

The investments in Greece are part of a deluge of investments into natural gas around the world, with significant consequences for climate change. In coming years, nearly a trillion and a half dollars will go into constructing pipelines and terminals, according to Global Energy Monitor. Twenty percent of that spending is in Europe.

The world’s pivot to gas speaks to a kind of hedging that increasingly defines global climate negotiations: While nations have agreed on the necessity to transition away from fossil fuels as quickly as possible, almost all major economic powers are promoting gas as a “transition fuel.”

Its proponents argue that gas is cleaner-burning than coal and oil, and more reliable than renewables like wind or solar. Critics counter that renewables are increasingly affordable and that gas is anything but reliable, as Europe should have learned through collectively spending trillions of additional dollars on it during the energy crisis that followed Russia’s invasion of Ukraine, draining government coffers and causing electricity prices to soar.

Natural gas is a climate threat in two ways. Burning it produces carbon dioxide, the main greenhouse gas warming the world. Large but unknown quantities of it also leak into the atmosphere unburned, where it has highly potent but shorter-term planet-warming effects. These concerns prompted the Biden administration this year to pause issuing permits for new export terminals while it assesses their effects on the climate.

In this arrangement, Greece gets billions of dollars of heavily subsidized gas infrastructure, but the bigger payoff is political, not financial. Greece positions itself as central to European energy security, and it plays a key role in the West’s strategy to isolate Russia.

The real money will be made by American gas companies. Since Russia’s invasion of Ukraine, the United States has more than doubled its exports of liquefied natural gas, or L.N.G., to Europe, amounting to nearly $100 billion in trade.

In Greece, the newest centerpiece is a floating gas terminal off the country’s northern coast. The facility was once an enormous tanker, but today it is stationary, held in place not just by anchors but also by its connection to an undersea pipeline with branches stretching across Europe.

In April, its first delivery of L.N.G. arrived from the Gulf Coast. The operators of the terminal hope that more than half of its supply will come from the United States.

That terminal is “near and dear to my heart,” said Geoffrey R. Pyatt, the former U.S. ambassador to Greece and Ukraine, speaking this month in New York City​ at a private event on ​Mediterranean energy​ supplies. Mr. Pyatt is now the State Department’s top energy official.

Mr. Pyatt told attendees​​ that the United States is the “unrivaled global champion” of gas exports​, and he assured them that American companies were “strongly committed to their involvement in the region.” He also said he was “eager to see” American fossil fuel companies partner with Greece and nearby Cyprus to exploit their own offshore gas fields.

Mr. Pyatt, being intimately familiar with both Greece and Ukraine, helped engineer Greece’s new status as an import hub. A major factor was urgency. Ukraine, for obvious reasons, will let a treaty elapse this year that had allowed Russia to pump gas across its territory.

He and other U.S. officials have lobbied European nations to use Greece’s new terminal and pipelines, promoting American L.N.G. as a natural replacement for Russian gas ​(which, unlike Russian oil, hasn’t been banned in the E.U.​).

“It is unfortunate to say, but war gave us the demand,” said Kostis Sifnaios, who heads Gastrade, the company operating the new floating terminal. “If I think about the money the U.S. puts into Ukraine, Bulgaria, Moldova, and so on, somehow they will have to get paid back, no? That’s why you see so much American L.N.G. flowing into this region.”

Mr. Sifnaios recalled Mr. Pyatt and other officials “actively lobbying countries like Serbia, Bulgaria and North Macedonia and encouraging them to make bookings” for gas from the new terminal. Even Ukraine is a potential customer.

But the real market is in the Balkans and Central Europe. Balkan countries like Bulgaria and Serbia are behind the rest of the continent in transitioning to renewable energy.

Energy analysts as well as environmentalists have raised concerns that easing their access to gas may discourage building renewables, and leave the poorer countries among them more susceptible to the price shocks that the gas market has seen in recent years.

“The Balkans were essentially skipped over for investment by Europe for the past 20 years,” said Antonio Tricarico, a regional expert at ReCommon, an organization that studies fossil fuel interests in Europe. “While it may look like now they are getting attention, they are really just getting skipped again, this time by getting hooked to gas instead of helped with renewable energy.”

On a recent day, in a remote forest near Greece’s border with Albania, workers set off a series of rapid-fire explosions that raced along a wide path cut through the woods. The dynamite was to help excavate a trench for a new pipeline. Only a few dozen yards away, another gash cuts through the forest, where a separate new pipeline crosses Greece on its path from gas fields in the Caspian Sea all the way to Italy. Soon, yet another pipeline will be built, connecting this network to neighboring North Macedonia.

The Institute for Energy Economics and Financial Analysis, as well as the E.U.’s internal energy regulation agency, project that demand for L.N.G. in Europe will reach its peak this year, in large part because even though Europe’s biggest economies are investing in gas, they are simultaneously building out renewables at a rapid pace. By 2030, Europe is projected to have nearly three times as much L.N.G. import capacity as it will need.

If those forecasts prove to be correct, then Europe is currently channeling public funding toward gas projects it knows it won’t make money, in the name of geopolitics.

To some extent, that’s already true. In the E.U.’s decision to grant $180 million toward the building of the Greek floating gas terminal, it said that “the project would not be financially profitable without the aid measure.”

“Without public subsidies, all this would hardly go ahead,” said Mr. Tricarico.

Despite the uncertain economic proposition for gas in Europe, and against protests from climate activists, Greece has proposed at least one more floating gas terminal, right next to the first.

“A second terminal would just be outrageous,” said Theodota Nantsou, the head of policy at the World Wildlife Fund in Greece. WWF has filed an injunction in the Greek courts to prevent more public funding from going to gas infrastructure. “I just don’t see why we continue to subsidize fossil fuels with taxpayer money,” she said, pointing out that last year Greece, albeit for just a few hours, ran its entire electricity grid on renewables.

Greece’s own demand for gas has declined so much that its one previously existing import terminal, which occupies a small island called Revithoussa just outside of Athens, sat largely idle on a recent day. But that’s partly because it serves only Greece’s domestic market, not cross-border shipments, and Greek power needs are increasingly satisfied by wind and solar.

At Revithoussa, the summer heat was causing some of the liquefied gas stored in the facility’s huge tanks to convert back into gaseous form. It takes a lot of energy to keep natural gas liquefied, so the terminal’s operators had chosen to burn off the excess gas by flaring, a process that experts say is wasteful and polluting and should be avoided if possible.

Meantime, at the new floating terminal across the Aegean Sea, Mr. Sifnaios said bookings were strong, thanks in large part to diplomatic efforts.

Despite the United States’ and Europe’s desire to use Greece to financially isolate Russia, at least some of the gas that reaches Europe through Greece will still be Russian. Countries like Hungary and Slovakia, which have straddled the geopolitical divide between the West and Russia, say they will continue buying Russian gas even after the pipeline route through Ukraine closes.

“And if they order it from Russia, it’s not like we will deny them,” said Mr. Sifnaios.