Balancing supply security and decarbonization: Optimizing Germany’s LNG port infrastructure under the European Green Deal

Abstract

The European Green Deal depends on a coordinated common policy for demand, renewable generation, supply security, and infrastructure. To ensure supply security after 2022 gas supply interruptions, the German government diversified energy imports into liquefied natural gas (LNG) through the use of floating storage and regasification units (FSRU). We test whether the current plan for Germany is consistent with the Green Deal objectives for decarbonization. We use a cost-minimizing facility location model following European policy objectives, combined with a network flow model, to optimize the assignment of FSRUs among German ports to ensure gas supply. Six scenarios are investigated: three greenfield models, with different demand scenarios, in which all locations are possible, a brownfield model in which the existing terminals are imposed, a no-FSRU scenario and a peace scenario between Ukraine and Russia. The optimal solutions for the base greenfield scenarios use the FSRU port infrastructures to expand the regasification capacity to 45 bcm per year. The model validates actual current decisions as optimal for supply security, but the two greenfield and long-term decisions differ in length and investment intensity, challenging policy consistency. Potentially, the impact of anticipatory hydrogen transport investments can distort the analysis.