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The economic and geostrategic role of LNG in EU energy transition

Author

Listed:
  • Casagrande, Sara
  • Dallago, Bruno

Abstract

Since 2010s, the EU promotes decarbonization and energy security as strategic goals. However, a fundamental impetus came with Russia's invasion of Ukraine in 2022. The EU promoted a drastic reduction of Russian gas import, massive import of liquefied natural gas (LNG), investments in the LNG value chain, reduction of energy demand, and green transition. This article analyses the rise of the LNG market, its contradictions and challenges. According to results, LNG rise has been determined more by geopolitical factors than economic ones, that can be traced back to the impact of the shale gas revolution on the EU-Russia relations. Indeed, LNG convenience compared to pipeline gas is threatened by market volatility and various costs peculiar to LNG. Currently, the massive import of LNG has not solved the problem of energy dependence and cost, does not fully compensate for the gas supply gap and threatens the credibility of the climate agenda.

Suggested Citation

  • Casagrande, Sara & Dallago, Bruno, 2025. "The economic and geostrategic role of LNG in EU energy transition," Structural Change and Economic Dynamics, Elsevier, vol. 74(C), pages 387-404.
    • Handle: RePEc:eee:streco:v:74:y:2025:i:c:p:387-404
    DOI: 10.1016/j.strueco.2025.04.002
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    Keywords

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    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe
    • Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources

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