Critical situation for Europe: Without Russia’s help, the continent’s energy crisis could turn into a dead end.
Europe has entered an energy crisis that could last for years. Against this background, Russia is ready to further strengthen its position as Europe’s top supplier, according to Bloomberg, quoted by Ziarul Financiar, Mediafax informs.
Just four months after Amos Hochstein, the US representative for energy security, said that Europe is not doing enough to prepare for the coming winter, the continent is facing a supply crisis that has pushed up gas prices four times that of last year’s levels. The crisis has left the European Union at the mercy of the weather and the cunning of Russian President Vladimir Putin, both of which are extremely unpredictable.
“The energy crisis hit the block when security of supply was not on the EU’s decision-makers,” said Maximo Miccinilli, head of energy and climate at EU consultants Fleishman Hillard.
In its expectations, the energy crisis will keep prices volatile and will also trigger more political tensions between the Brussels authorities and the leaders of the bloc’s 27 member states.
Europe is in the midst of an energy transition, shutting down coal-fired power plants and increasing dependence on renewables. Wind and solar energy are cleaner, but sometimes fickle, as illustrated by the continent’s sharp drop in turbine power last year.
Moscow’s growing leverage on its neighbors became apparent at the end of last winter, an unusually cold and long one that depleted Europe’s gas stocks just as its economies emerged from a pandemic-induced recession. During the summer, Gazprom PJSC, a state-controlled company, began limiting flows to the mainland, exacerbating the shortage of delayed maintenance of North Sea oil and gas fields and raising the stakes of a costly and delayed Kremlin-backed pipeline project.
At the same time, countries from Japan to China have increased their imports of liquefied natural gas (LNG) in preparation for the coming winter. All this has made Europe struggle to renew its declining stocks in the warmer months, when gas is less expensive.
However, Europe’s leaders have not betrayed any uncertainty. On July 14, the European Commission unveiled the world’s most ambitious fossil fuel disposal package in a bid to avoid the worst consequences of climate change. With their eyes set on longer-term goals, such as reducing greenhouse gas emissions by at least 55% by 2030 from 1990 levels, politicians have not appreciated enough of some of the potential pitfalls that were immediately on the way. for decarbonization.
Europe’s natural gas production has been declining for years, which has made it more reliant on imports. Russia is now ready to consolidate its position as the bloc’s main supplier. Gazprom and its European partners have invested $ 11 billion in Nord Stream 2, a 1,230-kilometer (764-mile) pipeline running under the Baltic Sea from Russia to Germany.
Repeatedly delayed by US sanctions, the decade-long project hit another hurdle this fall, when a new coalition government took power in Germany and the country’s regulator suspended final approval. The move has further shaken European energy markets, where gas prices have risen steadily since July. Putin, in a televised speech on December 24, promoted the benefits of the controversial pipeline, saying that “additional volumes of gas on the European market would undoubtedly lower the spot price.”
A recent increase in LNG imports from the US has provided some relief, but it is temporary at best. France has to shut down several of its reactors for maintenance and repairs, leading to a 30% reduction in nuclear capacity in early January, while Germany continues with plans to shut down all its nuclear power plants. With the coldest two months of winter still ahead, fear is that Europe could run out of gas.
Storage sites are only 56% full, with over 15 percentage points below the 10-year average. “In none of the last years since the recordings began, have we had such low levels of storage as at present,” said Sebastian Bleschke, head of INES, the association of German gas and hydrogen storage system operators. With the exception of an increase in Russian exports, an alternative that does not appear to be part of the authorities’ plan, levels will be below 15% by the end of March, the lowest level ever recorded, according to Wood Mackenzie Ltd.
The energy situation limits the scope of action that Western powers can take to counter Russian aggression, says Jason Bordoff, director of the Center for Global Energy Policy at Columbia University. “The ability of Europe and the United States to respond to a Russian invasion is constrained both by the desire not to aggravate Europe’s energy crisis by sanctioning Russian energy exports and, more broadly, by the threat that Russia could respond to any confrontation by restricting gas flows, ”said Bordoff, a former energy and climate adviser to the Obama administration.
“It’s hard to understand how a decent level of gas storage can be achieved without additional Russian exports through Nord Stream 2 or existing routes,” said Massimo Di-Odoardo, vice president of gas and LNG research at Wood Mackenzie. “2022 will be another volatile year for European gas prices.”