De nedlægger kul- og kernekraftværker. De vil lukke for olie fra Nordsøen. De vil Indføre vind- og solenergi. Og når så solen ikke skinner og det ikke blæser? Ja hvad så?
Energy dependence ties Europe’s hands in U.S.-Russia crisis
Europe’s growing dependence on Russian gas and oil is limiting the continent’s room to maneuver in the mounting U.S.-Russia crisis over security in the region and making it highly vulnerable in the event of an escalation.
Officials from the U.S., Russia and Europe meet Thursday in Vienna at the Organization for Security and Cooperation in Europe to discuss the tensions. Earlier this week, the U.S. and Russia failed to narrow differences over Moscow’s deployment of more than 100,000 troops along the border with Ukraine, a major thoroughfare for gas consumed in Western Europe, and Moscow’s demands for changes to Europe’s security architecture. Russia has denied preparing to invade its western neighbor.
Highlighting the central role energy is playing in the standoff, U.S. senators are expected to vote soon on a bill introduced by Sen. Ted Cruz (R., Texas) requiring sanctions to be imposed on Nord Stream 2, a German-Russian gas pipeline that is expected to get online later this year.
Western officials accuse the Kremlin of withholding extra supplies in recent months to force European regulators to approve the pipeline—a charge the Kremlin denies. U.S. lawmakers and Ukraine say the pipeline would make Europe ever more dependent on Moscow.
Such dependence means European governments aren’t willing to consider sanctions on Russian energy exports—the backbone of the Russian economy—as a possible deterrent against a potential invasion of Ukraine, according to a senior European official involved in discussions on how to respond to the crisis at the border.
They also are nervous about Moscow retaliating by slashing gas exports to Europe, a concern that has grown more acute in recent days as energy prices have started shooting up again, the official said. Despite intense lobbying from the U.S., Germany has yet to say whether it would permanently block Nord Stream 2 if Russia invades its neighbor.
Russia’s saber-rattling on the Ukraine border and its failure to increase—and its occasional throttling of—gas deliveries to Europe already have helped to send energy prices rocketing there, a development that has claimed corporate victims in the U.K. and pushed German energy companies to secure billions of euros in funds.
It highlights Europe’s continued reliance on a supplier that is increasingly willing to use energy as a diplomatic weapon.
“Governments in the region could find themselves on the horns of a dilemma if sanctions are applied and then Russia, even for the short term, cuts off all gas flows to Europe,” said Richard Morningstar, founding chairman of the Atlantic Council’s Global Energy Center and ambassador to the European Union under President Bill Clinton.
Russia has increased its share of Europe’s gas market since annexing Crimea in 2014 and backing separatist forces in Ukraine. Moscow supplied 123.8 billion cubic meters of gas via pipelines to Europe, excluding Turkey, last year, according to S&P Global Platts, more than Norway’s 108.6 billion cubic meters. That gave Russian pipelines a market share of 29%, down from 34% in 2018 but up from 27% in 2014. Russia also exports some liquefied natural gas to Europe on tankers.
Russian President Vladimir Putin has shown “the world—and Europeans in particular—that the old geopolitics of oil and gas is alive and well,” said Meghan O’Sullivan, the director of the Geopolitics of Energy Project at Harvard University’s Kennedy School. “For the foreseeable future, Europe will remain dependent—and possibly as dependent as ever—on Russian gas.”
Europe has long tried to buy gas from producers in Central Asia, Norway, North Africa and the U.S. while developing renewable energy. But renewables have often proved tough to scale and at times unreliable due to weather patterns, while nuclear energy has been a divisive political topic. Many coal-fired power stations have closed and domestic gas production has nosedived, leaving Europe with no alternative but to keep importing gas even when prices rocketed.
Deprived of Russian gas, the region would have few places to turn. Gas export terminals on the U.S. Gulf and East Coasts were running at 99% of capacity at times last month, according to Helima Croft, head of commodities strategy at RBC Capital Markets. Spring weather that tames demand could be months away.
Gas isn’t expected to flow through Nord Stream 2 for several months because it requires approval in Germany and by the European Union. Once up and running, however, it will form a key part of Europe’s gas-import infrastructure. The pipeline’s capacity would equal that of Nord Stream 1, which also runs straight to Germany and handled 37% of Russia’s gas exports to Europe last year, according to commodities analysis firm ICIS.
Russia has been a major energy supplier to Europe since Soviet times, taking care not to wield oil and gas as a weapon. Back then, Moscow largely saw energy, a key export, as a business proposition and a way to develop commercial and pragmatic relations with Europe. That has changed over the years as relations with the West soured. Russia twice curtailed gas deliveries to Europe during the cold winters of 2006 and 2009 over price disputes with Ukraine.
“Russia in the 2000s decided to use gas as a geopolitical weapon,” Tatiana Stanovaya, founder of R.Politik, an independent political-analysis firm. “Moscow failed to convince the world that it was a pure business argument and damaged its reputation as a stable supplier.”
The International Energy Agency on Wednesday said Russia is in large part responsible for Europe’s gas shortage. Executive Director Fatih Birol said state gas exporter Gazprom PJSC had reduced exports to Europe in the fourth quarter at a time when prices were high and Norway, Algeria and Azerbaijan were pumping more gas to the region.
Crude-oil prices also have risen globally, adding to Europe’s vulnerability and putting extra strains on businesses and consumers while contributing to record inflation in the eurozone. Mild weather and an influx of gas from the U.S. have offered some respite recently but wholesale gas prices in northwest Europe are almost three times as high as they were a year ago. Analysts say frigid temperatures and low gas storage levels could cause price spikes before spring even without interruptions to Russian supplies.
“There is not a common vision of security of supply and in this current crisis it comes to haunt us,” said Georg Zachmann, senior fellow at Bruegel, a think tank in Brussels.