Ingenuously envisioned, and perhaps mischievously engineered by Russia, a huge and unprecedentedly acute and massive energy crisis is looming large over the 27-nation-bloc of Western countries, the European Union (EU)
By M R Dua
- Vladimir Putin and energy giant, Gazprom, appear to be turning screws on Europe by limiting supplies
- Many homes, businesses in EU member nations used to receive nearly 40% of their natural gas supply from Russia
- EU nations have entered into several accords with gas suppliers such as Norway, Qatar, Algeria and the US
- Germany is considered to be the worst sufferer if Vladimir Putin further bolts the energy supply
AS an enormously harsh winter is inching fast, life in the entire continent may soon be completely paralyzed. And, behold, the single, and unique cause of this catastrophe to occur is the over nine-month-long Ukraine-Russia war. And, most, unfortunately, with no end in sight in the near future.
So, this do-or-die bloody combat for both the countries, Russia and Ukraine, may soon partially, if not completely, snuff out the hustle and bustle from Europe by cutting off the continuous ‘healing’ energy flow.
So far, Russia’s perpetually enduring energy supply of oil, electricity, power and natural gas to European Union (EU) member countries has been a pretty reliable, abundant, and plenteous source for the EU nations for many, many years. At the same time, it has been available at quite a reasonable cost.
But the price has been unreasonably hiked, and Russia continues spiking the rates for almost two years, as mentioned earlier. Of course, Russia also spins torrents of ready hard cash too! The total average yearly revenue from exporting natural gas and oil is estimated at 95 billion USD, according to the Paris-based International Energy Agency.
PROSPERITY BY NATURAL GAS RESERVE
People outside Europe, however, may have no idea at all as to how cacophonous and harsh this crisis could be! The ‘energy shock’ to some of the countries, especially Germany and Italy, could be historically severest than it was in the 1970s. Not only that, this strident energy crunch could prove to be extremely painful because its prices have climbed 15 to 20 times beginning January 2022. And, now that Russia is becoming affluent and prosperous with cash flowing in readily, Moscow could, sadly, find it alluring to stay in war longer. So far, many homes and businesses in the European Union member nations used to receive nearly 40 percent of their total natural gas supply from Russia, one of the continent’s largest and most important trading partners for energy, reported The New York Times, recently.
Germany, for instance, is said to be planning to ration the supply; Britain, it is learned, to be resorting to inflating costs by 80% beginning October first this year
But the irony is that as a major energy exporter, Russia’s economy may not be affected substantially though Moscow has considerably cut off supplies to many EU nations. (Incidentally, thanks to Moscow’s generosity to its best friend, China, will continue getting Russian oil at lower, or at usually normal rates). For, Russia’s past experience of the 1940s is a witness that it can do so without the European cash. It’s also said that denial of oil supply to Europe will serve as a ‘mighty war weapon’ for Moscow to punish Ukraine, besides, of course, EU nations.
Besides, Russia’s cutting supply to France through the Nord Stream gas pipeline is said to have led Paris to terminate its gas contract with the French Gas Novatek. Intending to meet home energy demands, EU nations have entered into several accords with gas suppliers in countries such as Norway, Qatar, Algeria and the United States of America.
Meanwhile, Russia’s natural gas reserve alone is tops in the world and is estimated to be of the order of –in million cubic feet, the 2015 figures:
Russia’s Natural Reserve is 1,688,228,000 (First in the world), Russia’s Production is 22,728,734 (Second in the world), and its yearly consumption is 15,538,247 (Second in the world). But Russia has a yearly surplus of 7,190,487 and Russia’s Gas Exports is 5,992,956. According to naturalgasinstel.com Russia’s Total National Natural Gas Reserve is 6,923 trillion cubic feet.
But despite all the agreements and alternate energy supply sources and with the ongoing war has impelled Russia’s denial of full quantum to the European Union countries. Russia’s intensely calculated declination is bound to chock and accelerate an all-encompassing energy crisis over most of Europe. Moreover, as the freezing-winter months draw closer, the emerging tough scenarios will compulsively and impulsively create panic across the continent.
Meanwhile, Russia’s threats to further tighten gas and power flows have already led to reduced supplies. In this belligerent, prickly situation, fewer alternatives seem to be in sight for most European nations.
To grapple with the harshest winter months’ jeopardous consequences, Russia has turned a deaf ear to any concessions for the time being and permit gas flow.
In fact, Russia is yoking oil and natural gas as political leverage in view of the West’s most stringent economic sanctions that have severely limited Moscow’s global economic transactions with countries other than the EU and the United States.
In addition, since its 24-February invasion of Ukraine, Russia has been hiking the tariffs on gas and electricity from time to time. As a consequence, the shortage of energy supply in Central and Eastern Europe from Russia has reportedly been varying between 2%and 5%. It’s indubitably certain that due to the continuing war with Ukraine, and most of Europe being most generously supportive of Ukraine, Russia is enormously exacerbated, infuriated endangered at all Europe making a common cause against it (Russia), as Moscow persists with the war, despite suffering several defeats and losing its men, materials and territories.
Russia is yoking oil and natural gas as political leverage in view of the West’s most stringent economic sanctions that have severely limited Moscow’s global economic transactions
Also, because Vladimir Putin and Russian state-owned energy giant, Gazprom, appear to be turning screws on Europe by limiting supplies. Surely, Moscow’s threat to cut off, restrict, limit, or ration energy supply to its several regular 100% supply to Western customers for many years, is synonymous with ‘economic warfare’ in retaliation for western Europe’s support for the war-torn and beleaguered Ukraine.
Moreover, the head of the International Energy Agency has warned Europe of the worse to come. Therefore, Europe ‘needs to prepare immediately for the eventuality of Russia turning off all gas exports to the countries this winter.’ They should be ready to wean themselves off Russian ‘malice’ toward entire Europe, and ‘inject’ all efforts homeward.
Russia has already cut off supplies to almost all of Europe – Italy, Austria, the Czech Republic, Slovakia, Serbia, Hungary, Belarus, Moldova, North Macedonia, and Latvia. Supplies have also been shut off to Poland, Bulgaria, France, and the Netherlands.
In the meanwhile, one by one, the energy-starved and energy-scarcity-affected EU member countries have been furiously searching for ‘electrifying’ substitutes domestically and digging up any available turf for an option. Since Russia is the world’s largest energy, natural gas, oil and electricity exporter, the insecure supply environment is likely to continue for a prolonged period, or at least till the Ukraine-Russia conflict continues.
Most badly hurt countries have been advised to tell their consumers to economise energy use for domestic and official purposes. With a view to conserving gas for its future needs, Germany, for instance, is said to be planning to ration the supply; Britain, it is learned, to be resorting to inflating costs by 80% beginning October 1.
To meet the looming exigency, The Economist has suggested levying new taxes, which is also under consideration in Bulgaria, Italy, Romania and Spain. The European Union has recommended that governments try to ‘capture a part of returns’ made by electricity generators. Numerous suggestions to stand up and be ready to face the powerless days and nights. More than a dozen America’s Democratic Party lawmakers have proposed a tax on ‘every barrel of oil big firms produce or import, equal to half the difference between the current oil price and the 2015-2019 average.’
The Economist has also argued that ‘the impulse to levy windfall taxes is particularly strong today because Russia’s invasion of Ukraine has caused oil and natural gas prices to rocket.’ But since most businesses are also amply benefiting financially from the war, the windfall tax may not be a bad idea, per se; for, after all such emergency situations have to be faced to guard public interests, per se. Meanwhile, arguably, there are very few chances for Europe to be able to ‘replace Russian gas by winter’, and the stark reality is that no European country can easily replace the Russian gas supply any time soon, and in fact, for all times to come. Therefore, EU member nations have been counselled to fill up their underground storage gas tanks to the maximum, even if higher prices have to be paid for.
The coal-fired power supply source is likely to be tapped for a limited time. In addition, the US is also believed to be ready for supplying liquified natural gas (LNG) to the most vulnerable EU nations ‘if Russia completely cuts off gas exports’, despite charging higher prices. Experts also opine that the EU nations should seriously consider ‘resort to reactivating old decommissioned coal plants.’ While coal may be considered to be a ‘worst fossil fuel’, but in the short-term, it can be substituted with ample precautions; for ‘we have to keep coal-powered plants on stand-by and maybe even let them operate.’ Moreover, as the energy crisis worsens, ‘coal remains a critical component of the power-mix, especially when the reliability of energy from other sources of energy is called into question,’ suggests the head of Rystad Energy, the German energy giant.
Since its invasion of Ukraine, Russia has been hiking the tariffs on gas and electricity from time to time. As a consequence, the shortage of energy supply in Central and Eastern Europe from Russia has reportedly been varying between 2% and 5%
Germany is considered to be the worst sufferer if Vladimir Putin further bolts the energy supply. But it must be remembered that if Germany resorted to coal-fire power, ‘it would go against its own green promise to phase out coal-fired plants by 2030,’ an eminent environmentalist has cautioned.
The renewable energy sources available in abundance can also be used as a powerful weapon to effectively confront Russia’s ban on oil, gas, and power supply to the West particularly. A senior official of the European Commission, Frans Timmermans, has strongly recommended: “If we really want to stop long-term making Putin very rich, we have to invest in the ‘renewables and we need to do it quickly.’’ Ursula von der Leyen, President of the European Commission, has urged “deep market interventions to help Europe weather a massive energy crisis unleashed by Russia turning off the natural gas taps to punish the EU for supporting Ukraine. Ursula Von der Leyen said: “This is not only a war unleashed by Russia against Ukraine, but this is also a war on our energy, a war on our economy, a war on our values and a war on our future.’’
The fact of the matter is that the world has to innovate and invent alternatives to the Russian oil, and gas supply. Solar and wind are being successfully yoked to energise agricultural machinery in some African and Middle Eastern countries. Poland’s Former PM Donald Tusk has suggested diversifying gas supply away from Russia, whom he says has been an ‘unreliable partner’ twice in 2006 and 2009. Tusk says that we should explore importing gas and oil from the Middle East and North Africa as optional sources. He is of the view that Iran, Iraq, Egypt, Kurdistan, Algeria, Libya, Israel, Azerbaijan, Turkey and Turkmenistan too could be explored for export of oil even in small quantities.
He also advocates intensifying collaboration for oil and gas exploration with Kazakhstan and Azerbaijan on the Southern Gas Corridor. Importing LNG from the US, East Africa, and Australia could be another avenue to find some alternative. ‘Norway is now replacing Russia as the largest oil and gas supplier to the EU members. Nuclear energy is being used in Belgium, Britain, France and Germany to shift from coal.
Since there seems to be little hope for an early solution to the Ukraine-Russian conflict, oil and gas supply from Russia may not be with us for a long time. Meanwhile, governments have to extend adequate financial support to the vulnerable public and the lower sections of society from the constantly soaring oil and gas prices, where winter is too harsh. For example, Germany has offered a nine Euros monthly ticket on public transportation to encourage people not to use their cars. This step has decreased car usage by an estimated 10 % trips.
Meanwhile, some European countries are believed to be temporarily pursuing fossil fuel alternatives to the Russian energy supply. A carefully chosen series of measures are being planned to provide support and relief to people grappling with a shortage of energy supply. These include Finland’s plans to build a hydrogen transmission network to shore up its energy scarcity after Russia stopped the energy supply. Similarly, governments in Britain, Germany, Italy, and Belgium are going to provide financial aid to meet increased expenses to procure energy-supply substitutes. The use of nuclear energy is also on the cards wherever such provisions exist. So far, very few reliable-ready alternatives are in sight, though.