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Where May Europe Turn Its Direction in Energy? - Büşra Öztürk


After the outbreak of war between Russia and Ukraine which was on the alert with the controversy on the Ukrainian east border, it turned into a West-Russia tension. Western countries attempted to deter Russia with various financial sanctions. However, this crisis maintains its place on the agenda with its energy dimension that can affect the entire European continent and the rest of the world. Although the US, UK, and European countries and many western companies have implemented sanctions such as withdrawing from Russian shares, shelving product shopping, etc., no sharp sanctions have been applied yet at the point of fuel exchange, which is Russia's main income source.


Russia is extremely important for global energy supply because it is the world's second-largest gas producer after the United States, accounting for 17% of worldwide output, and the world's third-largest oil producer after the United States and Saudi Arabia, accounting for 12% of global output. Although progress toward Europe's net-zero goals has aimed to reduce gas use and imports over time, around 43% of Europe's oil and gas comes from Russia. In 2019, Russia was the only provider of natural gas for North Macedonia, Moldova, and Bosnia & Herzegovina. Finland and Latvia were two additional European countries heavily reliant on Russian gas in 2020, with the latter accounting for nearly 90% of the total. Austria, Greece, Italy, Poland, Hungary are also dependent on Russia, with the occupation of over 40%. Germany, another highly dependent country on Russia’s fossil fuels, obtains some 55% of its gas imports from Russia, which also supplies some 50% of its coal and 30% of its oil.


Last week, the German government announced the cancellation of the €9.9 billion Nord Stream 2 gas pipeline, which was designed to double the flow of Russian gas into Germany. However, this attempt of deterrent has not had a rugged effect and may not hurt Russia quickly enough as the pipeline was not operating yet. Suppose the conflict between Russia and Ukraine continues, and Europe decides to implement serious sanctions on Russian gas. In that case, it is important to look at possible scenarios in which Europe's dependency on Russia in terms of energy supply may decrease.


In this context, the IEA has published a 10-Point Plan to Reduce the European Union’s Reliance on Russian Natural Gas, which considers a modest decline in overall emissions. The key avenues prescribed within the IEA report are not signing any new gas contracts with Russia; introducing minimum gas storage obligations to enhance market resilience; quickening the deployment of solar and wind; making the foremost of low emissions energy sources, such as nuclear and bioenergy; and sloping up energy efficiency measures in homes and businesses. The IEA also proposed a near term option which has the potential to displace large volumes of Russian gas relatively quickly by increasing use of Europe’s coal-fired or using alternative fuels, such as oil, with underlining the fact that these alternatives to gas use are not aligned with the European Green Deal.


In the light of IEA recommendations, there are several possible ways to reduce reliance on Russian gas. One of the ways is that imports from non-Russian pipelines, such as Norway and Azerbaijan pipelines, may increase over the next year by up to 10 bcm (billion cubic meters) instead of gas supplied to Europe from Russia. However, Equinor CEO Anders Opedal stated that Norway is already supplying at full capacity, and Azerbaijan's ambassador to the UK stated that any significant increase in volume would necessitate Europe signing long-term gas contracts. In this sense, this avenue may require a long term to be implemented and may not provide Europe energy security in short-winded.

As another way to turn away from Russian gas, Europe may potentially increase importing liquified natural gas (LNG) via tankers to replace import of 175 bcm to 200 bcm gas supply from Russia of overall 400 bcm import. This is likely to come from the United States and Middle Eastern suppliers such as Qatar. Since the LNG market is not very big, providing extra LNG for Europe might be hard and cause higher prices. Furthermore, some environmentalists are also concerned about the carbon cost of transporting more LNG to Europe via tankers because it requires more energy to transport on multi-continent shipment routes. However, some climate scientists believe there won't be much difference between LNG gas and what's being piped from Russia because the country is thought to use old and leaky infrastructure that already emits a lot of methane.


Before this conflict between Russia and Ukraine existed, some European countries, such as Belgium and Germany, were phasing out their nuclear plants. Now Germany is considering postponing the shutting down and maximizing the use of remaining nuclear plants. However, the usage of old-dated nuclear plants could be inefficient and detrimental. According to the chair of the Center for Security and International Studies (CSIS), even if Germany never shut down any of its nuclear plants, the impact on European gas demand would be about 4%. In this context, preserving old nuclear power plants may not reduce dependency much. Still, the establishment of new generation nuclear power plants may be a solution that will decrease dependence on Russia in the long run.


The long-term way to reduce the reliance on Russian gas is rapidly building out renewable sources. According to Economy and Climate Minister Habeck, renewables are the only way to achieve "true independence" in energy matters. In this respect, the transition to renewable energy may move faster under pressure. For instance, the German government reportedly wants to move 100% renewable electricity from 2040 up to 2035.


In my opinion, in case the Russia-Ukraine conflict continues, if Europe implements all of these alternatives within a comprehensive and strategic plan, it might be possible to completely wean Europe off Russian energy without creating a delay in its carbon zero targets while meeting its energy needs. However, not detail-oriented plans and the instantaneous fossil fuel use decisions, especially coal, may cause the carbon emission targets not to be reached in the expected time. This shift away could lead to higher greenhouse gas emissions since natural gas is considered the cleanest energy source among other fossil fuels. Even though Europe has survived a similar energy crisis before without an interruption in Russian gas throughout the cold war, I believe Europe's energy security and reliance have been shattered hard, and the dependency on Russian gas will be questioned a lot in the future.