On the impending invasion of Ukraine, and energy independence
- Dec 10, 2021 4:19 pm GMT
A November article in Bloomberg, How Europe Has Become So Dependent on Putin for Gas, has taken on added relevance in recent days. In advance of Russia's impending invasion of the Ukraine, President Biden has announced no military intervention by the U.S. would be forthcoming.
"Europe’s relations with Russia are close to their lowest point in decades. Yet now President Vladimir Putin’s willingness to open the spigot on Russia’s copious natural gas -- or not -- may be what determines how cold many Europeans get this winter. That’s despite the European Union’s vow a decade ago to reduce its dependence on Russian energy, to avoid this kind of vulnerability. It’s been a contentious issue within the economic bloc and has caused rifts with the United States. Now Putin is dangling the possibility of a surge in gas exports, but possibly with strings attached.
1. How Vulnerable is Europe?
A supply crunch in October provided a vivid insight into Europe’s reliance on gas flows from Russia. Gas storage tanks in the EU were at their lowest seasonal level in more than a decade, after longer-than-usual maintenance at Norwegian fields and Russia rebuilding its own inventories. Benchmark gas prices traded as high as 162 euros ($188) per megawatt-hour on Oct. 6, compared with about 20 euros at the start of the year. It was against this background that Nord Stream 2, a new Russian pipeline under the Baltic Sea to Germany, was completed in September.
2. What's Russia's agenda?
In exchange for increasing gas supplies, Russia wants Germany and the EU to give the approval it needs to begin using the pipeline, according to people close to Gazprom and the Kremlin. It might not be approved until May if regulators use all the time they’re allowed. Putin stepped in to ease pressure on the market in late October by ordering state-run gas giant Gazprom PJSC to start refilling its European gas-storage facilities, sending prices lower. But after Putin’s intervention, Gazprom only booked a fraction of extra capacity in existing pipelines, leaving energy markets on edge."
Any student of history will quickly recognize what can be expected in coming months and years:
- After occupation of Ukraine is complete, Putin's advance will extend westward into former members of the Soviet bloc.
- Germany's Energiewende has left it wholly reliant on Russian gas, to the detriment of the environment and its own sovereignty. Whether or not occupation or annexation of Germany is in the cards is irrelevant. Without radical action in 2022, democracy in that country will likely follow the same downward spiral it has in the U.S., with ominous implications for remaining states of the EU.
- The U.S., meanwhile, follows Germany's course of action blindly. Its plan to build 30 gigawatts of offshore wind capacity in international waters renders U.S. coastal electricity grids exceedingly vulnerable to submarine attack. Already dependent on sun and the wind, we will be increasingly energy-dependent on the peaceful intentions of our foreign adversaries.
Energy is not only power that lights our way in the night, that powers our cellphones, our access to commerce and information - it's political power. It's freedom. It puts control of our lives in our own hands, and it's anything but guaranteed. In coming months and years we will be forced to defend energy independence like never before, a challenge only made more formidable by misplaced confidence in renewable energy.
Get Published - Build a Following
The Energy Central Power Industry Network is based on one core idea - power industry professionals helping each other and advancing the industry by sharing and learning from each other.
If you have an experience or insight to share or have learned something from a conference or seminar, your peers and colleagues on Energy Central want to hear about it. It's also easy to share a link to an article you've liked or an industry resource that you think would be helpful.