European Union’s Energy Decoupling From Russia 

By: - July 22, 2022

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President Putin during a photo call of participants in the Russia-European Union summit with Italian Prime Minister Silvio Berlusconi, centre, and Javier Solana, EU High Representative for Common Foreign and Security Policy
Image by Russian Presidential Press and Information Office

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Despite apocalyptic predictions that are mostly coming from pro-Kremlin analysts, the European Union will not freeze to death without Russian natural gas. Although the coming winter could bring energy shortages to many European countries, EU members are actively preparing to live not only without Russian gas, but also without its oil and coal.

Europe will face a serious energy crisis only if it suddenly, for whatever reason, stops purchasing Russian natural gas and oil. In order to prevent such a scenario, the EU is gradually reducing the import of Russian energy. The European Commission has urged member states to reduce their gas use by 15 percent from August 1 of this year until 31 March 2023 “to ensure they can cope in the event of a total gas cut-off from Russia”.

Despite growing tensions between Moscow and the West over the war in Ukraine, the Kremlin is unlikely to completely cut off gas supplies to the European Union. Russia’s economy remains dependent on energy export, and the Kremlin has already demonstrated on several occasions that it is not ready to do any serious harm to its “Western partners”.

On July 11 Russia shut down the Nord Stream One pipeline for annual maintenance. German Vice Chancellor Robert Habeck said he suspected that Russia may cite “some little technical detail” as a reason not to resume gas deliveries to Germany after the maintenance is completed. Indeed, such an action would lead to a huge energy crisis in Germany, but the Kremlin made sure Berlin continues to receive Russian gas. On July 21, gas flows resumed through the Nord Stream 1 at 40 percent capacity, which means that Moscow de facto helped Germany avoid an energy crisis.

Germany, as well as other EU members, now have enough time to fill their gas storages sites and prepare for winter. Berlin plans to have natural gas storage at 80 percent capacity by October and 90 percent by November. However, it is rather questionable if Germany will manage to achieve such a goal if Russia does not increase the volume of gas going through Nord Stream 1.

In 2021 Germany relied on Russia for 55 percent of its natural gas imports. After the Russian invasion of Ukraine, the EU member reportedly reduced its gas imports from Russia to 35 percent. According to the International Monetary Fund analysis, permanent shutoff of the remaining Russian natural gas supplies to Europe would lead to gas shortages in Germany of nine percent of national consumption in the second half of 2022, 10 percent in 2023 and four percent in 2024. In other words, if Berlin stops purchasing Russian gas, German economy will suffer, but it will gradually adapt to a new reality and will find an alternative to Russian energy.

Despite significant dependence on Russian natural gas, coal and oil, the EU – be it under the United States pressure or voluntarily – remains determined to “end the era of fossil fuels in Europe”. By February next year, the European Union is expected to completely stop purchasing Russian oil, while the Bloc already reduced coal imports from the Russian Federation. Moreover, EU members are actively looking for alternatives to Russian energy. On July 18 Algeria announced that it will sign a “historic gas deal” worth $4 billion with Italy, a move that will help the EU member to get rid of Russian imports. In addition, the European Union signed a memorandum of understanding with Azerbaijan, aiming to double gas imports from the energy-rich South Caucasus country. According to the document, Azerbaijan will export to the EU at least 20 billion cubic meters a year by 2027. However, given the EU imports 169 billion cubic meters of natural gas from Russia, it is not probable that Azerbaijan’s gas will save Europe from potential shortages.

The EU will almost certainly not be able to fully replace Russian gas volumes this winter. In the short-term, its economies could face huge problems, and the European governments are expected to implement gas rationing plans. As a result, private households will likely be protected from electricity restrictions, although such measures will have an impact on European industry.

In the mid-term, solar energy, wind power, coal, and natural gas from other producers, will replace Russian gas at least to a certain extent. Germany, Italy, Austria and the Netherlands have all indicated that coal-fired plants could be used to compensate for a cut in Russian gas supplies. It is also entirely possible that certain European countries will continue purchasing Russian natural gas, and resell it to those EU members that will completely break energy ties with Moscow. Brussels will portray such actions as “European solidarity”.

Russia, on the other hand, is expected to continue diverting gas supplies from Europe to Asia. Moscow has already easily found a new market for its coal, and increased sales to countries such as India, China and Turkey. Therefore, as a result of the Ukraine war, the world will face a transformation of the energy trade.

In the long-term, however, if Russia suffers a defeat in Ukraine, and finds itself on the brink of collapse, those foreign powers that mange to establish control over the country’s energy giant Gazprom, as well as over Russian natural resources, will be the biggest winners of the Kremlin’s “special military operation”.