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Europe is on course for a long and potentially problematic winter. Energy supplies are dwindling as the continent battles with the tailwinds of the pandemic.
Europe, for several decades has increased its energy reliance on Russia. Local sources of European energy, including the North Sea are beginning to run dry. This blog will explore Europe’s energy reliance on Russia and question if the time is now, to rethink how the lights are kept on.
Europe and Russia have always had a complicated relationship. Much of the complexity in EU-Russian relations stems Cold War politics between the USSR and Western Europe which divided the regional powers. During this Cold War period, much of Western Europe’s energy was sourced locally. This played a significant part in the rise of European oil supermajors including Royal Dutch Shell, BP & Total. This localised reliance was geopolitically convenient for security purposes.
During the Cold War, trade of oil and gas between Western Europe and the USSR was exceptionally rare. The USSR did, however, in the 1980s, build a pipeline to supply West-Germany (then part of the USSR). However, when the USSR dissolved in 1991, everything began to quickly change. The ownership of natural resources of the former USSR (now referred to as Russia) was split among several oligarchs. Suddenly Russia switched from expansionary communism to breakneck-trade-based capitalism.
The oligarchs in control of Russia’s natural resources were more than aware of the huge potential to sell natural gas to Western and Eastern Europe. The mutually beneficial relationship grew at a great pace. What began with a single pipeline, has evolved into a complex web of pipelines that sprawl across the European continent reaching as far as the UK’s Bacton Gas Terminal.
Prior to the 2006 NATO summit in Riga, US Senator Richard Lugar, head of the U.S. Senate’s Foreign Relations Committee, declared that “the most likely source of armed conflict in the European theatre and the surrounding regions will be energy scarcity and manipulation.” Since that point, a string of national policies and strategies have been developed to defend Europe from the potential energy insecurity based on over-reliance on Russia. The issue has since dominated the rhetoric in EU-Russia relations.
As we approach winter 2021 in the Northern Hemisphere, an energy crisis is unravelling in Europe. Several factors are contributing to this crisis including; a recovery in global energy demand, a significant decline in European gas deposits, a hike in energy prices, wintery weather conditions beginning to appear and a messy long-term transition from fossil fuels to cleaner energy sources. As a result, widespread shortages in supply are being experienced across the continent.
These factors have created the perfect storm and have placed the EU and wider Europe in a troubling position at the mercy of Russian natural gas deliveries.
Russia claims that its gas giant Gazprom is operating at full capacity within the parameters of existing contracts. President Vladimir Putin has claimed Russia is not weaponising energy amid criticism from Western media outlets. Putin has claimed Europe’s gas-based energy crisis is largely its own fault and that other suppliers including the US had also reduced supplies to the continent. Putin also commented the claims were “complete rubbish… and politically motivated tittle-tattle”.
Despite Putin’s arguments, the IEA has said Russia could do more to increase gas availability to Europe and ensure storage is filled to adequate levels in preparation for the coming winter heating season.
Analysts believe the current energy crisis underlines Europe’s long term energy insecurity. US officials have claimed, “Europe needs an energy policy free of other leading power blocs”.
The US appears to have been attempting to execute that same strategy for a number of years. The United States is working hard to become self-sufficient in their own right. Some analysts claim the US is now in a position, whereby they could, in a worst-case scenario, rely entirely on their domestic production for food and energy. With regards to energy consumption, the US was between 86% and 91% self-sufficient in 2016, according to US Energy Information Administration.
Trump’s government was focused on deglobalisation and recovery of domestic industry, in part as a security measure against dependence on other regional giants including China (materials) & Saudi Arabia (energy).
Europe, however, appears to have been less focused on developing regional self-sufficiency. This lack of attention now appears to be creating serious issues.
When the dust settles on what will be a turbulent winter in Europe, there may well be an increased appetite to produce more energy regionally. With coal and nuclear rather unpopular options and natural gas reserves dwindling, Europe may be forced to increase its attention on renewable energy production. The question is, can the transition happen at a quick enough pace?, and can Europe produce enough energy to meet increasing demand? According to data from Irena, the EU could double the renewable share in its energy mix, cost-effectively, from 17% in 2015 to 34% in 2030.
This uplift in renewable energy production would be impressive, but in terms of reducing reliance on Russia, it may not be enough to have a significant impact, leaving Europe at the mercy of Russia’s supply.