What will Europe be like if “stop playing” with Russia’s fossil fuel resources?
Rehden is a peaceful village in northwestern Germany that has the largest underground natural gas storage facility in Western Europe, stretches the equivalent of 910 football fields and occupies a fifth of its storage capacity. German gas company, owned and operated by Gazprom, Russia’s state-owned energy corporation. This place could provide the key to answering the question of how difficult it will be for Europe to “detox” Russia’s energy.
Gazprom controls a third of the German, Austrian and Dutch gas storage. It is worth mentioning that the company lowered the amount of gas at its storage tanks in Rehden and other EU locations to unusually low levels last year. This move is clearly aimed at squeezing Europe’s energy supplies.
According to economists, rising tensions have shown that Germany, Italy and much of Europe’s heavy reliance on Russian energy is a misguided strategy. Russia supplies more than 40% of gas and coal imports, and a quarter of EU crude oil.
Veronika Grimm, an economics professor at the University of Erlangen-Nuremberg who advises the government, said: “In Germany there is a small problem that we always focus on one solution and rely on it almost completely Maybe now we’ve come to our senses.”
With growing calls that Europe should stop importing Russian energy, governments are now looking for alternatives. This is part of an EU-wide effort to cut the bloc’s gas imports from Russia by two-thirds next year.
Jörg Kukies, top economic adviser to German Chancellor Olaf Scholz, said: “That’s the top issue: drawing boundaries and making sure contracts don’t get involved with Russia. Preparing for potential gas shortages and looking to build infrastructure to diversify away from Russia, Europe is facing a number of energy security conundrums.
Could Russian supplies to Europe be cut off?
Such an energy “shock” cannot be ruled out. Poland has urged the EU to ban all energy imports from Russia, while Moscow has threatened to cut off gas supplies to Europe in retaliation for the sanctions. But while Germany has suspended the Nord Stream 2 pipeline, it opposes calls for a total embargo on Russian energy, with Mr. Scholz calling continued supply “necessary”.
Leonhard Birnbaum, chief executive officer of Eon, Germany’s largest energy company, endorsed Mr Scholz’s view last week, saying: “In the short term, it is impossible to go without Russian gas. – the European economy is likely to suffer serious consequences.
Germany and Italy are still heavily dependent on Russian natural gas
Europe’s daily energy bill for Moscow is around 800 million euros. Ukrainian President Volodymyr Zelensky has urged Berlin to cut economic links with Russia. A YouGov poll this month found that 54 percent of Germans support the Russian energy boycott.
Gerhard Mangott, a professor of international studies at the University of Innsbruck, said Russia earns 23% of state income from taxing oil exports, while gas taxes contribute only 8%. He said: “I think Europe will cut off oil supplies from Russia, but I’m not sure they will cut off gas. Either way, Moscow can retaliate by cutting gas.”
Most European countries have emergency plans in place to deal with gas shortages by prioritizing household supplies and cutting production in energy-intensive sectors. Bruegel, a consultancy, estimates that stopping imports from Russia will leave Europe unable to refill its storage tanks before next winter and be forced to cut energy use by 10 to 15 per cent through distribution. ration supplement.
The European Central Bank estimates that halting Russian energy imports will likely shave 1.4 percentage points off eurozone growth this year, to 2.3%. However, a study by the German National Academy of Sciences Leopoldina concluded that “the German economy can still be sustained for a short time if Russia stops supplying gas” and the allocation is likely to be unsustainable. necessary, needs.
Can Germany “detox” Russian energy?
This is not easy. According to the World Bank, Germany imports about 60% of its total energy use. Half of Germany’s gas and hard coal imports come from Russia, and also provide a third of its oil imports. According to a recent study by Econtribute, a research group formed by the universities of Bonn and Cologne, Germany will struggle to quickly find an alternative to Russian gas.
About half of Germany’s gas and coal imports and a third of its oil imports come from Russia
Germany uses gas for about a quarter of its electricity, and also uses it for heating homes, temperature control in industry and chemical production. Liquefied natural gas could be useful, but it would be costly: Germany has no LNG storage and would have to import it from other countries.
While the EU currently imports gas capable of generating 1,768TWh from Russia, Leopoldina’s research estimates the bloc has only the capacity to increase LNG imports by the equivalent of 1,100TWh with current infrastructure. Robert Habeck, German Economy Minister, said he had reached a long-term LNG supply agreement with Qatar.
Is Italy “in the same boat” with Germany?
The Italians voted overwhelmingly in the 1987 national referendum to impose a ban on nuclear power development. Renewable energy supplies only 11 to 12% of Italy’s energy needs, far below the European average of 22%. With gas covering 40% of the country’s energy needs, of which 40% comes from Russia, Italy’s desire to reduce its dependence will take a long time.
“We don’t have a good energy mix. The mistakes the country has made over the decades cannot be fixed in a year,” said Roberto Cingolani, minister in charge of ecological transition.
Italy’s domestic gas production has plummeted, from about 20 billion cubic meters a year, to just 3.7 billion cubic meters a year, mainly due to environmental concerns. “We have reduced domestic gas production but increased imports,” Cingolani said. “Continually hit the environment, and we damaged the economy ourselves.”
How does Europe get out of its energy relationship with Russia?
Germany is pushing to pass legislation that would require all gas storage facilities to be at least 90% full by December, up from just 25% today. If necessary, the government will buy it, as part of the EU’s plan to boost gas reserves.
Berlin also hopes to speed up the construction of three LNG depots. “Usually it would be five years,” Mr. Kukies said. “We’ve got it down to three and we think we can finish it in two years, maybe even faster.”
Increasing investment in renewable sources, such as wind and solar, which already produce more than 19% of Germany’s energy needs, is part of the long-term plan. Berlin has ruled out extending the life of the remaining three nuclear power plants. Instead, Germany wants to boost production from coal-fired power plants that use brown coal. Ferdi Schüth, vice president of the Max Planck Institute, said higher CO2 emissions from burning coal would be offset by the EU’s emissions trading system.
Cingolani said Rome has reached preliminary agreements from major gas export companies, for 16 billion to 18 billion cubic meters a year, equivalent to about half of its imports from Russia. However, tapping those supplies would also require leasing two floating storage and regasification facilities at a cost of between 36 million euros and 54 million euros a year.
Italy is also speeding up approval of large-scale renewable projects, but putting new energy into use will take a long time. “Unfortunately, one day is not enough to fix anything,” said Mr. Cingolani.
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