Kinh doanhQuốc tế

Europe must pay a big price to cut Russian energy

Europe’s plan to stop depending on Russian energy is likely to take a long time and cost billions of dollars because many materials to build projects are scarce and expensive.

Russia’s rush to replace fossil fuels is leading Europe to focus on boosting the flow of liquefied natural gas (LNG) in the near term and increasing production from renewable sources by 2030. Germany committed to build two LNG terminals this year, and the Netherlands has secured the construction of a Floating Storage Regasification Unit (FSRU) by March. Italy and Estonia are also accelerating their plans .

France wants to resume negotiations with Spain on a fuel connection pipeline. Meanwhile, Britain and France are looking to expand nuclear and renewable energy. Around 230,000 tonnes of reinforced steel will be used to build Hinkley Point C of the Electricite de France SA project in South West England. Another reactor of the same design is also planned.

However, the prices of the materials needed to build these projects have skyrocketed. Steel, copper and aluminum have alternated in price records over the past 12 months, and the spot commodity index, estimated by Bloomberg, has risen 46 percent in the same period. This spike could slow the European Union’s (EU) plans to nearly triple its solar and wind capacity this decade. According to estimates, the above plan may require about 52 million tons of steel.

Fred van Beers – CEO of SIF Holding NV, a company that makes steel bases for wind turbines, commented: “This battle affects all companies, including us when we are about to make investments. It’s a pretty big investment. It’s turning our business upside down.”





The Gazprom PJSC gas rig at the Kovyktinskoye gas field, near Irkutsk, Russia.  Photo: Bloomberg

The Gazprom PJSC gas rig at the Kovyktinskoye gas field, near Irkutsk, Russia. Photo: Bloomberg

Before the Ukraine conflict broke out, Russian gas was relatively cheap, easy to transport, and well-supplied. Those factors, along with the planned opening of the Nord Stream 2 pipeline to Germany, have led Europe to reduce its energy production in place and start shutting down coal plants and nuclear reactors to focus on clean sources. than.

According to the International Energy Agency (IEA), the EU imported about 155 billion cubic meters of gas from Russia last year. As a result of the conflict, the bloc wants to cut its dependence by two-thirds this year. The IEA says about 30 billion cubic meters could be replaced by other suppliers, including nuclear and renewable energy. Grant Sporre, an analyst with Bloomberg Intelligence, said that for the EU, the list price of infrastructure could be 20% higher than before the Russia-Ukraine tension.

“Construction will be more expensive than the government intended. We can expect some projects to be delayed as raw material prices continue to rise,” he predicted.

The European Commission plans to install 290 gigawatts of wind and 250 gigawatts of solar. At current market prices, the cost of steel alone has reached 65 billion euros ($72 billion). Russia and Ukraine are among the largest exporters of sheet steel used in the construction of turbines and gas pipelines. Although there are alternative sources, the cost of those supplies is 50% higher than usual, according to Rysted Energy AS.

To complicate matters further, China decided to close its Tangshan steelmaking center in an effort to control the Covid-19 outbreak. “The supply chain for all steel products in Europe is seeing rising costs,” said James Ley, senior vice president of Energy Metals at Rystad.

Copper is another key component with high electrical conductivity, ideal for wiring and cables. Europe needs about 7.7 million tons of copper to meet its 2030 target. According to Back of America, this year’s price hike will add about $7.6 billion to costs.

In addition, aluminum is also a necessary material for the solar panels, turbines and grids they connect to. Europe is facing a severe aluminum shortage due to a slump in output after soaring electricity costs dented the metallurgical industry’s profits. Russia is the largest producer outside of China, with refined aluminum accounting for about 5% of global production. According to BloombergNEF, the aluminum market has been tense this year and prices spiked to record levels in March. The risk that Russian shipments could be curtailed by sanctions fueled the tension. above.

Andrew Forrest, founder of Fortescue Group Metals, said: “The world may have to live without Russian supplies. It can certainly be done, but it will take some time to adjust.”

More grids will be needed to deliver large amounts of renewable energy where it is needed. According to BloombergNEF, about $1.5 trillion in cumulative investment between 2020 and 2050 is needed to add new connections.

Xiao Gu (according to Bloomberg)

You are reading the article Europe must pay a big price to cut Russian energy
at Blogtuan.info – Source: vnexpress.net – Read the original article here

Back to top button