It took a war in Europe for the first time since WWII for the European Union to realize that Russia is not the reliable energy supplier Moscow has always claimed to be, and many officials in Europe have believed. Russia's invasion of Ukraine and the concern over natural gas and oil supply to Europe prompted the EU and the biggest economies in Europe dependent on Russian gas to urgently overhaul its energy security strategies.
By most estimates and forecasts from the European Commission and analysts, Europe can survive next winter without Russian gas. However, ditching Russian energy dependence beyond next winter will be a challenge for the EU and many major European economies, including the biggest, Germany, which imports half the gas it needs from Russia.
As the war in Ukraine threatens to cut off Russian gas supply—either in the form of sanctions or a Putin retaliation to sanctions—Europe realized that ensuring energy security would mean weaning itself off Russian deliveries in the quickest way possible, even at a high economic price.
High Price To Pay
The price will indeed be high, especially in light of the already high energy prices in Europe even before Russia's invasion of Ukraine, which had put cost pressures on many industries, not to mention the cost-of-living increases with soaring energy costs for households.
Europe receives some one-third of its natural gas from Russia, but the dependence varies among EU members. Germany is 50-percent reliant on Russian gas, and Italy imports around 40 percent of its gas needs from Russia. Southwest European countries Spain and Portugal do not import any Russian gas, but southeast European countries and Russia's neighbors to the west, Estonia and Finland, are 100 percent or nearly 100 percent dependent on Moscow for their natural gas supply.
Early on Monday, natural gas prices in Europe shot up to a new record high—the third consecutive trading day in which gas prices in Europe beat all previous records—as the U.S. and Europe discuss measures to restrict Russia's oil and gas revenues.
European allies, however, are not currently on board with banning imports of Russian oil and gas. Germany said it clearly:
"Currently, there is no other way to secure Europe's supply of energy for heat generation, mobility, power supply, and industry," German Chancellor Olaf Scholz said on Monday.
Despite the fact that Germany has been working within the EU and beyond to procure alternatives to Russian energy supply, this doesn't happen overnight, Scholz added.
"It is therefore our conscious decision to continue doing business with Russian energy," the German chancellor said.
In Italy, Energy Transition Minister Roberto Cingolani told state TV Rai on Monday that Rome would replace around half of its imports from Russia by the middle of this year.
But Italy – unlike many other EU countries east of it – already has working alternatives routes for gas from other suppliers such as Algeria and the Trans Adriatic Pipeline (TAP) from Azerbaijan.
Related: U.S. Sanctions Can’t Keep China From Buying Russian Oil
Some EU members are entirely dependent on Russian gas, and reducing that dependence would need a lot of EU and supra-government coordination and solidarity to send (if possible) gas where it's needed. And a lot of money, of course.
New Energy Security Strategies
The Russian invasion of Ukraine prompted all European governments to revise their energy strategies, which are now geared toward freeing themselves from Russian energy dependence and Russian blackmail with natural gas deliveries.
Case in point: Russia's Deputy Prime Minister Alexander Novak said on Monday, that Russia could cut natural gas supplies to Germany via the Nord Stream 1 pipeline.
"In connection with unfounded accusations against Russia regarding the energy crisis in Europe and the imposition of a ban on Nord Stream 2, we have every right to take a matching decision and impose an embargo on gas pumping through the Nord Stream 1 gas pipeline," Novak said in a state television broadcast on Monday, adding that "so far, we are not taking such a decision."
In the wake of the Russian invasion of Ukraine, Germany announced last week it was changing course "in order to eliminate our dependence on imports from individual energy suppliers," Chancellor Scholz said. Germany will build two LNG import facilities, at Brunsbuettel and Wilhelmshaven, and look to speed up the installation of renewable energy capacity to have 100-percent renewable power generation by 2035.
Within the EU, the war in Ukraine prompted officials to advocate for a faster deployment of renewable energy sources.
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"The only way that we cannot be put under pressure from being Putin's customer is to no longer be his customer for our essential energy resources. The only way to achieve that is to speed up our transition to renewable energy resources," Frans Timmermans, the European Commission's Executive Vice-President for the European Green Deal, said on Monday.
The European Commission is unveiling proposals "to quickly get rid of our dependency on Russian fossil fuels," European Commission President Ursula von der Leyen says, noting that this would entail diversifying suppliers, taking in more LNG, investing in renewables, and improving energy efficiency.
The International Energy Agency also unveiled a plan which, the IEA says, could help the EU reduce its reliance on Russian gas by more than one-third within a year by turning to other suppliers and using other energy sources.
The EU's own strategy is set to include cutting dependence on Russian gas by 80 percent this year, Bloomberg reported on Monday, citing officials with knowledge of the plans.
As admirable as those plans are, if gas supply from Russia stopped now, industries and households in Europe would suffer, and economies would plunge into recession, according to analysts at Bloomberg Economics.
Europe has realized it cannot depend on one energy supplier, but it will take a lot of effort and money to cut Russia off.
By Tsvetana Paraskova for Oilprice.com
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