Europe’s energy prospects threatened by political short-sightedness | Daily News Byte

Europe’s winter – which is likely to be warmer than average – is a welcome relief for a continent that faced existential energy supply problems a few months ago. Those problems persist, and many Europeans are suffering the avoidable problems of over-reliance on Russian gas. Fortunately, the period in which Russia could use its energy control for a favorable political settlement in Ukraine may be shrinking. Winter is here, and Europe is holding on, though not without hiccups.

The main beneficiary of this mild winter in Europe is Germany, the engine of the European economy. It bought over 40 percent of its gas imports from Russia and planned to expand its dependence on Russian gas by activating the Nord Stream 2 pipeline. Russia’s war in Ukraine made that impossible, and now Germany has turned to more reliable non-Russian sources of LNG. This unexpected diversification and energy boon for Germany has led to broader economic gains for European producers and energy companies such as ConocoPhillips and EnBV Energie Baden-Wurttemberg AG

While Germany is building its own LNG import terminals, the proximity of Spain and Portugal to North Africa allows them to host their own LNG facilities. With gas prices in the Iberian Peninsula significantly lower than in northern or eastern Europe, expanded production and distribution capabilities would provide a vital energy bridge to Europe in the Maghreb.

Despite the long-term advantage of expanding energy infrastructure from Iberia to the rest of Europe, France remains adamant. French President Emmanuel Macron has resisted building a gas pipeline from Spain and Portugal across the Iberian Peninsula as France aims to sell its nuclear power, much to the chagrin of the rest of Europe.

To the east, European leaders appear to have found an ally in Azerbaijan, which has turned on its LNG tap in the Trans-Anatolian and Trans-Adriatic Pipelines (TAP/TANAP). By building more compressor stations, Azerbaijan will increase its LNG supplies to Europe from 16 to 26 billion cubic meters (bcm) per year. Although there is good news for Azerbaijan, it is still just a drop in the bucket. Europe needs to replace 160 billion cubic meters of LNG per year.

Europe’s energy transition is further complicated by an aggressive Russia – which has shown its propensity to redouble attacks on civilian energy targets after suffering battlefield setbacks. As the war continues, the Kremlin could continue to create disruptions in energy flows to the world. Although unlikely, due to falling leverage, Russia could shut down all of its gas it still supplies to Europe, 30 to 50 billion cubic meters. A complete halt to flows to Europe would close off a vital revenue stream, but would increase Russia’s dependence on China. Expanding the supply of Russian gas to the proposed gas hub in Turkey may increase Moscow’s dependence on Ankara, but also strengthen Turkish-Russian ties with their potential anti-Western vector.

The G7-facilitated pricing of Russian oil exports is likely to encourage Moscow to use illicit markets. The Kremlin could also avoid sanctions by using links to the illegal market or links with other marginal actors in the global South, but neither is likely to lead to the volume of trade needed to resolve problems with Europe. There is precedent for this as Russian oil and gas companies have hidden behind shell companies that are not sanctioned and/or operate through third countries. Complex ship-to-ship transfer methods and obscure shipping patterns aid in this endeavor, where Russian energy exports are funneled into Europe under the guise of being sold by reputable businesses.

Other countries looking to cash in on Russian sanctions will also participate, including India, Turkey, Qatar and Saudi Arabia. Iran, already under sanctions, is likely to play a significant role, helping to facilitate illegal oil shipments through its various subsidiaries. Taken together, they represent a credible threat to the sanctions regime.

Even if winter temperatures are warmer than normal, Europe must collectively address its energy issues by encouraging technological progress and productive dialogue at national and union level. German President Olaf Scholz recently struck a compromise between the Social Democratic and Green parties, ordering two of Germany’s three remaining nuclear power plants to remain operational until mid-April. Nevertheless, Germany’s strong reliance on Russian gas – up to 55% in 2021, and commitment to the gradual abolition of nuclear energy, should have guaranteed the diversification of energy sources. Now European energy producers such as Centrica, Fortum, Uniper and EDF are suffering.

This deal could easily have included nuclear power, from which Germany only gets 6% of its energy. New nuclear technologies include small modular reactors, SMRs, which luminaries such as Bill Gates and others are investing in. The Pebble Bed Reactor is another innovative technology that promotes greater efficiency of electricity generation through the use of enriched fuel pebbles in graphite reactor cores. Although capital intensive, investing in these systems provides safer long-term solutions.

The divisions between far right and far left in Europe will affect any attempt to rationalize energy security and efficiency. Political parties on the fringes, particularly in France and Germany, have made claims that nuclear power is not safe even if it is key to thwarting reliance on Russia. France’s anti-Atlantic left-wing political coalition, led by Jean-Luc Melenchon, has lobbied for severe restrictions on nuclear power, despite 70 percent of France’s electricity coming from nuclear fission.

While the United States is doing its best to help Ukraine and supply LNG and coal to a Europe facing Russian aggression, the European Union must look inward to collectively take control of its reliance on Russian energy and rethink its anti-nuclear policy that has sparked today’s fiasco. Sun and wind are not a panacea for lack of storage and intermittency. Technology may catch up, but it will take several decades. While some may be discouraged by the expansion of nuclear power or LNG terminals, the alternative security scenarios, particularly those involving the emboldening of Russia and China, are far darker. Europe needs leadership, a balanced and balanced energy policy and massive capital investment in modernizing the energy sector, making electricity abundant, reliable and affordable. Above all, it should break away from energy and economic dependence on enemy great powers.