26 May 2022

Europe is in an energy conflict with Russia – it’s time policymakers realised that

By Dr Frank Umbach

Last week the EU published it’s €300bn REPowerEU plan, which aims to simultaneously reduce continental carbon emissions and wean Europe off Russian hydrocarbons by 2027. This followed a major escalation of Europe and Russia’s stand-off earlier this month when Moscow shut off gas supplies to Poland and Bulgaria, citing disputes over rouble payments.

These moves dismantle European illusions about the precarious energy security reality it faces following the brutal invasion of Ukraine. We got a taster last summer when Gazprom – Russia’s most important foreign policy instrument – was unwilling to provide additional gas supplies for European gas storages. The race to source alternative supplies to Russian gas before next winter is the continent’s greatest energy challenge since the 1973 OPEC crisis. Like then, businesses, industry and households are facing the prospect of ‘gas rationing’ if dependence isn’t massively reduced.

Meeting the demands of this moment will require the kind of creativity, pragmatism, ambition and coherent coordination by European policymakers that has until now appeared lacking. If it is to win the race, Europe must lean on the full spectrum of gas alternatives available.

First, clarity is required about the scale of the challenge. Russia accounted for approximately 40% of all EU gas imports in 2021. To replace this at speed is an undertaking no less significant or pressing than phasing down fossils fuels as part of the climate change fight. A continent-wide mobilisation is needed, drawing on cooperation between the EU, national governments, energy companies, financial institutions and the public. REPowerEU is only the beginning of an unprecedented effort.

For Ukraine, every day counts in Europe’s efforts to reduce exposure to Russian gas. The more than €45bn that European nations have already sent to Russia for energy since the invasion began directly funds Putin’s war effort. This exceeds European financial, military and economic support for Ukraine during the same period. Speeding up the disconnection from Russian fossil fuels will harm the Russian cause just as much as providing weapons to the Ukrainians will.

Since the end of February, we have become accustomed to the sight of European and Nato leaders gathering to discuss military support for Ukraine. But where is the same urgency for efforts to wean ourselves off Russian gas supplies? This other half of the conflict equation continues to be met with less intensity by European policymakers. It also highlights the need to redefine supply security in the ‘energy triangle’ alongside climate needs and economic competitiveness. Until recently, it had been subordinated to the other two objectives, rather than balancing all three objectives equally.

Without a stronger political-industrial cooperation and a mutual understanding of the major challenges for bringing together policymakers, suppliers and distributors, the energy industry is left to take up the baton. Gastech, the gas sector’s leading event taking place in Milan in September, is a rare opportunity for Europe, and indeed the world, to coalesce around the urgent need to recalibrate gas supplies in the context of REPowerEU. The questions of how and where we get gas supplies are immensely complex. High-level opportunities, like Gastech, to convene the key decision-makers are essential for ensuring Europe’s gas supply security.

A rapid expansion of LNG supplies will also play a major role in alleviating pressures. The US, Qatar, and a range of African producers have demonstrated willingness to divert supplies to Europe. But the continent’s import capacity for LNG is stretched. The scramble to secure more floating capacity and build new import terminals will take years. Furthermore, the lack of a northern pipeline in Spain, Europe’s largest onshore LNG capacity, demonstrates the absence of a coherent energy security strategy up to this point.

Efforts to boost domestic gas production, including temporarily using Europe’s unconventional gas resources (such as in Scandinavia) and removing production freezes in the North Sea, while no panacea in the short term, will help. On the demand side, energy conservation – whether through industrial rationing or public campaigns to reduce household energy usage – will be required in the short term to avoid a collapse of Europe’s energy-intensive industries, especially in the event of Russia turning off the taps.

Meanwhile, nowhere is the gap between rhetoric and reality more pronounced than with hydrogen. Positive noises about ramping up production and capacity have been made in recent months, with little meat on the bone. The European Commission has outlined ambitions for hydrogen to take on some of the existing Russian gas burden, but detail on how that is achieved is scant. They have rightly recognised hydrogen compatible interconnectors as key to ramping up capacity, but the how remains missing.

Europe is in an energy conflict with Russia. If it is to secure its supply, European decision-makers must echo the urgent approach taken to arming and supporting Ukraine. REPowerEU must be the starting gun for that process. Only by bringing together leaders to determine an ambitious, diverse, and realistic alternative gas and energy strategy can Europe truly put the squeeze on Russian gas supplies.

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Dr Frank Umbach is Research Director at the University of Bonn's European Centre for Climate, Energy and Resource Security.

Columns are the author's own opinion and do not necessarily reflect the views of CapX.