how Europe can reduce its dependence on Russia

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Ukraine is being invaded, but Europe is keeping the tap from Russia open. In just 24 hours, imports of energy and materials from the West amount to 700 million dollars. A huge amount of money that goes to Russia every day. Countries like Germany have made some moves to reduce their dependence on Russia, such as the paralysis of the Nord Stream 2 gas pipeline, but they are still circumstantial.

Does Europe have the capacity to supply itself with energy if Russia cuts off gas supplies? It would be a difficult situation, since even in the worst moments of the Cold War the gas kept flowing, but there are multiple alternatives. Each of them with its own consequences. Let’s review them.

The direct option: go back to burning coal. We saw it in October last year when the energy crisis was hitting Europe. Coal production soared and reached 270 dollars per ton. In recent months it had moderated, but in recent weeks it is growing strongly again. The reason is simple: burning coal is a quick alternative to gas to produce energy and meet demand.

Despite attempts by the respective governments to reduce its use, countries like Germany or Poland continue to depend heavily on coal. During the first half of 2021, coal use represented 27% of power generation in Germany. Faced with a reduction in gas, coal is still very present. Betting on this energy would be a solution, but it would have an important consequence: goodbye to trying to achieve the objectives against climate change.

The worst energy crisis since 1973: the invasion of Ukraine has triggered gas by 55% and rising

Get the gas from somewhere else. The data from the European Union Agency for the Cooperation of Energy Regulators (ACER) are clear: Russia is the main supplier of energy to most European countries. Half of the German or Italian gas depends on Russia, while there are countries like Finland or Moldova that depend 100%. Spain is saved on this occasion, but would still suffer the impact of being dragged by the needs of neighboring countries.

But there are also other gas producers. Spain obtains gas through Algeria and buys it from the United States. Qatar and Nigeria are also major gas producers. This week the Gas Exporting Countries Forum was held in Qatar and the conflict with Ukraine was at the center of the debate.

The role of Qatar and the rest of the producers. Qatar is the first producer of liquefied natural gas in the world, above Russia. However, only 5% arrive in Europe. The vast majority is sent to Asian countries such as Japan or South Korea. The Qatar route is very present in the plan and at the end of January the president of the United States, Joe Biden, already had discussions with the emirs to try to ensure that they were prepared to ship gas to the West.

However, this week Qatar’s energy minister, assured that it is “almost impossible” to replace Russia in Europe quickly, since most of the volume is subject to long-term contracts with Asia and they would only have a margin of between 10 and 15% of their volume to send to Europe.

Romania is another major gas producer and this week the country’s government has announced that it will maximize production to “contribute to Europe’s energy security”. Further away are the options of Iraq and Iran, due to the bad relations with the United States. Finally there is China, which already during the crisis of last autumn ended up sending ships loaded with natural gasbecause with the high price they paid for the distance.

Europe has reserves and regasification facilities. as described The Economist based on a Citigroup reportEurope has enough regasification facilities, such as the Enagás plant in Barcelona (the oldest in Europe), enough to replace almost two thirds of Russian imports. The challenge is the lack of time to expand production capacity.

The shipment of methane tankers from China could also help cover the shortfall that would be caused by the interruption by Russia. Not immediately, but to increase reserves. According to a IHS Markit Global Gas reportif Russian gas exports represent some 230 million cubic meters per day, the regasification capacity could offset some 50 Mm3/d.

Renewables are the way to go, but we are still a long way off. “We are doubling down on renewable energies. This will increase Europe’s strategic independence in terms of energy,” announced the President of the European Commission, Ursula von der Leyen. Europe is preparing to present a new energy strategy, still very focused on trying to reduce dependence on fossil fuels. However, European commissioners aim for 2028-2030 when Europe can “do fine” without Russian gas.

Solar, wind or hydroelectric power are long-term solutions to meet the energy challenge, but we are still a long way off. In 2021, the objective of the European Union was to cover 20% of the demand with renewables. Objective met by countries like Spainbut it is still a very low percentage.

The nuclear energy debate reaches its peak due to the inability of the huge French nuclear park to deal with the energy crisis

Europe already has nuclear power, despite many reluctance. Thierry Breton, European Commissioner for the Internal Market, calculated that Europe needs invest up to 500,000 million euros by 2050 if you want to achieve carbon neutrality. From France they seem to be clear that nuclear energy is the way forward, but countries like Germany or Spain are not clear about it and continue with their idea of ​​dismantling the oldest plants. Despite everything, the European Commission approved at the beginning of February that nuclear energy will be considered green and therefore likely to receive some investments that could also go to renewables.

The problem with nuclear energy to deal with the gas crisis with Russia is that it is a very long-term project, since it takes about 15 years to build new reactors.

The level of unity is measured with the interconnections. The Yamal gas pipeline is at a minimum and so are exports through Ukraine. Together with the stoppage of Nord Stream 2, it means that the gas that arrives from Russia is expensive and does not flow as much as it could be needed. Given this, seven European countries have formed the Pentalateral Energy Forum, an alliance to protect and ensure gas supply. In total they have 575 TWh accumulated in the different storages.

The plan is to improve interconnections so that gas can be sent from one country to another based on who needs it most at that time. Europe has plenty of room for improvement in this regard. Mainly Spain, which is below the minimum of 10% recommended by the European Union.

Europe cannot eliminate its dependence on Russian gas, but it can reduce it. Cutting dependence on Russian gas is too ambitious a goal. Even in the long term. The alternatives are not ready and in case the cold arrives, Europe depends on Russia to supply the demand. Despite this, we have reviewed multiple alternatives that would help reduce dependency and in the process neutralize the scope of Russia’s threat in terms of energy.

Image | Edward Cano

Ukraine is being invaded, but Europe is keeping the tap from Russia open. In just 24 hours, imports of energy…

Ukraine is being invaded, but Europe is keeping the tap from Russia open. In just 24 hours, imports of energy…

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