by Will Hitt
As Russia turns off the gas in response to sanctions, energy insecurity in Europe is exposed, the price of energy surges, European economies suffer from soaring inflation, and climate action is put on the back burner in the name of public security.
Introduction
Due to Russia’s war in Ukraine, alongside the tragic loss of life, the war has exposed an acute reliance on Russian natural gas, followed by energy insecurities amongst European states. The war in Ukraine threatens to impede critical progress towards decarbonising Britain and Europe’s infrastructure, endangering vital net zero commitments.
Photo by Arvind Vallabh on Unsplash
The War
On the 24th of February 2022, the Russian Federation invaded Ukraine. Russia’s President, Vladimir Putin, described it as a “special military operation”, designed to “protect the people”, to demilitarise, and to ‘denazify’ Ukraine. However, this is not the first Russian attack on Ukrainian sovereignty. In 2014, Russia illegally invaded and annexed Crimea, a Ukrainian peninsula in the Black Sea, further discrediting the current justification for war, and highlighting Putin’s ambition to take land by force.[1]
Over half a year later, the Ukrainian military has succeeded in halting Russia’s lightning advance and has been successful in recapturing some lost territory. This did not stop Putin from orchestrating illegitimate referendums, where Ukrainian citizens were accommodated by armed Russian soldiers whilst being coerced into welcoming Russian rule, and illegally annexing four eastern regions of Ukraine. Just one day after the mass-annexation, Ukraine recaptured the strategic town, Lyman, casting further doubt onto just how well Russia can hold onto Ukrainian lands.[2]
Not only has this war resulted in the tragic deaths of innocent civilians, brave Ukrainian military, and international volunteers, it has also risked critical progress on the mitigation of climate change in Europe and beyond.
The Energy Problem
Russia is a proven exporter of natural gas which help power the majority of European nations. This is achieved by various pipelines, but most notoriously, through the Nord Stream 1 pipeline, which connects Russia directly with Germany. Nord Stream 2, aimed at doubling gas supply to Germany and beyond, was never fully certified, thus never in use.
However, reactions to Putin’s war have resulted in debilitating EU and UK economic sanctions.[3] As expected, Putin has responded by limiting and turning off gas supply to Europe which many nations rely upon, just before the winter. Not only has supply stopped, but lines affecting both Nord Stream pipelines have been damaged by mysterious explosions. As a result, up to 350,000 tonnes of methane is leaking out of the pipelines, presenting one of the worst natural gas leaks ever and posing a tragic climate risk.[4]
A turbulent invasion igniting in Eastern Europe, mounting economic sanctions, and unreliable energy supply, has what the World Bank has described, “altered global patterns of trade, production, and consumption of commodities in ways that will keep prices at historically high levels… exacerbating food insecurity and inflation”. How then, has energy insecurity translated to economic inflation?[5]
The reduction and uncertainty in the supply of natural gas has caused the global wholesale price to soar. At the beginning of the war, gas was trading for $3.85 per metric million British thermal unit (MMBtu). This has increased exponentially, and peaked at $9.58 on the 22nd of August. Such a rise in the cost of gas, in combination with rising food costs, has resulted in the burrowing of inflation in many resilient economies, especially those reliant on gas for energy.[6]
The EU
The EU’s inflation rate is now expected to reach 10 per cent, rising from 9.1 per cent in August 2022, as a result of the rising cost of energy.[7] The largest economy in the EU, Germany, is set to shrink in the second half of 2022, only to settle down in 2024. France, the second largest economy in the EU, is also experiencing rising inflation, but not to the same degree. This is due to French President, Emmanuel Macron’s “tariff shield”, limiting how much public companies could raise prices. After France nationalised energy production company EDF for nearly €10 billion, energy prices are rising by only 4 per cent, as opposed to Germany’s 25 per cent rise, and the UK’s 54 per cent rise in April. However, it is unknown how sustainable this policy will be in the longer term.[8]
The UK
Across the English Channel, the situation is no better. British inflation sits at 9.9 per cent, dropping ever so slightly from the former 10.1 per cent in August, thanks to the fall in the price of petrol and diesel.[9]
Similar to other European nations, the UK has been exposed to the significant rise in energy prices. But unlike other European countries, the UK is not reliant on Russian gas, but rather on Norwegian gas.[10]
Nevertheless, the disruptions seen in the global energy market, caused by the war, have seen wholesale prices of energy quadrupling in the last year. The UK is currently a net-importer of energy, meaning a continued reliance of expensive foreign energy for years to come. Due to such energy insecurity in Europe, this has led to fears of reliable energy exporters. Norway is currently considering restricting their energy exports to guarantee domestic energy supply.[11]
Clearly, the war in Ukraine has resulted in staggering energy prices for everyone. It has triggered soaring inflation amongst some of the world’s most resilient economies, and it has highlighted energy insecurity amongst many European nations. How then, does all of this feed into climate change mitigation?
Consequences
Climate change has become the new frontier. The effects of climate change are ramping up and its fallout recognises no borders. European record-breaking heatwaves are becoming more severe and likely every year, in addition to frequent droughts, shocking wildfires, and deadly floods. Even if all countries were suddenly net zero tomorrow, the effects of climate change would be here to stay for years to come.[12]
COP26 which was hosted in Glasgow, UK, in November 2021, built upon the Paris Climate Agreement (PCA), in its Glasgow Climate Pact (GCP), to ensuring the Earth does not exceed an average global surface temperature increase of 1.5 degrees Celsius.[13] This mission is admirable, but just how realistic is it in light of the Russian invasion of Ukraine?
To begin, with Russia limiting and turning off the gas to Europe, EU nations have set targets to reduce gas consumption in a strategic move to avoid gas shortages, increasing costs, and possible winter rationing.[14]
As a consequence, Germany has passed emergency laws to reopen mothballed coal plants as a matter of public security. The move has been criticised by environmental campaigners, and puts Germany’s commitment to phase out coal by 2030, a necessary step to stay in line with the PCA and GCP, into question.[15]
On the other hand, Germany has committed €200 billion to decarbonise its electricity supply by 2035. This, in addition to finding Russia an unreliable energy partner, may push Germany in a greener energy direction. However, German Chancellor, Olaf Scholz, has visited the Gulf region in a bid to secure new energy partnerships, meaning more foreign gas for German energy in the meantime.[16]
France on the other hand recently failed to meet a court deadline to get PCA objectives back on track. Similar to Germany, France is seeking a long-term energy deal with the United Arab Emirates for fuel and gas as it removes its dependency on Russian gas, which before the war stood at 17 per cent. However, France is at an advantage. Renewable sources already generate 20 per cent of France’s electricity and this is only set to increase. Whilst some renewable projects are being postponed due to unfavourable economic conditions, wind energy alone will contribute €8 billion to France’s revenue in 2022 to 2023.[17]
Just two months after hosting COP26, the UK greenlit project Jackdaw, a new oil and gas field in the North Sea. Greenpeace campaigner, Ami McCarthy, says the approval was “a desperate and destructive decision”. In addition, the UK has offered more than one hundred North Sea oil and gas licenses, prompting concerns of legality, and this casts doubt on the UK government’s commitment to reaching net zero.[18]
Conclusion
Overall, the Russian invasion of Ukraine has become a catalyst for ongoing economic struggles. Energy insecurity has contributed to inflated costs for energy and food, which has resulted in ambitious governments wavering on their international pledges to decarbonise, opting to prioritise domestic energy supply with fossil fuels and gas.
The war in Ukraine and its consequences highlight how important it is that we strive stronger than ever to transition to renewable energy and net zero. This is, however, easier said than done. If we are to avoid power blackouts and energy rationing, we must transition in a safe, secure, and sensible manner, whilst maintaining our commitments to reaching net zero.
[1] RUSSIA’S “SPECIAL MILITARY OPERATION” AND THE (CLAIMED) RIGHT OF SELF-DEFENSE (Lieber Institute) – https://lieber.westpoint.edu/russia-special-military-operation-claimed-right-self-defense/; Ukraine: Putin signs Crimea annexation (BBC News) – https://www.bbc.co.uk/news/world-europe-26686949
[2] A day after it was ‘annexed’, crucial city returned to Ukraine (The Guardian) – https://www.theguardian.com/world/2022/oct/02/a-day-after-it-was-annexed-crucial-city-returned-to-ukraine; Ukraine ‘referendums’: Soldiers go door-to-door for votes in polls (BBC News) – https://www.bbc.co.uk/news/world-europe-63013356
[3] EU Solidarity with Ukraine (EU Commission) – https://ec.europa.eu/info/strategy/priorities-2019-2024/stronger-europe-world/eu-solidarity-ukraine_en ; Sanctions against Russia (UK Parliament) – https://researchbriefings.files.parliament.uk/documents/CBP-9481/CBP-9481.pdf ; EU sanctions against Russia explained (EU Council) – https://www.consilium.europa.eu/en/policies/sanctions/restrictive-measures-against-russia-over-ukraine/sanctions-against-russia-explained/
[4] Germany freezes Nord Stream 2 gas project as Ukraine crisis deepens (Reuters) – https://www.reuters.com/business/energy/germanys-scholz-halts-nord-stream-2-certification-2022-02-22/; Russia’s Gazprom keeps gas pipeline to Germany turned off (Aljezeera) – https://www.aljazeera.com/economy/2022/9/2/russias-gazprom-keeps-gas-pipeline-to-germany-turned-off; Nord Stream 2 pipeline pressure collapses mysteriously overnight (The Guardian) – https://www.theguardian.com/business/2022/sep/26/nord-stream-2-pipeline-pressure-collapses-mysteriously-overnight; Nord Stream gas leaks may be biggest ever, with warning of ‘large climate risk’ (The Guardian) – https://www.theguardian.com/environment/2022/sep/28/nord-stream-methane-gas-leaks-may-be-biggest-ever-with-warning-large-climate-risk
[5] Food Security Update (World Bank) – https://www.worldbank.org/en/topic/agriculture/brief/food-security-update#:~:text=According%20to%20the%20World%20Bank%27s,exacerbating%20food%20insecurity%20and%20inflation
[6] Natural gas summary (Trading Economics) – https://tradingeconomics.com/commodity/natural-gas; Energy prices and their effect on households (Office for National Statistics) – https://www.ons.gov.uk/economy/inflationandpriceindices/articles/energypricesandtheireffectonhouseholds/2022-02-01
[7] Euro area annual inflation up to 10.0% (Eurostat, Euroindicators) – https://ec.europa.eu/eurostat/documents/2995521/14698140/2-30092022-AP-EN.pdf/727d4958-dd57-de9f-9965-99562e1286bf
[8] German inflation hits record 10% in September (DW News) – https://www.dw.com/en/german-inflation-hits-record-10-in-september/a-63276749; Lower inflation, better jobs … in France la vie est belle (The Observer) – https://www.theguardian.com/business/2022/apr/02/lower-inflation-better-jobs-in-france-la-vie-est-belle; German electricity prices to soar by 25 percent on average (The Local de) – https://www.thelocal.de/20220819/german-electricity-prices-to-rise-by-25-percent-on-average/; Domestic energy prices (UK Parliament) – https://commonslibrary.parliament.uk/research-briefings/cbp-9491/
[9] UK inflation eases to 9.9% but remains close to 40-year high – as it happened (The Guardian) – https://www.theguardian.com/business/live/2022/sep/14/uk-inflation-forecast-hit-fresh-40-year-high-remain-double-digits-business-live
[10] Imports of energy from Russia (UK Parliament) – https://commonslibrary.parliament.uk/research-briefings/cbp-9523/#:~:text=In%202021%20imports%20from%20Russia,and%2046%25%20of%20coal%20imports ; Trends in UK imports and exports of fuels (Office for National Statistics) – https://www.ons.gov.uk/economy/nationalaccounts/balanceofpayments/articles/trendsinukimportsandexportsoffuels/2022-06-29#:~:text=Norway%20is%20typically%20the%20UK%27s,the%20United%20States%20and%20Russia
[11] Price cap to increase by £693 from April (Ofgem) – https://www.ofgem.gov.uk/publications/price-cap-increase-ps693-april#:~:text=The%20energy%20price%20cap%20will,£1%2C309%20to%20£2%2C017; Digest of UK Energy Statistics (DUKES): foreign trade statistics (Office for National Statistics) – https://www.gov.uk/government/statistics/dukes-foreign-trade-statistics ; UK energy: how much, what type and where from? (Office for National Statistics) – https://www.ons.gov.uk/economy/environmentalaccounts/articles/ukenergyhowmuchwhattypeandwherefrom/2016-08-15; Norway set to curb electricity exports in blow to European energy suppliers (Financial Times) – https://www.ft.com/content/7f001d0c-63d0-4cfa-92a7-2cc6462d7887
[12] Climate change made UK heatwave more intense and at least 10 times more likely (Imperial College London News) – https://www.imperial.ac.uk/news/238772/climate-change-made-uk-heatwave-more/ ; ‘The new normal’: how Europe is being hit by a climate-driven drought crisis (The Guardian) – https://www.theguardian.com/environment/2022/aug/08/the-new-normal-how-europe-is-being-hit-by-a-climate-driven-drought-crisis ; Europe wildfires: Are they linked to climate change? (BBC) – https://www.bbc.co.uk/news/58159451 ; Catastrophic floods could hit Europe far more often, study finds (The Guardian) – https://www.theguardian.com/environment/2021/jul/21/catastrophic-floods-could-hit-europe-far-more-often-study-finds ; Climate Change: The Race to Resilience (Centre for Britain and Europe, Jean Monnet student news) – https://blogs.surrey.ac.uk/jean-monnet-student-news/2021/12/08/climate-change-the-race-to-resilience/
[13] COP26 The Glasgow Climate Pact (UK COP26) – https://ukcop26.org/wp-content/uploads/2021/11/COP26-Presidency-Outcomes-The-Climate-Pact.pdf
[14] Germany is on Track to Meeting its Gas Saving Target (International Monetary Fund) – https://www.imf.org/en/News/Articles/2022/08/11/CF-Germany-on-track-to-meet-gas-saving-target
[15] Germany fires up coal plants to avert gas shortage as Russia cuts supply (Financial Times) – https://www.ft.com/content/f662a412-9ebc-473a-baca-22de5ff622e2; Germany to reactivate coal power plants as Russia curbs gas flow (The Guardian) – https://www.theguardian.com/world/2022/jul/08/germany-reactivate-coal-power-plants-russia-curbs-gas-flow;
[16] Germany’s proposed 2030 national target not yet 1.5˚C-compatible (Climate Action Tracker) – https://climateactiontracker.org/publications/germanys-proposed-2030-national-target-not-yet-15c-compatible/; Russia-Ukraine war risks greater carbon pollution despite boost to clean energy (DW News) – https://www.dw.com/en/the-bootprint-of-war-carbon-emissions/a-57682807; Germany’s Scholz seeks energy partnerships with Gulf states (DW News) – https://www.dw.com/en/germanys-scholz-seeks-energy-partnerships-with-gulf-states/av-63228178
[17] France fails to meet court deadline to get Paris climate deal objectives back on track (euronews) – https://www.euronews.com/2022/03/31/france-fails-to-meet-court-deadline-to-get-paris-climate-deal-objectives-back-on-track#:~:text=France-,France%20fails%20to%20meet%20court%20deadline%20to%20get,deal%20objectives%20back%20on%20track&text=With%2010%20days%20to%20go,the%20Paris%20Climate%20Agreement%20objectives; France to pay nearly €10bn to fully nationalise EDF (The Guardian) – https://www.theguardian.com/business/2022/jul/19/france-to-pay-nearly-10bn-to-fully-nationalise-edf; Energy security: France takes emergency measures to boost renewables (Wind Europe) – https://windeurope.org/newsroom/news/energy-security-france-takes-emergency-measures-to-boost-renewables/
[18] Climate activists vow to fight as new gasfield gets go-ahead in North Sea (The Guardian) – https://www.theguardian.com/environment/2022/jun/02/jackdaw-uk-new-gas-field-shell-north-sea-climate
