Russia’s gas squeeze: a moment of truth for Europe

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Russia’s gas squeeze: a moment of truth for Europe

23 June 2022 Clean energy investing 0

Russia is tightening its natural gas squeeze on Europe. Moscow has cut capacity through the main pipeline to Germany by 60 per cent since last week, claiming EU sanctions have caused maintenance problems — but has failed to step up supplies via other routes. Many capitals believe the Kremlin is using energy to exert pressure as its troops wage a war of attrition in Ukraine. European gas prices have soared 50 per cent in the past week and the shortfalls are making it hard to refill gas storage before the wintertime. Ten EU states have declared early warnings of a gas emergency. The International Energy Agency has said the continent should be ready for a complete cut-off of Russian gas exports this winter.

As well as preparing to conserve energy, countries including Germany, Austria and the Netherlands are restarting mothballed coal-fired power stations or raising limits on their output — which threatens to slow the transition to green energy. Reverting to coal is in part inevitable. Governments have an overriding priority to keep the lights on, hospitals open and factories running.

Not doing so would cause misery for millions and a recessionary shock. That could shatter European popular support for climate efforts and for Ukraine’s defence against Russia’s invasion — which Kyiv fears could force it into an unpalatable peace with Moscow. But coal’s return should be shortlived; an impetus not to delay the switch to clean energy, but to accelerate it.

Europe has halved the proportion of its total gas supplies coming from Russia since before the Ukraine invasion, but most options to diversify suppliers have already been exploited. So the focus must be on alternative energy sources and efficiency. To reduce coal-burning, existing nuclear plants should be kept operating as long as possible. Germany has been criticised for continuing to decommission its remaining nuclear power stations; Berlin insists technical and safety factors prevent it from keeping them open. Some nuclear operators say the life of plants can be safely prolonged, but that needs timely decision-making by governments.

The IEA is right to say the overall answer to today’s energy squeeze and to the climate crisis is the same: a “massive surge” in investment to accelerate the transition to clean energy. Things are moving the right way; in the five years after the 2015 Paris Agreement, clean energy investment grew 2 per cent a year; since 2020, the pace has accelerated to 12 per cent. But that partly reflects higher materials costs — and spending on renewables and energy efficiency is well below what is needed.

Industry says renewables projects are being held up not by a shortage of funds but by cumbersome regulatory and planning processes in many countries, and problems connecting to grids. Bureaucracy needs streamlining, and investment accelerated in modernising power grids and developing storage so they can cope with higher levels of intermittent renewables.

EU capitals are developing rationing plans for a Russian shut-off, even as they hope they will not be required. Co-ordination is needed to avoid fights for supplies that erode European solidarity. Surging prices are already prompting businesses and households to cut energy use; governments must have measures in place to protect the most vulnerable from hardship — and to encourage moves to insulate homes.

But many governments could do more through carefully targeted information campaigns to help consumers understand how to conserve power, and explain the real reason, beyond climate efforts, why prices are so high. Russia should not be allowed to achieve through energy blackmail what it cannot achieve on the battlefield.

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