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France 24
France 24
Politics
Tom WHEELDON

Can Europe keep the heating on this winter amid Russian gas crunch?

An illustration of a natural gas pipeline over an EU flag made on July 18, 2022. © Dado Ruvic, Reuters

While Europe scorches in the heatwave, some of its leaders are securing new gas suppliers to try to ensure the heating stays on this winter as the war in Ukraine forces the continent to confront its dependence on Russian gas. But analysts warn that new gas sources will not solve the problem – meaning Europeans will have no choice but to cut their energy consumption.

Despite the searing heat, Europeans can soon be expected to restrain their use of air conditioning so they can stay warm this winter. French President Emmanuel Macron warned last week of a “scenario where we have to manage completely without Russian gas” because Moscow is using it as a “weapon of war”. Accordingly, France will have to go through a time of “energy restraint”.

The problem became acute in mid-June when Russia’s state-run energy firm Gazprom cut gas supplies in the Nord Stream 1 pipeline to just 40 percent of capacity. The pipeline provides Russian gas to Germany through the Baltic Sea – and Berlin fears that Moscow will stop supplies completely when the pipeline is scheduled to reopen on July 21 after ten days of maintenance.

Germany still gets 35 percent of its gas from Russia – down from 55 percent before Russia invaded Ukraine. France is less dependent but still exposed, importing 17 percent of its gas from Russia.

Russia has already stopped sending gas to Finland, Poland and Bulgaria over their refusal to pay in roubles. And now there is a “very strong risk” that Moscow will follow suit with the whole continent and cut gas supplies completely before the winter, warned Jacob Kirkegaard, a senior fellow in economics and trade at the German Marshall Fund Brussels bureau.

Russian President Vladimir Putin “needs a reset in the Ukraine war”, Kirkegaard said, “and one way to do that is by messing around with Europe’s energy supplies in the hope that support for the Ukrainian cause will therefore evaporate”.

The “only way to decrease our vulnerability and disable Russia’s use of a blackmail tool is to immediately start getting ready for a total halt to Russian gas supplies”, added Agata Loskot-Strachota, a European energy specialist at the Centre for Eastern Studies in Warsaw.

‘Alternative suppliers will not be enough’

Indeed, European leaders have been rushing to boost non-Russian gas supplies. Italian Prime Minister Mario Draghi travelled to Algeria on Monday to draw up an agreement to boost gas imports by 20 percent, even amid a political crisis at home threatening to bring down his government.

Likewise, EU Commission President Ursula von der Leyen went to Azerbaijan on Monday to sign a deal to increase gas flow through a network of pipelines from the Caspian Sea to Europe.

The continent is buying a record amount of liquefied natural gas (LNG) from countries like the US – with imports increasing by 47.7 percent year-on-year in April.

LNG imports have bolstered European gas inventories, which are used to build up reserves in time for the winter. Overall, EU member states’ gas inventories have reached 52 percent of capacity, up from 43 percent at the same point in 2021. The EU Commission has suggested that member states fill their gas storage to 80 percent of capacity by November 1.

Asked if these non-Russian supplies could meet Europe’s energy needs in the cold months to come, Kirkegaard said “the short answer is no, relying on alternative suppliers will not be enough”.

“A lot of this additional supply takes time to become operational,” he explained. “It will definitely be helpful for the winter of 2023-24, but not this winter, especially if Russia cuts off supplies completely.”

Need to reduce demand

A big part of the problem is that gas cannot be transported as easily as oil or coal. It has to be transported via pressurised pipelines – or traded in liquid form, then transformed back into gas when it arrives in the country buying it (“regasification” in industry parlance).

Roughly half of Europe’s regasification infrastructure is concentrated in the UK and Spain. Germany currently has no regasification capacity at all.

Berlin has expedited the construction of regasification terminals and is leasing offshore facilities, which are quicker to build. However, it will be a while before Germany’s first floating regasification unit gets up and running, Kirkegaard said: “You’ve still got to get all the pipeline infrastructure laid. So it’s certainly not going to happen this year; it’s too late for this to be a relevant source of supply for Germany this winter, even if it will be a major role during the next one.”

In light of all this, the EU “will not be able to fully replace Russian gas volumes this winter”, so reducing demand will be a “necessity”, Loskot-Strachota said.

Market forces have already prompted energy saving. Thanks to the “explosion” in prices set off by the supply crunch, consumption has already fallen by “over 10 percent” across the continent, noted Claudia Kemfert, an energy specialist at the German Institute of Economic Research in Berlin.

Policymakers are preparing to drive gas demand down further. While France awaits Macron’s economisation plans, the EU Commission is expected to unveil this week a request that countries limit cooling and heating of buildings.

Germany is already asking people to reduce energy use – prompting local authorities to dim street lamps and close swimming pools. If Germans are not careful, the situation could become “critical”, Vice Chancellor Robert Habeck warned on July 7.

“This is uncomfortable territory for politicians, especially during a heatwave, but they’re doing what they should do in pointing out that ordinary people need to help, not just governments and utilities,” said Ben Cahill, a senior fellow at the Energy Security and Climate Change Program at the Center for Strategic and International Studies in Washington.

But while households can expect to reduce consumption, Cahill continued, the flow of gas to homes for heating and cooking will be the “number one priority” alongside supplies to critical infrastructure like hospitals.

Concerns about industry, environment

There will have to be hard choices about reducing businesses’ gas consumption. Again, Germany is in a particularly vexed position. Industry comprises more than 37 percent of its gas use; manufacturing giants like BASF – the world’s largest chemicals company – have long been accustomed to Russian gas supplies.

“Rationing gas to companies is a complicated issue,” Cahill noted. “Sectors like chemicals and steel are dependent on gas and there’s no easy alternative because of the heat you need to generate.

“Ideally governments would target energy-intensity companies but that’s hard to do because global supply chains are so linked,” he continued. “They will have to be careful.”

That leaves electricity generation as the area in which governments are keenest to cut gas consumption. Here some countries have already made an uncomfortable decision.

The EU’s long-term vision is for renewables to completely replace gas. But because renewables cannot make up for the immediate shortfall, countries like Germany and the Netherlands have suspended environmental regulations to ramp up coal output to generate electricity – even though it is the most polluting of fossil fuels.

“Europe burning more coal is one of the most unfortunate consequences of the energy crunch,” Cahill lamented. “Nobody wants it, but if you want to keep the lights on it is hard to avoid.”

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