Moscow’s Battle with Energy Weapons
Moscow’s battle with energy weapons is a report on Europe’s energy crisis. One of the main consequences of Russia’s invasion of Ukraine is the sharp increase in energy prices. What initially seemed like a purely economic issue and concern quickly turned into a multi-layered energy crisis that has engaged the entire society and is even altering geopolitical balance. Russian gas and oil, which many countries are still dependent on, have become a weapon in Putin’s hands. Meanwhile, European countries that have imposed sanctions against Moscow are seeking new energy suppliers in Asia and the Middle East and are designing a new geo-economic game.
Not Just Gas: Inflation and Instability
Citizens, companies, and institutions were forced to adjust their budgets to the sudden increase in electricity costs, which in turn has led to inflation rising to its highest historical level in several decades. Additionally, rising prices could pose a serious food crisis risk for many developing countries.
Will inflation cause instability in some of the world’s warmer regions like the Middle East and North Africa? What will happen to energy transition, and can governments accelerate the replacement of renewable energies, or is there a likelihood of returning to fossil fuels like coal?
Considering that most countries in the Middle East and North Africa lack the necessary infrastructure and facilities to produce and utilize renewable energies, and also the return to high-pollution fossil fuels like coal, which contradicts sustainable development and environmental policies, this wave of rising energy prices in many countries with weak and less developed economies could lead to a major disaster.
Europe’s Gas: What Will Winter Be Like?
Five to ten horrific winters: this is the prediction of Belgium’s Energy Minister Tinne Van der Straeten regarding how much energy prices in Europe could continue to rise. She called for gas price control at the European Union level and added that the time for negotiation is over, and now is the time for decision-making. According to her, the current situation is no longer bearable for many families and companies. Governments must take immediate measures to reduce household energy costs, as many families are struggling to cover their living expenses.
Moreover, considering that the invasion of Ukraine has entered its seventh month and in the absence of a negotiated solution, the number of harsh winters mentioned by Belgium’s Energy Minister does not seem unlikely, especially if the reduction in Russian gas supply continues at today’s level or even worsens.
Since June, Russian gas supply to the European Union has decreased by 70% compared to the pre-crisis period, which means Europe needs to find new replacements for almost one-third of its total gas resources. This is exactly why the price of methane today is about 300 euros per megawatt-hour, which is 15 times more than last year. Therefore, the discussion is not about facing five winters in an uncertain future but about the winter that is approaching. The European Union has managed to reach its predetermined goal for October by storing energy at about 79%.
However, this figure hides a worrying reality, which is that the stored gas is only enough for 20% of Germany’s or Italy’s consumption, and to a lesser extent for Poland (15%) and Bulgaria (10%). These are countries that designed the ‘without Russian gas’ project in May and decided to fully implement it.
Deadlock
Therefore, governments face a prospect where no better solution than gas rationing to reduce consumption in winter can be found. Even Italy, despite having more diverse energy suppliers compared to other European countries, is not immune from this. If Germany and Northern European countries need more gas from Norway, which currently supplies 13% of Italy’s demand alone, the possibility of reducing or stopping gas supply to Italy becomes feasible.
Meanwhile, citizens have asked governments for help with paying their bills, which have more than doubled. In response, European governments have pledged to allocate 280 billion euros to resolve this crisis, which is even more than the additional 210 billion euros investment made by the European Commission with the aim of completely cutting their dependence on Russian energy sources and accelerating the transition to clean sources by 2027.
According to some experts, this allocation of budget to help reduce bill costs could be a contradictory signal, meaning that reducing bill costs and invoices inherently supports consumption and increases energy consumption, which is inherently in conflict with the common goal of countries supporting the ‘without Russian gas’ project.