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THE EUROPEAN ENERGY CRISIS

Updated: Oct 9, 2023

European nation-states collectively witnessed the threat of an acute energy crisis when Russia curbed its fossil fuel imports to the European Union, triggering prices to surge to an all-time high. Once the rulers of the globe, the Europeans struggled to generate sufficient energy to survive the winter of 2022-2023. The EU's high dependency on Russian energy commodities, mainly natural gas, coal, and solid fossil fuels, was one of the primary reasons it was impacted the most. EU members acquired 43% of their natural gas, 29% of their oil, and nearly 50% of their coal from Russia, prior to its full-scale attack on Ukraine.


An illustration on the European Energy Crisis

Illustration by The Geostrata


The Kremlin decreased its energy imports to Europe in late 2021, and the situation aggravated following the attack on February 24, 2022. Consequential geopolitical tensions ignited an EU-Russian energy war, where the reluctance to continue the trade of fossil fuels became mutual. European sanctions on Russia's imports of oil and coal prompted the latter to drop its essential natural gas imports, culminating in a reduction of 82% in the value of Russian imports to the EU by March 2023.


Natural gas was the most widely employed fuel in 2021, responsible for generating more than a third of the region’s energy. Thus, the blockade of the gas supply was a tragic blow to Europe’s energy sector, thereby instigating the energy crisis and affecting the living costs of every household. As a result of less supply and an unprecedentedly high energy demand due to COVID-19, costs increased exorbitantly, with gas prices skyrocketing to 14 times higher than in early 2019.


European governments accordingly feared the task of surviving the then-upcoming winter of 2022-2023 with insufficient energy resources.

AN UNFORTUNATE TIMING


To make matters worse for Europe, the timing of the crisis was particularly poor. Considering that the EU’s trade sanctions on Russia were arguably a strategic blunder, the internal state of affairs in Europe during the loss of its pivotal energy supplier, rendered it patently vulnerable to a grave energy crisis, as witnessed.


Firstly, the EU’s noble policy initiatives under the Green Deal, which aim to attain a 55% reduction in greenhouse gas emissions and climate neutrality by 2050, backfired. The region was in the process of voluntarily reducing its dependence on Fossil Fuels to signify a leap towards a cleaner environment, but that adversely affected them with a grave crisis of absent gas and coal stocks. European gas storage was at its lowest level in a decade.


The lack of gas supply also implied that Europe had to shift its hopes towards coal to satisfy its energy requirements.

Coal being the most harmful carbon-intensive fossil fuel, the situation in Europe during the initial phase of the crisis turned antithetical to their agenda of decreasing greenhouse gas emissions due to an increase in coal usage by 35% in comparison to 2021. Hence, in the first half of 2022, the EU found itself trapped in a dilemma where achieving energy security and a clean environment appeared to be two mutually exclusive tasks. It understandably ended up choosing the former, in view of the delicate situation. However, coal consumption dropped once the initial phase of the crisis had passed, paving the way for a glimmer of hope in Europe.


WIND OF CHANGE


In spite of its challenges, Europe has successfully managed to survive the winter while commendably adding only 0.3% to global coal emissions in 2022. It has minimised its reliance on Russian fossil fuels, with the target of completely eliminating Russian energy imports by 2030, as envisaged by the REPowerEU Plan in May 2022.


By eradicating dependence on Russian fossil fuels, REPowerEU planned to tackle the climate crisis and the energy crisis together.

The three principal steps it strived towards incorporated- the promotion of saving energy, the diversification of energy suppliers, and the transition towards clean and renewable energy sources.


Saving Energy: A basic household policy that stems from individual responsibilities can have large-scale impacts if executed with sincerity and solidarity. Data has revealed that citizens lowered their thermostat temperatures by an average of 0.6 degrees Celsius. High prices had also driven people to consume relatively less energy. These actions primarily assisted in reducing energy demand in Europe by a staggering 20% as of June 2023 - a critical aspect of pacifying the fight against its energy crisis.

Diversification of Energy Suppliers: Norway, the US, and the UK came to the rescue of Europe by exporting natural gas to it in order to substitute for Russia’s absence. Further, Liquified Natural Gas (LNG) emerged as the best alternative to natural pipeline gas. And the U.S. extensively provided the EU’s LNG requirements, along with Algeria and Qatar.


Transition to Renewables: Overcoming dependency on Russian fossil fuels was largely, if not most significantly, steered by a transition to clean energy. The optimistic and deterministic mindset of European individuals and Governments on transitioning to clean, renewable sources of energy- as enshrined in the agenda of the Green Deal- remained intact notwithstanding the crisis.


In fact, the urge to develop renewables was likely facilitated by the crisis. Despite unfortunate prolonged heat waves in the summer of 2022 and operational glitches at French and German nuclear reactors- which resulted in a 16% and 19% fall in nuclear and hydropower energies respectively- renewables were the positive highlight of the crisis.


An estimated 11 billion cubic metres of gas was avoided as a result of growth in the use of clean energy in 2022. Wind and solar energies constituted a record 22% of the EU's generated electricity, which is more than any fossil fuel, thereby establishing a bright future for the two energy sectors.


The crisis thus refrained from aggravating as a result of the execution of optimal policies by the EU, with its terminal objective being to reduce energy demand, increase supply, and possess unrestricted access to energy markets. At the same time, Europe’s luck, which came disguised as a mild and bearable winter, can be regarded as an equally responsible aspect in avoiding the dreaded.


“WINTER IS COMING”


A victorious 2022 for the EU deserves praise indeed. But as many would agree, the word “complacency” must be eradicated from European vocabulary, at least until the next winter subsides.


Unlike the winter it survived- which was the second warmest winter it had recorded- the upcoming winter of 2023-2024 is predicted to get much colder.

The sector of renewables appears promising, with wind and solar energy expected to continue their rise by about 20% in 2023, along with the restoration of the French nuclear fleet. Simultaneously, a high summer temperature until so far in 2023 has been yet again challenging for hydropower plants. Stabilisation of prices can furthermore result in a relative spike in energy demand, in contrast to last year’s phenomenon.


Even though Europe seems secure in terms of its gas storage by impressively filling storage tanks to 95% capacity by November 2022, there are risks that Europe needs to extinguish. This needs to be done through continued emphasis on the transition to clean energy. Doing so would help Europe terminate its struggle in ensuring a clean environment and, of course- energy security.


 

BY ROUNAQ GUPTA

TEAM GEOSTRATA

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