It is very, very difficult for Europe to give up its dependence on Russian gas for anything other than three to five years
European countries usually rely on the summer months to recharge their gas storages
As the shutdown of Russian gas undermines Europe’s energy security, the continent is struggling to cope with what experts say is one of the worst energy crises in its history – and it could still get much worse.
For months, European leaders have been haunted by the prospect of losing natural gas supplies to Russia, which account for about 40 percent of European imports and have been a vital energy lifeline for the continent.
That nightmare is now becoming a painful reality as Moscow slashes its supplies in response to Europe’s support for Ukraine, dramatically raising energy prices and forcing many countries to resort to contingency plans as backup energy suppliers such as Norway and North Africa do not they manage to cope.
“This is the most extreme energy crisis Europe has ever seen,” said Alex Munton, an expert on global gas markets at Rapidan Energy Group, a consultancy. “Europe is facing the very real prospect of not having enough gas when it is most needed, which is during the coldest part of the year.”
“Prices have gone through the roof,” added Munton, who noted that natural gas prices in Europe – close to $50 per MMBTu – have dwarfed US price increases almost tenfold. “This is an extremely high price for natural gas, and there’s really no immediate way out of here.”
Many officials and energy experts worry the crisis will only deepen after Nord Stream 1, the largest gas pipeline from Russia to Europe, was shut down for scheduled maintenance this week. Although the pipeline is expected to be under repair for just 10 days, there have also been fears that Moscow will not reopen it, leaving heavily reliant European countries in the lurch. (Russia’s second pipeline to Germany, Nord Stream 2, was shut down in February as Russian President Vladimir Putin prepared to invade Ukraine, leaving Nord Stream 1 as the largest direct gas link between Russia and Europe’s largest economy. )
“Anything is possible. Anything can happen,” German Economy Minister Robert Habeck told Deutschlandfunk on Saturday. “It is possible that the gas will flow again, perhaps more than before. It may also turn out that nothing comes’.
This would spell trouble for the coming winter, when energy demand rises and the availability of sufficient natural gas is needed for heating. European countries usually rely on the summer months to recharge their gas storages. And in times of war, when the continent’s future gas supplies are uncertain, having this energy cushion is especially important.
If the problems in Russia continue for a long time, experts warn of a difficult winter. The British authorities, who only a few months ago warned of a spike in electricity bills for consumers, are now warning of even worse.
Europe could be facing a “winter of discontent,” said Helima Croft, managing director at RBC Capital Markets.
Unrest is already brewing, with strikes breaking out across the continent as households struggle under the pressure of spiraling living costs and inflationary pressures. Part of this dissatisfaction also has side effects on the energy market. In Norway, the European Union’s biggest supplier of natural gas after Russia, mass protests in the oil and gas industry last week forced companies to halt production, sending further shock waves across Europe.
European countries are at risk of falling into “a very, very sharp conflict because there is not enough energy,” Frans Timmermans, vice president of the European Commission, told the Guardian. “Putin is using all the means at his disposal to create discord in our societies, so we must prepare for a very difficult period.”
But the pain of the crisis is perhaps being felt most clearly in Germany, which has been forced to resort to a number of energy-saving measures, including limiting hot water and closing swimming pools. To deal with the crisis, Berlin has already entered the second phase of its three-stage emergency gas plan; last week it also moved to save its energy giants, which have been hit financially by Russian disruptions.
But it’s not just Germany. “This is happening all over Europe,” said Olga Hakova, an expert on European energy security at the Atlantic Council, who noted that France has also announced plans to nationalize energy company EDF as it succumbs to mounting economic losses. “The challenging part is how much can these governments provide to support their energy consumers, these companies? And what is that tipping point?’
The situation has also complicated the climate goals of many countries. In late June, Germany, Italy, Austria and the Netherlands announced they would restart old coal-fired power plants as they grapple with shrinking supplies.
The potential consequences of the crisis that European nations are grappling with reveal how this crisis is occurring on a scale that has only been seen in wartime, Munton said. In the worst-case scenario, “we are talking about gas supply constraints, and this is not something that Europe should be dealing with at any other time than during war,” he said. “That’s basically where things have come to now. This is an energy war.”
They also highlight the long and painful battle Europe will continue to face to wean itself off Russian gas. Despite the continent’s eagerness to abandon Moscow’s supplies, experts say Europe is likely to remain trapped in this spiraling crisis until it can develop the infrastructure for greater energy independence – and that could take years. American gas transported by tanker is one possibility, but this requires new terminals to receive the gas. New pipelines take even longer to build – and there is no surplus of eligible suppliers.
“It is very, very difficult for Europe to give up its dependence on Russian gas in anything other than three to five years. Gas projects just don’t get built that fast,” said James Henderson, an energy expert at the Oxford Institute for Energy Research. “It’s just going to take a significant amount of time to get new projects online, so it’s not something that’s going to go away.”
Until then, European leaders will continue to struggle to secure sufficient supplies and can only hope for mild weather. “The worst-case scenario is that people have to choose between food and heating in the winter,” Croft said.
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