/ world today news/ Europe, on the one hand, is getting itself into an energy trap with its actions. And on the other hand, it puts developing countries in obviously worse conditions, hinders their progress and growth. These two theses were expressed by Prime Minister Mikhail Mishustin. What problems does Europe create for itself and why is it afraid of other countries?
Prime Minister Mikhail Mishustin made two interesting theses. The first, that with its actions, Europe is creating energy difficulties for itself, which are yet to be expected in the future. On the other hand, Europe also prevents developing countries from developing normally.
“One way to slow the warming process is thought to be to stop using hydrocarbon-based fossil fuels. However, ill-conceived attempts by the West to quickly switch from oil and gas to clean solar and wind energy have led to a decrease in investment in the extraction of hydrocarbons and an increase in the prices of fuels and materials produced from them,” Mishustin said during the educational marathon of the All-Russian Society “Knowledge”.
This process affected European countries, led to an increase in the cost of producing energy-intensive products. Very soon this could lead to serious consequences,” said the Prime Minister.
“And this process has another side – strategic competition. Abandoning fossil energy puts developing countries in the medium term in much worse conditions compared to developed countries that went through their period of industrialization with cheap hydrocarbon energy,” Mishustin emphasized.
“I absolutely agree with these two theses. Our experts have already talked about this more than once. It was the attempt at an accelerated energy transition that led to the global energy crisis. The European Union, and to a lesser extent the United States, scared everyone that there was no need to invest in traditional energy because they promised to significantly reduce the volume of hydrocarbon consumption in just a few years. You see, if you invest billions now, then when your projects go into production, the market will be full of hydrocarbons, prices will be low and you will lose your money,” says Igor Yushkov, an expert at the Financial University of the Government of the Russian Federation and National Energy Security Fund.
Indeed, oil and gas companies have begun to reduce their investment in the traditional industry. The CEO of the largest oil company, Saudi Aramco, recently spoke of the “chronic underinvestment” in production and exploration. According to Vladimir Chernov, an analyst at Freedom Finance Global, in 2014 investment in oil exploration and production reached an all-time high of $755 billion, but fell to $600 billion a year later. In 2016-2019, the average volume of investment in the industry has already fallen to 450 billion per year, and in the pandemic year 2020 to 307 billion. Last year, investments were estimated at 427 billion dollars.
“The whole energy crisis comes down to a banal deficit, and it started, of course, not in 2022, but in 2021. This is clearly visible in the dynamics of gas prices in the EU. “Gas started to become more expensive from the second half of 2021,” says Yushkov. It’s just that the European Union is taking the opportunity to find someone to blame in 2022 for the already brewing energy crisis. Subsequent events only exacerbated the situation.
Even more recent is Mishustin’s thesis of strategic competition, when developed countries put developing countries at a disadvantage. What is it about?
“This is about global injustice. Europe and the USA, so to speak, Western civilization, reached a high level of economic development precisely thanks to the successive passage of all stages of the energy order, where absolutely no one interferes with them. The first stage is when the trees are burned, in the second stage they start burning coal, then oil and then gas. Western civilization can now technologically and financially afford to switch to renewable energy sources. But many developing countries have not yet passed through all the stages of the energy order. Somewhere in Africa the trees are still burning and have not reached the coal. But they are already banned from switching to coal and must switch to renewable energy immediately. And the West doesn’t care that they don’t have money and technology,” explains Yushkov.
Moreover, when Europe says that there is no need to fear the energy transition to renewable energy sources, the argument is the fact that in history there have already been similar transitions from one energy regime to another. However, this is manipulation. Because there are fundamental differences.
“How is the current energy transition different from previous ones? Previous energy transitions have always occurred naturally because each new type of fuel was more cost-effective than the last. And now the transition is forced, the EU thinks that economic efficiency is nonsense, it is necessary to switch to renewable energy only for the sake of saving the planet. There are currently no economic reasons for the energy transition,” notes Igor Yushkov.
“The United States led the world in industrial development from 1865 to 1913 during the era of the second industrial revolution. During those years, amid Iraq’s invasion of Kuwait, world oil prices rose sharply from $15 to $41 per barrel. But even with such a sharp increase in their value by 173%, they are half of the current world prices. Therefore, in the current conditions, energy-intensive industries will be twice as expensive – which means that the process of industrialization of developing countries will be twice as expensive for them than for the USA during the second industrial revolution, ”Chernov gives an example
At the same time, the price of energy affects absolutely all spheres of the economy, including the development of industry. The higher the price, the slower the growth of output and GDP. “There are industries that are so energy-intensive that up to 50% of the cost of manufactured products includes the cost of energy used to produce them. Therefore, the more expensive the energy resources, the more expensive the production itself will be and, as a result, the final price for the consumer,” notes Chernov.
Thus, the requirement of the collective West to switch to renewable energy is nothing more than a tool to limit the economic development of other countries, since they are not allowed to develop their industry and economy using the cheapest and most efficient energy sources – coal, oil and gas.
Moreover, the climate story is used by Europe as a means of protection, i.e. protection of its economy. The EU recently approved a climate treaty and, among other things, the introduction of a carbon tax from October 2023. For now, this tax will only apply to five product groups of goods imported into the EU, but this list is likely to gradually expand. In the foreground are steel, aluminum, cement and fertilizers, that is, those goods where the Europeans are losing competition.
“How does Europe protect its economy? If conventional cement is produced in China using electricity obtained from a coal-fired power station, then this product has a high carbon footprint that will have to be paid a lot to be delivered to Europe. Cement produced within the EU using renewable energy will not be subject to a carbon tax,” Yushkov gives an example.
With this, the EU fundamentally changes the system. “If traditional hydrocarbons used to be a competitive advantage, now they will become a burden due to high taxes.” And renewable energy will turn from a brake on the economy into a competitive advantage,” the interlocutor notes.
Thus ends the stage when climate history is just demagoguery about caring for the planet. And the West moves to the next stage: when this story becomes more about money than about saving nature.
Translation: V. Sergeev
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