Opinion | Winter is coming, and Europe faces the energy crunch

By Tom Fowdy

When the war in Ukraine began, European leaders expressed very confidently that they would diversify their energy dependencies away from the Russian federation, of which it is highly reliant upon for the import of natural gas. The effort to find alternative resources quickly become a means of political posturing for EU leaders, including Olaf Scholz of Germany and of course European Commission President Ursula von der Leyen. They presented the process of doing so as effortless, overhyping deals with very small countries or providers, such as Azerbaijan or Qatar, and repeatedly vowing to "cripple Putin's war machine".

Six months on, none of this has aged very well. Gas and electricity prices in Europe are now an astronomical high, and in conjunction with that Russia's state revenues are higher than ever. The rising prices are creating a whirlwind of inflation which is quickly accumulating in growing unrest throughout the continent, and increasingly vocal criticism of Europe's support for the war in Ukraine itself. To make matters worse, several days ago gas flows through the NordStream pipeline were terminated, with follow up comments from a senior Putin advisor suggesting it will not resume as normal until western sanctions were lifted.

In the midst of such news, Ursula von der leyen soon took to twitter and proclaimed that "Europe will prevail" and suggested a "price cap" for the imports of Russian gas, a proposal which of course makes absolutely no sense whatsoever given they are critically dependent upon it. Winter is coming and demand for power is only going to increase, putting Europe in an increasingly untenable situation as it wrestles to keep the lights on and also redress growing public anger over surging bills. Some things are certainly easier said than done, and that it is obvious in the midst of this crisis EU leaders have both overpromised and underdelivered when it comes to confronting Russia.

Finding new sources of electricity for a continent of upwards to 500 million people is not the same as going to the supermarket and opting to buy Pepsi instead of Coke. Rather, energy resources, be it coal, oil or gas are critical materials that stem from limited and geographically concentrated suppliers. Renewable resources, such as wind and solar, are a long-term work in progress and nowhere near enough capacity or power generation to supplement the needs of an entire continent. Similarly, Germany inflicted on itself a scathing wound by having chosen to move away from nuclear power. All of this has made Russia's highly abundant and readily in supply liquid natural gas the most important product in European energy markets.

And for multiple reasons it is not simply as easy as vowing to buy LNG from elsewhere either. First of all, geography and infrastructure talk. Russia is part of Europe and enormous pipelines have been constructed to deliver gas readily. The plan was to open a second one as well, NordStream2, but the US made sure that didn't happen. Whilst gas can of course be bought and shipped from elsewhere, such as Qatar or the United States, there is no infrastructure in place to facilitate its shipping on a large scale. In addition, the removal of Russia as the largest single supplier from the market has an irreversible impact on the markets as it constitutes both a removal of supply and an increase in demand, which means prices irreversibly surge elsewhere too. The best example of this is how energy prices are also surging in the United Kingdom, who are not reliant on Russian energy.

In a nutshell, Europe do not have a short-term answer to this problem, and should not have presented it as a quick fix. Russia recognizes this critical vulnerability and is now exploiting it to maximum effect. Moscow hopes that with winter on its way, the surge in energy demand and prices will accumulate in growing political anger and unrest throughout the continent and will undermine legitimacy for supporting the war in Ukraine. Signs are quite obvious the continent will fall into a recession soon. In light of this, Ursula von der Leyen's recent announcements do not seem to be a show of resilience, but an expression of panic and anxiety. The idea of capping gas prices when they are in a position of need is simply ludicrous. But what can one expect from her having a broad history of repeatedly making overstated commitments and promises, often including pledging spurious amounts of money to various things, and never living up to it.

In conclusion, hard months lie ahead for Europe. This winter may be the defining moment of a war which has now dragged on for over six months, and whilst the United States will keep ploughing money in irrespectively, Putin is clearly gambling on knocking Europe out of the equation.

The author is a well-seasoned writer and analyst with a large portfolio related to China topics, especially in the field of politics, international relations and more. He graduated with an Msc. in Chinese Studies from Oxford University in 2018.

The views do not necessarily reflect those of DotDotNews.

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