Europe’s «Strait Gate» to the Future

How Russia’s invasion to Ukraine accelerated Europe’s green transition

Machine trans­la­tion

Despite the ener­gy cri­sis, the European Union is not aban­don­ing its Green Deal and is step­ping up efforts to devel­op envi­ron­men­tal­ly friend­ly, cheap and non-depen­dent on Russian hydro­car­bons ener­gy. Russia’s for­eign pol­i­cy has played a sig­nif­i­cant role in this process.

Gas attack

For sev­er­al years now, Russia has been using the «gas valve» as an instru­ment of polit­i­cal pres­sure. You could say, «a gas war». It start­ed long before February 24. But, while until 2021, Russian gas pol­i­cy main­ly con­cerned Ukraine, in 2021, many European econ­o­mists not­ed some strange declines in gas sup­plies to EU countries.

Fabio Panetta, a mem­ber of the Executive Board of the European Central Bank, says in his speech on European green ener­gy: «There are signs that even before invad­ing Ukraine, Russia manip­u­lat­ed the gas sup­ply to the European mar­ket, cut­ting gas flows and cre­at­ing scarci­ty and uncer­tain­ty about future sup­plies. There was already less Russian gas flow­ing to Europe in 2021 despite high­er gas prices and robust demand.»

    Russian gas sup­plies to the EU (in mil­lions of cubic meters per day).
    Sources: Bloomberg and ECB staff cal­cu­la­tions.
    Notes: LNG includes sup­plies from Russia.
    The lat­est obser­va­tion is for 24 October 2022.

Russia increased gas pres­sure on the EU even after February 24. Strange «danc­ing with the valve» around Nord Stream 1 began. First there is a need for a tur­bine, then no tur­bine. Without wait­ing for these «dances» to end, the EU decid­ed to refuse to sup­ply Russian hydro­car­bons in order not to finance the war in Ukraine.

The EU econ­o­my is heav­i­ly depen­dent on fos­sil fuels: they account for almost three-quar­ters of total ener­gy con­sump­tion. Most fos­sil fuels are import­ed. The EU accounts for 8% of glob­al fos­sil fuel demand and only 0.5% of glob­al oil pro­duc­tion and 1% of glob­al gas production.

It seemed that the rejec­tion of Russian gas should cause, per­haps not pan­ic, but at least dis­con­tent in Europe. It did hap­pen, espe­cial­ly in the spring (strikes by dri­vers and couri­ers in Britain and Germany, the grow­ing pop­u­lar­i­ty of oppo­nents of the refusal to import oil and gas, such as Marine Le Pen and Hungarian Prime Minister Viktor Orban).

But most European coun­tries sup­port­ed refus­ing to import hydro­car­bons from Russia. And in January, Europeans received elec­tric­i­ty bills for 2022. They sighed and paid up. But European gov­ern­ments did­n’t resign, and a wave of strikes did­n’t fol­low. Although it was not easy for everyone.

In the fall, the sto­ry was pop­u­lar in Russian social net­works that Europeans «wash them­selves with a dog» because hot water is pro­hib­i­tive­ly expen­sive. But there was no need to «wash them­selves with a dog,» and Europe did not freeze out entire cities, as Russian pro­pa­gan­dists had prophesied.

The EU had filled its gas stor­age facil­i­ties to near­ly 100% capac­i­ty by November (some of the liq­ue­fied gas even had to be left for some time in tankers, mak­ing them very expen­sive float­ing gas stor­ages, it must be said). At the end of January 2023, the gas stor­age tanks were more than 80% full (in January 2022, only 50% full). There is def­i­nite­ly enough gas until the end of the heat­ing sea­son. And, prob­a­bly, by April, when usu­al­ly about 25% of gas reserves remain, this year there will be twice as much.

The Europeans beat back the Russian gas attack. They con­tin­ue to sup­port Ukraine. We need to be patient for anoth­er year. LNG plants in the U.S., which are now rapid­ly being built, will start sup­ply­ing in 2024-2025. LNG from Canada and Qatar will come no lat­er than 2026. The fleet is ready.

There will be gas. But there is anoth­er way. This is the «green pas­sage,» long declared by Europe. True, one will have to run across it, not walk. And it will be not even a pas­sage, but a steep pass. But accord­ing to experts (includ­ing Fabio Panetta, whom we quot­ed), it is pos­si­ble to cross it.

The Price of Life

When it came to talk­ing about the green tran­si­tion a year ago, its neces­si­ty and even oblig­a­tion were inevitably asso­ci­at­ed with glob­al warm­ing. Indeed, glob­al tem­per­a­tures are ris­ing, CO2 is a green­house gas, and the less of it the bet­ter. Climate sci­en­tists made graphs and pre­dic­tions (one worse than the oth­er). Scientists would end each pre­sen­ta­tion or study with the oblig­a­tory words, almost like Cato. Except not «Carthage must be destroyed,» but “CO2 emis­sions must be reduced. Arguments ranged from the reduc­tion of species diver­si­ty to the rise of the oceans, mass migra­tion, and star­va­tion. And peo­ple, espe­cial­ly the younger gen­er­a­tion, felt a respon­si­bil­i­ty to future generations.

But the chal­lenge Europe faces in 2022 is of a dif­fer­ent nature. This is not about sav­ing polar bears. It is lit­er­al­ly about the sur­vival of Europe. Not tomor­row, but today. A short­age of hydro­car­bons — a short­age of heat and light — is a threat to life. And not the polar bears, but mil­lions and mil­lions of people.

When it comes to sur­vival, all means are good. Isn’t the coal green? Yes, let them, as long as it’s warm. Indeed, coal imports to Europe grew through­out 2022 and rose by 36%. And European coun­tries were active­ly buy­ing coal from South Africa and Colombia. To put it blunt­ly, that’s not too close.

Different European coun­tries han­dled the rejec­tion of Russian hydro­car­bons dif­fer­ent­ly: some found it eas­i­er, while oth­ers found it very dif­fi­cult. Let’s look at sev­er­al major European economies.

Poland, one could say, has hard­ly noticed this refusal. The con­tract with Gazprom expired in September, and Poland was not going to renew it. Back in 2016, Poland built a sta­tion­ary ter­mi­nal to receive LNG and began receiv­ing LNG from Qatar; in the fall of 2022, the coun­try launched the Baltic Pipe gas pipeline car­ry­ing Norwegian gas. In addi­tion, Poland is very active in using coal-fired cogen­er­a­tion plants (almost 80% of its entire ener­gy sys­tem is based on hard coal and lig­nite). And although the coun­try is an importer of coal, it can be bought not only in Russia.

France (Europe’s sec­ond econ­o­my) has also rel­a­tive­ly eas­i­ly sur­vived the rejec­tion of imports from Russia: 70% of the ener­gy pro­duced in the coun­try is pro­duced in nuclear pow­er plants. France not only pro­vides pow­er for itself, but also sup­plies it to the European grid: nuclear pow­er usu­al­ly brings the coun­try more than 3 bil­lion euros a year. Usually, yes, but not in 2022! Just this year saw the shut­down of a num­ber of already aging reac­tors for sched­uled repairs. Because of the incred­i­bly hot sum­mer and drought, many reac­tors were oper­at­ing at low load: they became dif­fi­cult to cool. In September, Nature mag­a­zine wrote: «All of this has con­spired to force half of France’s nuclear reac­tors offline for now. This couldn’t have come at a worse time: Europe’s ener­gy prices and sup­plies are already under immense pres­sure fol­low­ing the inva­sion of Ukraine.»

France pro­vid­ed itself with elec­tric­i­ty, but could not help its neighbors.

Germany was the hard­est hit. Of course, on January 18, 2023, in Davos, Chancellor Olaf Scholz declared that Germany is ful­ly inde­pen­dent of all Russian hydro­car­bons. But it came at a high price. The costs of most of the coun­try’s inhab­i­tants have increased by thou­sands of euros per year.

It is a harsh les­son: Russia can­not be trust­ed. It is not to be dealt with. But is it only Russia? You can’t do busi­ness with Iran either. Maybe Qatar is more reliable?

The rise in hydro­car­bon prices has had a quite pre­dictable effect. Producers of renew­able elec­tric­i­ty began to make super prof­its. These com­pa­nies sold their elec­tric­i­ty through the com­mon grid. Because the cost of gen­er­at­ing elec­tric­i­ty at gas-fired pow­er plants rose sharply, the price of elec­tric­i­ty on the pub­lic grid also jumped. But the cost of renew­able ener­gy pro­duc­ers remained the same as it was: nei­ther solar nor wind will become more expen­sive, no mat­ter what is going on in Russia. Superprofits green com­pa­nies have become so high that on September 30, the EC has set a lim­it rev­enue when sell­ing elec­tric­i­ty (180 euros per megawatt-hour). And in Germany, con­sumers have a chance to reduce their elec­tric­i­ty bills by con­nect­ing to green com­pa­nies. Another thing is that not every­one had such a chance.

What if every­one had? If all or almost all elec­tric­i­ty was green? At least, like in Austria, where renew­able ener­gy accounts for 80%.

The sun, wind, heat from the Earth (we’ll talk about geot­her­mal heat pumps next) are every­where. So maybe it is safer to use these sources and stay away from unre­li­able part­ners trad­ing in hydro­car­bons? This is a new twist on the «green tran­si­tion.» And as it stands, it makes per­fect sense to any European, no mat­ter how con­cerned about glob­al warming.

Bottle Neck

On May 18, the European Commission pub­lished a doc­u­ment called REPowerEU: «A plan to rapid­ly reduce depen­dence on Russian fos­sil fuels and fast for­ward the green transition.»

The European Commission report begins with infor­ma­tion about the per­cent­age of the EU pop­u­la­tion that sup­ports a plan to help Ukraine and move away from Russian hydro­car­bons. In May 2022 it was 85% (accord­ing to Flash Eurobarimeter sur­vey). At the begin­ning of January 2023, the lev­el of sup­port has dropped to 74%, but it is still a major­i­ty of Europeans. Having secured such strong sup­port, the European Commission sets out its plan for a green tran­si­tion and rejec­tion of Russian imports.

The first thing the EU insists on in this doc­u­ment is the need to con­serve ener­gy. Everywhere it is pos­si­ble. Specific mea­sures to save ener­gy must be devel­oped by each country.

Щn September 1, Germany adopt­ed the pack­age. It includes reduc­ing the tem­per­a­ture in offices (in par­tic­u­lar, the tem­per­a­ture in the cor­ri­dors — not high­er than 19°C), expand­ing the pow­er of pri­vate com­pa­nies to reg­u­late the tem­per­a­ture in offices and the max­i­mum pos­si­ble refusal from the street light­ing. In August, Berlin’s may­or Franziska Giffi announced that the city planned to reduce ener­gy con­sump­tion by 10 percent.

    Or here’s street light­ing. In the sum­mer of 2016, when Russian hydro­car­bons were flow­ing quite nor­mal­ly into Europe, the author of this col­umn was in Krakow and watched the European Football Championship final in a cafe on Market Square, in the heart of the city. The square was lit almost exclu­sive­ly by the lights of the many crowd­ed cafes. There were almost no city lights. St. Mary’s Church went straight into the dark­ness of night. When we drove into Moscow a few days lat­er, the night city was flood­ed with light. After the mod­esty of Krakow, it looked osten­ta­tious­ly opu­lent. And there was some­thing bar­bar­ic about it. It was embarrassing.

On the pod­cast Substation (December 2022), Olga Orlova talks to a vari­ety of peo­ple about sav­ing ener­gy in Europe this win­ter. A girl who grew up in America tells how a friend from Germany came to vis­it her in Chicago. They were wan­der­ing around the city and every­thing was fine until the German girl saw the price of gaso­line. She lit­er­al­ly got upset: «Gas can’t be that cheap!»

Europeans’ idea of nor­mal light­ing or the price of gaso­line is pret­ty hard for some­one who grew up in an envi­ron­ment of ener­gy abun­dance to imagine.

Saving, self-restraint is impor­tant, but it’s cer­tain­ly not every­thing. The main thing REPowerEU is talk­ing about is pre­cise­ly the green tran­si­tion. Before win­ter broke out, both the author­i­ties and the cit­i­zens of Europe were wor­ried about whether there would be enough gas for heat­ing. Today we can already say that there was enough gas. But it was­n’t hot either.

The most ener­gy-con­sum­ing form of heat sup­ply to house­holds is cen­tral heat­ing. Heat is sim­ply lost in the pipes. And the longer the pipes, the high­er the loss­es. The opti­mal form of gen­er­a­tion and sup­ply of heat in homes avail­able (although not every­where) today is a ground source heat pumps. This is stat­ed in all EU doc­u­ments on the green transition.

The idea of a heat pump is quite sim­ple. There is land (or sea, if it is close) at some depth its tem­per­a­ture is about the same at any time of the year. The heat pump is a device like a refrig­er­a­tor. The refrig­er­ant cir­cu­lates through the pipes. But it is not warmed by elec­tric­i­ty, but by the heat of the earth. When the refrig­er­ant evap­o­rates, the tem­per­a­ture of the envi­ron­ment decreas­es; when it con­dens­es, it increas­es. When the house is cold the heat of the earth heats it, when it is hot — cools it. The heat pump coil is buried at a depth where the tem­per­a­ture is sta­ble. The cir­cu­lat­ing refrig­er­ant car­ries heat in win­ter or cold in summer.

Heat pumps today are usu­al­ly installed in pri­vate homes. Installation is quite expen­sive, tens of thou­sands of euros, but it is almost a per­fect device. Heat is prac­ti­cal­ly not lost, and for the oper­a­tion of the pump, which deliv­ers the refrig­er­ant through the pipes, you can use, for exam­ple, solar pan­els or wind tur­bines. There will be prac­ti­cal­ly zero emis­sions, min­i­mum loss­es, full con­trol­la­bil­i­ty of the device by its own­er: turn it on, turn it off.

Germany planned to switch to heat­ing 44% of premis­es with heat pumps by 2050. This is about as much as is cur­rent­ly heat­ed with gas. Now it will have to speed up a lot.

The EU sees the devel­op­ment of heat pumps as a top pri­or­i­ty.

REPowerEU envis­ages very large invest­ments in the green tran­si­tion. In par­tic­u­lar, a lot is said about green hydro­gen. Unlike heat pumps, this tech­nol­o­gy is not yet at the stage where it can be imple­ment­ed every­where. In fact, there are only impres­sive pro­to­types, for exam­ple, for steel mills.

Many experts say that the aus­ter­i­ty regime, which the EU is pur­su­ing, will inevitably lead to the with­draw­al of most ener­gy-inten­sive indus­tries from Europe.

For exam­ple, Professor Jonathan Stern, who heads the Oxford Institute for Energy Studies, told to Al Jazeera: «We are going into a huge reces­sion in Europe. I think it could be worse than [the COVID-19 pan­dem­ic reces­sion of] 2020, lead­ing to de-indus­tri­al­i­sa­tion, forc­ing indus­tries to move to the Middle East and the US. None of it is remote­ly good and it sug­gests polit­i­cal insta­bil­i­ty.»

The EC is more opti­mistic. And green hydro­gen is one of the main hopes that the dein­dus­tri­al­iza­tion pre­dict­ed by the expert will not happen.

The report by Fabio Panetta, with which we began our con­ver­sa­tion, is called «Greener and cheap­er: could the tran­si­tion away from fos­sil fuels gen­er­ate a divine coin­ci­dence?» It’s about price sta­bi­liza­tion while decarbonizing. 

Frans Timmermans, Executive Vice President of the European Green Deal, adds a third com­po­nent to this «divine coin­ci­dence»: «Renewable ener­gy is a triple win for Europeans: it is cheap­er to pro­duce, clean­er for our plan­et, and inde­pen­dent of Russian manip­u­la­tion.» And today the third is more of a first.

According to a study by E3G and Ember, renew­able ener­gy pro­duced 24 per­cent of all EU ener­gy between March and September. Analysts point to record growth in wind and solar pow­er. It avoid­ed gas costs of 11 bil­lion euros. At the same time, the EU spent about 82 bil­lion euros on fos­sil gas to pro­duce 20% of its electricity.

However, Panetta believes that with the right invest­ment pol­i­cy and low­er­ing of bureau­crat­ic bar­ri­ers — which is already hap­pen­ing and quite dra­mat­i­cal­ly — a «divine coin­ci­dence» is quite pos­si­ble. Solar and wind pow­er have reached a point where the mar­gin­al cost of expand­ing pro­duc­tion in these indus­tries is about half that of expand­ing elec­tric­i­ty pro­duc­tion from fos­sil fuels. And invest­ments in green ener­gy are more attractive.

The sit­u­a­tion in which Europe finds itself resem­bles a clas­sic «bot­tle neck». It is like­ly that the com­ing years will see the aban­don­ment of many tra­di­tion­al tech­no­log­i­cal solu­tions and expen­sive (in both sens­es) human habits. And it looks like it will be the ener­gy-effi­cient, cheap, envi­ron­men­tal­ly friend­ly tech­nolo­gies and solu­tions that will sur­vive. Going through a bot­tle neck is always dif­fi­cult and even dan­ger­ous. In the evo­lu­tion of the bios­phere, a bot­tle neck is always a tran­si­tion through which not every­one «squeezes through,» but in which use­ful muta­tions take hold. They will deter­mine the future.

    «Enter ye in at the strait gate: for wide is the gate, and broad is the way, that lead­eth to destruc­tion, and many there be which go in there­at: because strait is the gate, and nar­row is the way, which lead­eth unto life, and few there be that find it.» (Matthew 7:13-14)