Industry analysts have warned that Europe’s unprecedented energy crisis will worsen during this Northern Hemisphere winter, raising the prospect of power rationing and plant shutdowns.
And with natural gas prices skyrocketing, manufacturers and households subject to soaring bills, some fear the EU’s integrated energy system could collapse, the bloc’s member states have resorted to hoarding what they have to supply. This has triggered yet another ugly intra-EU political conflict.
Thierry Bros, professor of Sciences Po in Paris and a former oil and gas expert at the French economy ministry, says he suspects this may be the reason the Kremlin halted top-up supplies of natural gas to EU customers . That Russian authorities are trying to stir up political disputes between the bloc’s 27 member states over energy supply and electricity generation.
“I think that’s probably why the Kremlin is exacerbating this energy crisis a little bit more,” he said in a podcast for Natural Gas World, an independent website devoted to global gas issues. “We have a solidarity mechanism inside the EU, so we should be in a position to close industries elsewhere to ensure that residents are still warm in their homes elsewhere,” he said.
In normal times everything works smoothly with the EU’s energy solidarity mechanism, which gives priority to homes over manufacturers, says Bros, who represents France at the International Energy Agency, or IEA. However, he warns that during the colder months to come, “we may see some very difficult implementations of this solidarity mechanism.” As an example, he asks, “Are we going to close some French industries to warm the Germans? Or are we going to close some German industries to warm the French?”
The International Energy Agency and European lawmakers have accused Russia’s state-controlled energy giant Gazprom of deliberately not doing enough to boost Europe’s supply of natural gas. “For November, daily pipe gas exports from Russia to Europe are down 14% compared to October,” Bros noted in a tweet on Tuesday, which was itself a record low month.
Gazprom says it is fulfilling all of its contractual obligations to EU customers. But US officials have joined a group of European politicians calling on Moscow to increase gas exports to Europe. “The reality is that there are pipelines with enough capacity through Ukraine to supply Europe. Russia has consistently said that it has enough gas supplies to be able to do so, so if that is true, they have to. Should, and they should do it quickly through Ukraine, Amos Hochstein, senior adviser for energy security at the US State Department, said recently.
“Russia has said that it has enough gas supplies to meet European energy needs,” a State Department official told Granthshala. “It can and should provide additional supplies through existing pipeline networks, including in Ukraine. Failure to do so threatens European energy security and calls into question Russian motives to withhold those supplies.”
“We are concerned that the storage of gas is less and the supply in the market is less as compared to previous years,” the official said. “The below-normal level of gas storage demonstrates the importance of a diverse energy supply to meet Europe’s energy security goals. We are actively engaged in enhancing the energy security of our European partners and allies.”
The International Energy Agency has also called on Russia to boost gas exports. A recent statement said, “The IEA believes that Russia can do more to increase gas availability in Europe and ensure storage in preparation for the warmer weather to come.” fill up to a sufficient level.”
The spurt in natural gas prices is due to a surge in demand related to the pandemic in Asia and short supply in Europe, which set a new record price last month when the bulk of natural gas contracted nearly 400 percent in November. was increased. since the beginning of the year. Electricity prices are also rising as natural gas is used to generate a substantial percentage of its electricity across the continent.
Some European politicians argue that the Kremlin is intentionally worsening Europe’s energy crisis, as a tactic to pressure the European Union to accelerate certification of the Nord Stream 2 gas pipeline, which bypasses Ukraine in the Baltic Sea. From Russia to Germany. Washington has long warned that Nord Stream 2 would make the EU even more dependent on Russia for its energy needs.
But others share Bros’ skepticism, with the Kremlin testing it to see if it could create conditions for a political conflict between EU member states over energy supplies. They worry that member states will refuse to shut down their industries to ensure homes in another country stay warm – an energy nationalism that reflects how EU state health nationalism at the start of the coronavirus pandemic in which some member states blocked exports. of PPE equipment, oxygen supply and incubators.
Moscow On the one hand, Europe will still face lower energy prices due to global demand and lower-than-expected solar and wind power generation. In Britain, more than a half-dozen natural gas suppliers have closed in the past two months, a result of rising gas prices and a government limit on how much consumers can charge. British consumers will face price increases of several hundred dollars per household. British officials are considering offering state-backed loans to some of Britain’s biggest energy retail companies to help them tide over price volatility.
Other European governments are also considering how to intervene in energy markets to keep homes warm and lit, and factories running in the winter. They also fear a domestic political fallout from a sharp jump in domestic costs and are looking at billions of dollars in aid. EU member states are divided over what their collective response should be to the rise in energy prices, with some countries wanting a radical regulatory overhaul and others vehemently opposed.
Spain has been supportive of far-reaching reforms. The country’s energy minister, Sarah Augesen Munoz, has called for a “European response”. Others believe that member states should prepare their own home remedies. More than 20 member states have offered, or are planning, direct income support, state aid and tax cuts to help their businesses and families survive a price storm and supply shortages.
Granthshala State Department correspondent Cindy Sen contributed to this report.