Russia killed off any doubt that it was using energy as a weapon by shutting down the Nord Stream 1 pipeline, Gazprom’s main conduit for natural gas deliveries to Germany, on Wednesday. While the shutdown, ostensibly for “maintenance,” is scheduled to last only three days – we will see about that – it comes after the Kremlin-controlled gas exporter reduced Nord Stream’s flows by 80 per cent.
At the same time, Gazprom has been steadily reducing gas supplies to Italy – they were down by a quarter this week alone – and France. Russian President Vladimir Putin must be laughing as he strangles the energy flows to the European Union’s three industrial powerhouses, each a supporter of sanctions against Russia and a supplier of weapons to Ukraine.
As the Kremlin works its dark magic, it’s no surprise that Europe’s wholesale gas and electricity prices are up tenfold since this time last year. As the cold weather approaches, and families and factories turn up the heat, they could keep climbing, boosting the odds of energy rationing, rolling factory closures and blackouts.
Europe’s sudden, far-too-late hunt for energy independence will, of course, accelerate the rollout of renewable energy. The few energy optimists out there, mostly of the die-hard Green parties variety, are convinced that outrageous prices for gas and oil will trigger a renewables surge that is sure to keep the 2050 net-zero emissions goal safe.
Dream on! There is an even greater push today for Europe to find – and burn – as much gas and oil as possible for fear that a war that was supposed to have been won by Mr. Putin in weeks will endure for years. The 2050 net-zero goal (2045 for Germany) looks more and more like a fantasy.
For years, decades even, we have all been told that green energy is good, that unit costs are coming down and that the planet would be toast unless we wean ourselves off planet-warming oil, gas and coal – especially coal. That’s all more or less true, depending on your time horizon. Trillions of dollars have been spent developing wind and solar power; the big push started with the energy and related food crisis of 2008 and 2009, when oil reached US$147 a barrel (today it is at US$97, up by a third in the past year).
Despite all the hype and the lavish investment, the clean-energy rollout has been wholly incapable of keeping up with rapid population growth and the voracious energy demands of the developing world. According to the International Energy Agency (IEA), oil, gas and coal remain by far the biggest components of the global energy mix. Wind and solar supply just 3 per cent or less.
Grubby hydrocarbons show little sign of going gentle into that good night. The IEA says investment in boosting coal supplies rose 10 per cent in 2021, the year before the war started, and will likely rise by the same amount this year. Clean-energy spending in developing economies (excluding China) has been stuck at 2015 levels.
Climate summit will fight for attention as energy crises flare
And countries where energy prices have reached painful levels, especially in Europe, are scouring the planet for new supplies of hydrocarbons.
Investment in liquefied natural gas (LNG) terminals is soaring so Europe can buy as much U.S. and Qatari LNG as possible. Spain, with six LNG terminals, is under pressure to build gas pipelines to France and Central Europe. Liz Truss, who will probably become the next prime minister of Britain, wants to issue new licences for North Sea oil and gas drilling. Plans are being made to build pipelines to Southern Europe from the gas-rich Eastern Mediterranean. Italian Prime Minister Mario Draghi is pursuing gas-supply deals in Algeria and other parts of Africa. Germany is reopening mothballed coal-fired power plants.
Political pressure is mounting to end the fracking ban in most of Western Europe. Shale deposits that could be fracked – which involves the high-pressure injection of water, sand and chemicals to crack open gas resources trapped underground – could meet 20 per cent of Germany’s gas demand, according to the German Association of Gas, Oil and Geoenergy.
Europe’s near-panic pursuit of gas does not bode well for net-zero pledges, which were in doubt even before the war started, partly because European countries seemed to be doing all the heavy lifting on the CO2 reduction front, not the big, high-growth polluters such as China and India. Those two countries continue to build fleets of coal burners.
China alone is the source of about 27 per cent of global emissions. Canada’s contribution is about 2 per cent; the EU’s about 8 per cent. China’s emissions have tripled in the past three decades. Europe fears it will have to de-industrialize to meet the net-zero goals and knows that China, India and other high-growth Asian economies would be happy to make the goods that Europe sheds. In other words, accelerating the cuts to Europe’s emissions would come at horrendous cost, which has got to be a demotivating scenario.
Net zero is not dead. But with hydrocarbons suddenly back in vogue as governments everywhere try to ensure security of supply fairly quickly at non-extortionate prices, it seems likely to slip and keep slipping. Coal burners and LNG terminals will take priority over planting vast wind and solar farms all over the map. Mr. Putin helped assure that outcome.
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Eric Reguly