Europe is currently experiencing an unprecedented energy crisis which has led to increased gas prices, amidst scarcity and other things. This crisis has been further worsened following Russia and Ukraine war, the sanctions imposed on Russia, and Russia’s perceived retaliation. Following the war, European countries through the European council imposed several sanctions against Russia, to make it reconsider its stance on the ongoing war. Some of these sanctions have been implemented, with a complete ban on the importation of oil from Russia set to take effect at the end of the year.
Russia is the largest exporter of natural gas in the world. According to reports, in 2021, Russia exported about 240 billion cubic meters of natural gas to the world. Also, Russia supplies 40% of gas to Europe, with Germany as its major importer. Following the sanctions on Russia, it cut its supply to Europe. The Nord Stream pipeline which stretches under the Baltic Sea to Germany sends a maximum of 170 cubic meters of gas daily. However, in June 2022, the supply was curbed to 40 cubic meters and further reduced to 20 cubic meters. Russia stated the need for maintenance as the reason for the reduction, the move has been described as political by European Union.
With the winter approaching, the following are its implication for the energy crisis.
Hike in Price
With a drop in the amount of gas coming into Europe, there’s a certainty that there will be a hike in price during winter as it would be needed more. According to a report, Russian gas giant, Gazprom, has indicated that gas prices in Europe could rise to the equivalent of about 347 euros per megawatt-hour during the winter. This will take the price to an all-time time. The implication is that many citizens in countries like Germany where dependent is high might be unable to pay energy bills.
Volatility
During winter, most European countries use more gas than they do during summer. Due to the cold, gas is used to heat Hines, schools, hospitals, and other places to keep them warm. However, with a reduced supply of gas from Russia, there will be uncertainty over it. With demands set to increase, there’s a huge risk of gas apportioning and blackouts. The government has begun advising its citizens on blackouts as a solution to the energy crisis. If Russia decides to cut supply completely, the shortage of heating may spread across Europe.
Loss of economic growth and production
The scramble for gas is set to increase the vast majority relying on available supplies. With this, companies cannot function to full capacity. According to reports, energy-intensive companies are beginning to shut down. Also, Europe has been experiencing inflation due to the energy crisis. According to reports, French railway workers went on strike wanting a wage increase, also the French energy sector workers went on strike, among other economic effects happening across Europe.
Renege on climate goal promises
With Europe realizing they might not have the same flow as usual as winter approaches, countries like Germany, France, and Austria are preparing to reopen coal-fired power stations it closed in 2020. The European Union had earlier signed a green pact which includes reducing gas emissions by at least 55% by 2030, and becoming carbon neutral by 2050. The coal-fired power stations are alternatives to the energy crisis proffered to help during the winter. The implication is that the green pact is set to be delayed, and the European Union will have to consider its plan again on emissions.
The energy crisis has possibly opened Europe to its dependence on gas supplies from Russia. It also opens up the need to check some of the sanctions placed on Russia, in what has been described as “two can play the game.” While a long-term plan might be in the offing for the European Union, it must find a short-term fix to cushion the effect as winter approaches.
