Tips from FT Chinese Website: If you are interested in more content of FT Chinese Website, please search for “FT Chinese Website” in the Apple App Store or Google Play, and download the official application of FT Chinese Website.
Since the Russo-Ukrainian War, EU countries have been rushing all the way to de-Russify energy, and Europe has not chosen a smooth path.
De-Russification of energy mainly refers to the de-Russization of coal, oil and natural gas. In April this year, the fifth round of EU sanctions against Russia included a ban on Russian coal imports. At the end of May, EU member states reached an agreement on the Russian oil embargo in the sixth round of sanctions. In early December, the EU set a price ceiling of US$60 per barrel on Russian oil and banned the import of Russian seaborne oil. As for natural gas, according to Bruegel, the 27 EU countries and the United Kingdom have experienced a peak of 2.621 billion cubic meters of Russian natural gas imports in the ninth week of this year, which has dropped to 711 million cubic meters in the 49th week of this year. From the perspective of natural gas import routes, the natural gas pipelines transported from Russia to the European continent mainly include the Nord Stream to Germany, Yamal via Poland, the pipeline via Ukraine, and the Turkish Creek via the Black Sea. The first two pipelines have been at zero traffic for some time.
In terms of emergency reserves, the EU’s natural gas reserves reached 86.59% on December 13. Before this, the continent experienced a lot of unease and uncertainty. With the natural gas reserves of EU member states at a new low, how cold will autumn and winter be? Can natural gas reserves keep up? Will face rationing, is unknown. Fortunately, most of the member states have completed their gas storage tasks ahead of schedule, and the not-so-cold autumn is a gift from heaven. Today, when the heating peak is in progress, the EU’s natural gas reserves are declining. In the next winter, unknowns and uncertainties may continue to be staged. In 2022, the European continent will experience many “musts” on the road to energy.
Security of supply: replacements had to be found
The most important and also the most difficult is natural gas. While gradually abandoning Russian natural gas, the EU has increased its imports of natural gas from Norway and Algeria, and is also pinning its hopes on liquefied natural gas.
In July, the EU and Azerbaijan signed a memorandum of understanding on energy strategic partnership. By 2027, Azerbaijan’s natural gas supply to the EU will be doubled to at least 20 billion cubic meters per year. Azerbaijan is already a player in the supply of natural gas in Europe, with a supply of 8.1 billion cubic meters in 2021 and expected to reach 12 billion cubic meters in 2022.
LNG plays a key role in displacing Russia’s pipeline gas. In March, the European Commission and the United States issued a joint statement that the United States will provide the EU with an additional 15 billion cubic meters of liquefied natural gas in 2022 and 50 billion cubic meters per year thereafter. However, the EU is not infrastructure ready to receive LNG. Since rerouting energy supply, countries have been busy building LNG terminals and floating storage and regasification units (FSRUs). At the same time, pipelines for transporting natural gas from Norway and Azerbaijan are also under construction or planned.
Europe’s original intention was to free itself from its dependence on Russia, but not at the cost of one dependence falling into another. Things have evolved to this day, and Europe has gradually accumulated a certain dissatisfaction. It is dissatisfied that Europe is increasingly dependent on U.S. liquefied natural gas. This dissatisfaction and imbalance has recently been exacerbated by the American “Inflation Reduction Act”, in which European industry has been greatly passive.
2022 is an eventful year in Europe. The recent fall of the star group known as the “Brangelina” of the European Parliament has embroiled it in a corruption scandal in Qatar. After many controversial topics in the World Cup, Qatar once again entered the scrutiny of Europeans. A few days ago, German Economy Minister Habeck had to defend the liquefied natural gas from Qatar in the whirlpool of public opinion. In search of alternatives to Russian gas, Germany is running around. At the end of November, Qatar signed a deal to supply LNG to Germany from 2026.
Coal and nuclear power: Had to step in
This summer, due to the drought, the hydropower has dropped sharply, and the French nuclear power plant has been partially shut down due to technical reasons, which has put great pressure on power generation. In the worry of “whether there will be a power outage this winter”, coal power and natural gas power generation are generating electricity The proportion in the energy structure is rising rapidly. Since 2015, coal power plants in EU countries and the UK have fallen by more than 40%. Around half of Europe’s 324 coal plants in 2021 have either already closed or will close by 2030, according to EURACTIV. But amid the energy crisis, temporarily restarting coal power is the most viable option, even if it runs counter to climate goals. According to the International Energy Agency, in the first half of 2022, coal consumption in the EU will increase by 10% due to coal power. In view of the conservation of natural gas, especially natural gas for power generation, the demand for coal power will continue to increase.
The energy crisis has disrupted the energy plans of EU member states. In addition to coal power, the importance of nuclear power has also been highlighted, with Germany and Belgium postponing deadlines for shutting down nuclear power plants, while countries including France and the United Kingdom decided to increase nuclear power construction.
Energy saving: have to save some for the winter
Earlier this year, the former German president called for “freezing for freedom”, and the sense of justice of “standing with Ukraine” revealed in it was somewhat tragic. This winter seems to be a dangerous wolf. The voices of “the wolf is coming” come and go. Newspapers, the Internet, and the radio are all contributing to the prevention of huge energy bills and the winter strategy of energy saving. Of course, Europeans did not and did not need to suffer from the cold in the end. What they faced was that the indoor heating temperature of public buildings and commercial buildings was up to 19 degrees. The Christmas season, which was originally brightly lit, would be much dimmer. as always.
In July, EU member states reached an agreement on voluntary gas saving, agreeing to reduce natural gas consumption by 15% of the average natural gas consumption level in the past five years this winter, except for some member states that rely heavily on natural gas for power generation, and member states decide to save measure. In September, member states reached an agreement on saving electricity to reduce energy prices. From December 2022 to March 2023, voluntary reductions in general electricity demand by 10% and mandatory reductions in peak electricity demand by 5%. This move is estimated to save 1.2 billion cubic meters of natural gas.
The energy transition: the process has to be accelerated
To a certain extent, it can be said that the Russo-Ukraine war has become a driving force for Europe to accelerate energy transformation after learning from the pain. De-Russification of energy is both an end and a means. Ultimately, energy security and energy independence must be ensured. Compared with the diversification of energy supply, renewable energy is more important. In view of the reality in Europe, Europe cannot achieve complete energy self-sufficiency. What it can do is to increase the proportion of clean energy produced locally and minimize its dependence on energy imports.
In early March, shortly after the Russo-Ukraine war broke out, the European Commission called for the rapid de-Russification of energy. Two months later, the European Commission announced short-term and medium-term plans for energy de-Russification and de-fossil energy: REPowerEU, from now until 2030, the EU will invest an additional 210 billion euros in energy conservation, diversification of energy supply and acceleration of clean energy building. The plan builds on the Fit for 55 package, a climate package proposed by the European Commission last year that aims to reduce greenhouse gas emissions by 55% by 2030 compared with 1990 levels. REPowerEU boosts Fit for 55’s 2030 targets for energy efficiency and renewable energy from 9% to 13% and from 40% to 45%, respectively.
Accelerating the construction of clean energy is the focus. Acceleration includes legislation to speed up the approval of renewable energy projects, solar construction to expand rooftop photovoltaics and promote local production of photovoltaic panels, and industrial decarbonization to include electrification in addition to improving energy efficiency and replacing natural gas with renewable energy. In terms of accelerating investment, the European Commission revised the state aid interim crisis framework in July to allow and support member states to invest heavily in renewable energy. Since the Russo-Ukrainian War, the imports of photovoltaic panels by various member states to China have been on the rise, and imports of heat pumps by various countries have also increased.
In clean energy, green hydrogen shoulders the mission. The EU has set a goal of producing 20 million tons of green hydrogen by 2030, half of which will be produced locally and the other half will be imported. The European Commission approved two public investment projects in hydrogen technology and infrastructure construction under the framework of the Important Project of Common European Interest (IPCEI) in July and September respectively.
In 2022, Europe will be very passive and even embarrassed on the road to the de-Russization of energy, but from the original point of view, Europe will actually take the initiative and never look back.
(This article only represents the author’s own point of view, editor in charge: Yan Man [email protected])