Russia declares gas war on EU

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Russian President Vladimir Putin is playing hard on the European Union – cutting off gas supplies to some of Russia’s best customers in a howl of rage over sanctions imposed after invading Ukraine.

It’s putting huge political pressure on governments, threatening to freeze Europeans if this winter is cold and potentially undermining the bloc’s climate targets as countries replace gas-fired power plants with coal. It could even plunge the continent into recession.

Simone Tagliapietra, analyst at the Bruegel think tank, Calls Russia’s “energy blackmail” policy.

Only 40 percent of the normal volume of gas flows through the undersea Nord Stream pipeline from Russia to Germany, which affects supplies to France, Italy and Austria in addition to Germany. Russia’s gas export monopoly Gazprom has already halted all supplies to Poland, Bulgaria, the Netherlands, Finland and Denmark after energy companies in those countries refused to bow to Kremlin demands to pay for supplies in rubles.

In response, some countries are planning to ramp up coal-fired power plants.

“One has to recognize that Putin is gradually reducing gas deliveries to Europe, also to drive up the price, and we have to react to this with our measures,” said Federal Economics and Climate Minister Robert Habeck on television interview late Sunday, adding that “it’s a tense, serious situation.”

Austria plans to camouflage a decommissioned power plant to burn coal again.

Poland aims to subsidize coal for domestic heating.

The Netherlands on Monday decided to scrap previous plans to limit production at its four coal-fired power plants.

“If these weren’t special times, we would never be doing this,” said Climate Secretary Rob Jetten.

The Italian government is planning an emergency meeting for Tuesday, and Prime Minister Mario Draghi has ordered two liquefied natural gas regasification units and has spoken with countries including Qatar, Angola and Algeria to sign gas supply deals to secure supplies in the event of a Russian lockdown.

Brussels is keen to exude confidence, but the concern is clear.

“We take the situation we find ourselves in very seriously. But we are prepared,” said European Commission President Ursula von der Leyen at a meeting with reporters on Monday. “We are in difficult times. Times don’t get any easier,” she added.

Dirty deals

The rush to burn coal to secure energy supplies is symbolically uncomfortable for climate-conscious Europeans. But few expect it to steer the EU or its member states far off course in their efforts to cut greenhouse gas emissions.

In Germany, officials insist the return of coal will be short-lived and will not jeopardize the country’s path to zero coal power by 2030. Coal will serve as a back-up supply for the power sector, allowing the country to build up its coal gas supplies ahead of winter. Meanwhile, the government plans to ramp up clean power rapidly.

The Neurath coal-fired power plant in Germany | Andreas Rentz/Getty Images

The Russian invasion has hardened political support for renewable energy in Germany, said Simon Mueller, director of think tank Agora Energiewende.

“This additional level of urgency that we now have in light of this situation helps provide the political impetus we need for some very important accelerations in renewable energy deployment,” Mueller said. The German Bundestag is considering ten measures for energy efficiency and renewable energy, and Müller said the tripartite coalition largely agreed that it was important to remove barriers to green electricity.

Green groups were also optimistic. “In Germany there is currently no plan at all to question the date of the coal phase-out,” said Christoph Bals, policy director of the NGO Germanwatch.

But the need to quickly change course in coal dismantling is creating political tension.

In Berlin, the conservative opposition chastised Habeck for allowing an increase in coal use while ruling out keeping Germany’s three remaining nuclear power plants operational beyond the end of this year.

“I don’t understand that the green climate minister would rather have more coal-fired power plants run longer than climate-neutral nuclear power plants,” says Jens Spahn, deputy chairman of the CDU. said German television on Monday. The nuclear shutdown policy was adopted by the former leader of his party, Angela Merkel.

Politics is also causing stress within the governing coalition.

“It is necessary to keep the three remaining nuclear power plants running longer,” said Bijan Djir-Sarai, Secretary General of the liberal Free Democrats. “This is a fact that the economy minister cannot simply ignore.”

Coal is still better than the nuclear revival, Habeck conceded the move was “breaking a taboo,” arguing that a change in nuclear policy would not take effect until late next year — too late to help this winter. He received support from Chancellor Olaf Scholz, who said in an interview published on Monday: “Nuclear power will not help us now, not in the next two years, which is what matters.”

Political leaders are urging their people to save energy and reduce gas consumption, while governments work to increase storage capacity so the continent can survive a winter Russian gas shutdown. As a last resort, they advise rationing of glow gas.

A halt to gas supplies would almost certainly plunge the bloc into recession. The European Central Bank warned that the euro zone would shrink by 1.7 percent next year if Russia shuts down the tap completely.

“The disruptions in energy supply and the little opportunity for immediate replacement of gas supplies from Russia would likely require some rationing and reallocation of resources, leading to production cuts in the euro area, particularly in energy-intensive sectors,” the bank said. If that were to happen, the bloc’s economy would recover over the next year.

But the ECB also had a word of warning for Putin.

“Regarding the Russian economy, the scenario calls for a severe recession with a drop in production similar to the drop seen when the Soviet Union collapsed.”

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