War and Energy: A Complicated Relationship

War and Energy: A Complicated Relationship
Image Source

The Ugly Truth

Five months and four days or a hundred and fifty-four days have passed since Russia invaded Ukraine. The status quo in the Eurasian continent is not been the same since then. And, certainly never will be. Geopolitical alliances and coalitions emerge or are revived. The war gave birth to both a general human crisis and a harsh energy crisis, which exacerbates the climate crisis. This article will try to clarify the relationship between energy and warfare, the cost of energy, and the environmental implications.

Firstly, many governments, heads of States, and activists underlined that fossil fuels are funding the Russian invasion of Ukraine. Had Russia not had revenues from fossil fuel exportation, this horrific energy war would probably not be able to continue. And a “dilemma” has arisen: Energy security or solidarity with the Ukrainian people? Sanctions and potential embargoes against Russia do not mean that the Western States are not in need of Russian oil and gas. The current invasion demonstrates how hazardous the reliance on fossil fuels is, especially when power is concentrated in the hands of one man or a few companies.

History Repeats Itself

However, this is not the first time that Russian warlike actions have led leaders around the world to reconsider their countries’ energy mix in order to ensure energy security. Similar worries surfaced when Russia invaded Georgia in 2008 and after it invaded and then annexed Crimea in 2014. Nevertheless, the Ukrainian war is in our backyards. As a result, oil and gas prices have reached their highest levels in almost a decade as a result of Russia’s unjustified invasion of Ukraine, which has also forced numerous nations to reevaluate their energy supplies.

Another result of Russia’s invasion of Ukraine, which jeopardizes the future delivery of over 140 billion cubic meters of Russian gas per year (bcma) to EU customers, Europe faces the possibility of a serious gas shortage. Gas (and electricity) have been thrust to the center of national and EU policy concerns over energy affordability even before the invasion as a result of a tighter European gas balance, which had already driven prices to severe levels.

Russia as an exporter

Russia is the world’s top exporter of oil to international markets, and its natural gas powers the European economy, according to the International Energy Agency. EU member states are the biggest gas importer and Russia could face a serious problem finding another buyer of its range. Along with imposing economic sanctions on Russia, the European Union, the United States, and other parties have also made plans to gradually wean themselves off of – that nation’s – fossil fuels. It’s pointless to cut off a unique source of fossil fuels and not all of them. 

War and Energy impact
Image Source

At the moment, the biggest question is how to escape Russian dependence. The latter has weaponized natural gas and uses it in an extortionate manner. Each EU member state is dependent in one way or another. Germany imports more than 1/3 of its oil and more than half of its natural gas and coal, and is one of the countries where the energy problem is particularly severe. And, that’s because the country was highly dependent. Germany has to lessen its reliance on natural gas for electricity generation. This is more difficult as the country decided to abandon nuclear power. Its final three nuclear plants are set to shut down this year.

Solutions to The Global Energy War?

The USA and the UK were the first major nations to forbid Russian oil, although neither nation is highly reliant on it. Furthermore, these restrictions have little effect because Russia can easily divert the oil to other markets throughout the world. Economists assert that an embargo would only be effective if the EU joined in. Since it would be challenging for Russia to find new clients for the oil and gas it exports to Europe.

Regarding the climate crisis, the EU ETS is an asset for the power sector. So, for example, a brief boost in coal power plants should increase the cost of carbon credits and require emissions reductions elsewhere. The diversification of the energy mix calls for a relative regression to alternative fossil fuel sources in order to satisfy the demand side.

But, one should play his cards wisely this time and not replace one form of dependence with another. The American LNG should not be a long-term solution, but only a short-term emergency one. Each country must exploit its own sources. Greece, for instance, is a great example of a country’s potential energy independence. Should the public and private sectors collaborate in an efficient way under a transparent legal framework, independence is certain. Greece is blessed with wind, solar and geothermal energy at a level that could be an energy exporter. Other countries might have the same potential as well.

It’s complicated

To conclude, although the conflict in Ukraine will likely hasten Europe’s transition away from fossil fuels, Nikos Tsafos worries that it may slow the clean energy transition. And probably increase greenhouse gas emissions — in other parts of the world. According to him, Southeast Asia, particularly, might return to coal, if Europe successfully monopolizes the global market for liquefied natural gas. Hopefully, those moves will not be a long-term strategy. It is a multifaceted, complex problem with many dimensions to take into consideration. Human lives, energy security-energy poverty, sustainability.

P.S.: A day before the publication of this article Putin announced that due to technical issues the capacity of Nord Stream 1 will diminish by 20% (33 mcm). The relationship between war and energy is once more at the forefront (?).

Written by our Energy Analyst

Katerina Filakouri 

Katerina has a Bachelor in Law from the National and Kapodistrian University of Athens and just completed her traineeship at a boutique law firm in Kolonaki, Athens. She is a postgraduate student of the MSc in Energy: Strategy, Law, and Economics at the University of Piraeus in the faculty of International and European Studies. Katerina would like to be a legal and policy advisor regarding energy transition and climate change. She speaks Greek, English, French, and Russian. She is keen on English literature and indie films.  

Leave a Reply

Your email address will not be published. Required fields are marked *