Europe’s unprecedented energy crunch will worsen during this northern hemisphere winter, increasing the likelihood of power rationing and plant stoppages, industry analysts are warning.
And with natural gas prices skyrocketing, subjecting manufacturers and households to soaring bills, some fear the European Union’s integrated energy system could break down, with the bloc’s member states resorting to hoarding what supplies they have, triggering yet another ugly intra-EU political squabble.
Thierry Bros, a professor at Sciences Po in Paris and a former oil and gas expert at the French Ministry of Economy, says he suspects this might be what is behind the Kremlin withholding top-up supplies of natural gas to EU customers. That Russian officials are seeking to provoke political disputes between the bloc’s 27 member states over energy supplies and power-generation.
“I think this is perhaps why the Kremlin is pushing this energy crisis a bit more,” he said in a podcast for the Natural Gas World, an independent website dedicated to global gas issues. “We have a solidarity mechanism inside the EU, so we should be in a position to switch off industries somewhere to make sure residents are still warm in their homes elsewhere,” he said.
In normal times everything works smoothly with the EU’s energy solidarity mechanism, which prioritizes households over manufacturers, says Bros, who represented France at the International Energy Agency, or IEA. He warns, though, that during the coming frigid months, “we may see some very difficult implementation of this solidarity mechanism.” As an example, he asks, “Are we going to switch off some French industries to warm Germans? Or are we going to switch off some German industries to warm the French?”
Russia’s state-controlled energy giant Gazprom has been accused by the International Energy Agency and European lawmakers of purposely not doing enough to boost natural gas supplies to Europe. Bros noted in a tweet Tuesday, “For November, daily pipe gas exports from Russia to Europe are so far down by 14% vs October,” which itself was a record low month.
Gazprom says it is meeting all its contractual obligations to EU clients. But U.S. officials have joined a chorus of European politicians in calling on Moscow to increase gas exports to Europe. “The reality is there are pipelines with enough capacity through Ukraine to supply Europe. Russia has consistently said it has enough gas supply to be able to do so, so if that is true, then they should, and they should do it quickly through Ukraine,” Amos Hochstein, a senior adviser for energy security at the U.S. State Department, said recently.
“Russia has stated it has sufficient gas supply to meet European energy needs,” a State Department official told VOA. “It can and should provide additional supplies through the existing pipeline network, including Ukraine. Failure to do so threatens European energy security and brings into question Russian motives for withholding those supplies.”
“We are concerned gas storage is low and the market is undersupplied compared to prior years,” the official added. “The lower-than-normal levels of gas storage illustrate the importance of diversified energy supplies to meet Europe’s energy security goals. We are actively engaging to enhance the energy security of our European partners and Allies.”
The International Energy Agency also has called on Russia to boost gas exports. “The IEA believes that Russia could do more to increase gas availability to Europe and ensure storage is filled to adequate levels in preparation for the coming winter heating season,” it said in a recent statement.
The huge price jumps in natural gas are being caused largely by a pandemic-related surge in demand in Asia and low supplies in Europe, which at one point last month saw a new record price set when November wholesale contracts for natural gas rose almost 400 percent since the start of the year. Electricity prices also are soaring because natural gas is used across the continent to generate a substantial percentage of its electricity.
Some European politicians argue the Kremlin is deliberately worsening Europe’s energy crisis as a tactic to pressure the EU into speeding up certification of the just completed Nord Stream 2 gas pipeline, which bypasses Ukraine and runs from Russia to Germany under the Baltic Sea. Washington has long warned Nord Stream 2 will make the EU even more dependent for its energy needs on Russia.
But others share Bros’s suspicion the Kremlin is testing to see whether it can create the circumstances for a political tussle between EU member states over energy supplies. They worry member states will refuse to shut down their industries in order to ensure households in another country stay warm — an energy nationalism that would mirror how EU states engaged in health nationalism at the onset of the coronavirus pandemic, which saw some member states block exports of PPE equipment, oxygen supplies and incubators.
Moscow aside, Europe still would be faced with an energy price crunch thanks to global demand and lower-than-expected solar and wind energy output. In Britain, more than half a dozen natural gas suppliers have gone bust in the past two months, a consequence of surging gas prices and a government cap on how much they can charge consumers. British consumers will face price hikes running into several hundreds of dollars per household. British officials are considering offering some of Britain’s biggest energy retail companies state-backed loans to help them ride out the price tempest.
Other European governments also are considering how to intervene in energy markets to keep homes warm and lit, and factories running through the winter. They also fear domestic political fallout from sharp jumps in household costs and are considering billions of dollars in aid. EU member states are split on what should be their collective response to the spike in energy prices, with some countries wanting a radical regulatory overhaul and others firmly opposed.
Spain has been championing far-reaching reforms. The country’s energy minister, Sara Aagesen Muñoz, has called for a “European response.” Others believe member states should devise their own domestic remedies. More than 20 member states have, or are planning, direct income support, state aid and tax reductions to help their businesses and households survive the price storm and supply shortages.
VOA State Department Correspondent Cindy Saine contributed to this report.
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