Ukraine Conflict Forces Europe to Reckon With Its Fossil Gas Dependence
by Jonathan Thompson | Sierra Magazine | Reading time: 7.5 minutes
Russian president Vladimir Putin’s decision to recognize the separatist regions of eastern Ukraine and launch a full-blown invasion of Ukraine has sparked a swift response from the United States and its allies. The retaliation has come not in the form of missiles or troops but as economic sanctions against Russian companies and the oligarchs who run them. The most potent of these sanctions is the cancellation of an $11.8 billion pipeline constructed to carry Russian methane gas (a.k.a. “natural gas”) to Germany and the rest of Europe. On February 22, German chancellor Olaf Scholz announced he was putting the permitting of the Nord Stream 2 Pipeline—completed months ago but still awaiting European Union certification before it can carry gas—“on ice.”
The importance of Nord Stream 2 to both European democracies and Putin’s autocratic Russia reveals how central energy politics are to the crisis in Eastern Europe. The Russian invasion into Ukrainian territories—the most serious warfare on European soil since the end of the Cold War—could mark a turning point in Europe’s efforts to wean itself off of fossil fuels.
Scholz’s decision to pause Nord Stream 2 will deal a severe blow to Putin by cutting off a prime source of revenue for Russia. But it may hurt American allies just as much. That’s because European countries have grown increasingly dependent upon imported gas for electricity generation, heating, and cooking, almost half of which comes from Russia. If Russia were to react to a Nord Stream 2 shut down by cutting off all gas exports, it could cause an energy and economic catastrophe in Europe, which is already struggling with gas shortages and exorbitant energy prices. But it may also prove a boon to US gas producers desperately in search of new markets.
A Ukrainian serviceman pauses while walking to a frontline position outside Popasna, eastern Ukraine, on February 20, 2022. | Photo by Vadim Ghirda/AP Photo
The European Union as a whole, led by its wealthiest nations, has been working to phase out fossil fuels from its energy mix. Austria shut down its last coal-burning power plant in 2020, and industrial powerhouse Germany consumes 40 percent less coal than it did a decade ago. Germany also shut down half of its remaining six nuclear power plants at the end of 2021 and plans to eliminate the power source altogether by the end of this year. These same countries have gone on a solar- and wind-installation building frenzy, adding gigawatts upon gigawatts of generating capacity in efforts to reach net-zero emissions targets in the next couple of decades.
Europe has been less successful weaning itself off gas, however. While overall methane gas consumption plateaued and even dipped a decade ago (as opposed to in the United States, where gas use has skyrocketed), most countries have started burning more of the fossil fuel in recent years to offset the loss of coal and nuclear power. Meanwhile, European gas output is declining: The Netherlands has gradually shut down its Groningen field, one of Europe’s few methane-producing areas, in recent years due to environmental concerns and drilling-triggered earthquakes. And most European countries have been slow to adopt fracking, the drilling method that has unleashed huge reserves of shale oil and gas in the United States.
Today, the EU acquires 90 percent of the methane gas it consumes from outside its borders, a good chunk of it coming from Russia via pipelines that cross Ukraine, Belarus, and Turkey. Since 2011, the first Nord Stream pipeline has been delivering Russian gas to Europe via a conduit that stretches under the Baltic Sea from Vyborg, Russia, to Greifswald, Germany.
The biggest of those fossil fuel arteries currently goes through Ukraine, giving the former Soviet Republic leverage over Russia and leaving the pipeline vulnerable to potential shutdown in retaliation for Russia’s aggression. So in 2015, following Russia’s invasion of Crimea, the Russian state–owned oil and gas company Gazprom partnered with Shell and other global energy companies to build another Baltic Sea line, Nord Stream 2, which would double the capacity of the existing Nord Stream and bypass Ukraine’s transfer fees. Construction of the massive undersea line was completed in September. But certification by German regulators was delayed as the Gazprom-led global consortium that operates the line set up a German subsidiary to comply with EU rules. In the meantime, Nord Stream 2 has become the most fragile and contentious strand in the global geopolitical-hydrocarbon drama of Putin’s incursions across Ukraine’s borders. And a trans-Europe energy crisis of unprecedented proportions has made the situation even more volatile.
After a pandemic-induced slump, Europe’s energy demand rebounded last year as businesses, factories, and offices reopened. A colder than normal spring in 2021 prompted Europeans to crank up gas and electric heaters, and a summer heat wave and spike in air conditioner use further increased power consumption. In the past, Russia’s Gazprom would have responded to the heightened demand by sending more gas to Europe. But this time, Putin refused to open the valves to stabilize Europe’s growing energy demand-supply imbalance, driving power and gas prices through the roof. Utility bills have doubled or more across the continent, spurring Greek farmers to dump milk on a highway and French egg producers to pelt a supermarket with their wares in protest. One British energy company even advised customers to turn down the thermostats and hula hoop and cuddle with pets to keep warm and save money.
Russia and Gazprom haven’t revealed why they’re being stingy with their gas, an action European Commission president Ursula von der Leyen in February called “very strange behavior” for a company interested in profits. In a recent op-ed decrying Europe’s gas dependency, however, analysts from IEEFA, an energy think tank, suggested Gazprom “manufactured the gas crisis as political leverage for the speedy approval” of Nord Stream 2.
Even before Nord Stream 2 was paused, much of Europe was looking to diversify its energy supply to reduce reliance on Russia. But different factions disagree on whether this means building out cleaner, less geopolitically fraught energy sources such as wind and solar or simply finding new gas suppliers. EU leadership has often seemed to want both. At February’s Munich Security Conference, Von der Leyen said Europe could get by without Russian gas by turning to other gas suppliers this winter and stocking up in the summer, but added, “In the middle- to long-term, we are doubling on renewables. Sun, wind, and hydropower will increase European independence on energy.” It’s not yet clear whether the heightened clean energy ambitions will stop efforts to construct a fleet of new gas plants across the continent or an EU proposal to reclassify certain gas projects as “green” investments.
The Biden administration, meanwhile, is pushing American gas on Europe. The United States has been awash in methane gas—and prices of the commodity have been depressed—since the fracking frenzy of the mid-2000s. Producers increasingly have looked overseas to sell their product and have had some luck in Asian markets. But getting it there is a challenge: Since there are no trans-Pacific or trans-Atlantic methane pipelines, the gas must be liquefied by cooling it to -260 degrees Fahrenheit and then loading it onto massive, specialized tankers to ship it. Gas producers loaded a record-high 246 tankers with Europe-bound LNG last year, a number that’s expected to climb.
The US shipments have helped Europe avoid an even deeper energy crisis while also driving up US gas prices to levels not seen since 2009—resulting in an uptick in coal burning. That has provided US oil and gas companies with more incentive not only to drill and frack for gas but also to capture and sell the gas that oozes from oil wells rather than flaring or venting it directly into the atmosphere—a marginal improvement, environmentally. But, critics say, it is also enabling Europe to perpetuate its gas dependency and hampering efforts to decarbonize, even if it is helping it break free from Russia. Instead, writes Julian Popov, a former Bulgarian environment minister and European energy analyst, the United States should be putting its considerable weight behind helping Europe decarbonize. “If the US wants to reduce Europe’s energy dependency on Russia,” Popov wrote in Energy Monitor in 2020, “it should focus much more on cooperating on cybersecurity and supporting the integrated European power market, renewables, intelligent energy demand-side response, transport electrification, energy storage, hydrogen and energy efficiency.”
And, Popov suggested recently, much of that work could be centered in Ukraine. The nation could rid itself of the trouble being a route for Russian gas has brought it and replace lost revenues by harvesting its vast solar, wind, biomass, biofuels, and hydroelectric resources and export the power to its European neighbors. After all, even the most powerful autocrats can’t cut off the sun or the wind.