![]() ![]() Policies, regulations and voluntary commitments intended to address the threat of climate change are still having an inhibiting effect on investments that could increase gas supplies into Europe, some executives say. And there is a fundamental tension at the heart of Europe’s strategy that is not easy to resolve: governments want the industry to increase supplies of fossil fuels in the short term, while maintaining a commitment to reduce demand for those fuels in the medium to long term to meet their climate goals. There are still significant disagreements over the extent to which the urgent need to bring more gas into Europe should override other policy priorities, such as maintaining competitive markets or limiting emissions. The details, however, are more difficult. And it has to find new sources of supply, both by pipeline and as LNG, to replace the Russian gas flows that have been shut off indefinitely. In broad terms, it is clear what is needed: Europe has to curb its demand for natural gas, by investing in renewables, nuclear power and hydrogen. Joao Galamba, Portugal’s secretary of state for environment and mineral resources, said in a plenary session: “There is now a common understanding that some choices in the last 20 years were disastrous for Europe.īut while the understanding of the roots of the crisis may now be widely shared, there is less agreement among governments, regulators and businesses about the appropriate solutions. Alexander De Croo, Belgium’s prime minister, warned in an interview with Bloomberg: “A few weeks like this and the European economy will just go into a full stop… The risk of that is de-industrialisation and severe risk of fundamental social unrest.”Īt the Gastech 2022 conference in Milan last week, some policymakers were prepared to be very frank about the mistakes that have led to this crisis. In an extremely cold winter, demand curtailments will be inevitable. If the continent has a mild winter, then European gas supplies should be adequate. No-one is laughing now.Īs Massimo Di Odoardo, Wood Mackenzie’s vice-president for gas and LNG research, explained earlier this month, Europe is now essentially at the mercy of the weather. It has continued to blame equipment malfunctions, but has made it clear that flows through the pipeline will be halted indefinitely. ![]() When supplies through Nord Stream began to be disrupted in June, Gazprom maintained a fig leaf of excuses about technical difficulties forcing the flows to be restricted. The news that Russia was suspending gas flows through the Nord Stream 1 pipeline crystallised fears that have been building since the invasion of Ukraine on February 24. Europe had been buying Russian gas for decades, and its supply had been dependable through the Cold War, the break-up of the Soviet Union, and the rise of Vladimir Putin. When US president Donald Trump warned at the UN in 2018 that Germany would “become totally dependent on Russian energy if it does not immediately change course”, German diplomats chuckled and shook their heads. ![]() Less than two weeks later, Europe was at war.Įuropeans’ attitudes to their dependence on natural gas supplies from Russia often had a similar character: they could not believe that such a rational, mutually beneficial trading relationship could be broken. Herbert Henry Asquith, the UK’s prime minister, told a cabinet meeting in late July 1914 that although tensions were building between the Austro-Hungarian Empire and Serbia, “happily there seems to be no reason why we should be anything more than spectators”. ![]() The ties of trade, investment and culture, and even the close family connections between the monarchies of Germany, Russia and the UK, seemed strong enough to prevent hostilities. Right up until the first shots of World War 1 were fired, many Europeans did not believe that a conflict between the Great Powers was possible. ![]()
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