Decoupling from Russian energy, can Europe do it?

  In mid-to-late July, most countries in Europe were experiencing record-breaking high temperature weather. Even cities with high latitudes such as London and Paris had temperatures exceeding 40°C. But in the midst of the raging heatwave, one European country is particularly worried that it might freeze.
  Gazprom (hereinafter referred to as “Gazprom”) earlier announced that due to “technical reasons”, from July 11 to 21, the “Nord Stream 1” gas pipeline that supplies gas to Europe across the Baltic Sea will be stopped. Gas supply for ten days. This has plunged Germany, the primary destination of the pipeline, into unprecedented energy anxiety and panic.
  Since June, gas delivery from the Nord Stream 1 pipeline has been cut to 40% of production, to no more than 67 million cubic meters per day. As one of the emergency response measures, German Deputy Chancellor and Economy Minister Habeck announced at the time that Germany entered the second level of its three-stage natural gas supply emergency plan, the “alert” level, and launched a package of “gas-saving” plans, calling for All people make more efforts to save natural gas. Many TV stations have started to broadcast propaganda videos advocating that Germans should take a hot bath for no longer than five minutes. Some local government public swimming pools were forced to close their doors to thank guests because there was no natural gas to heat the water in the pools.
  Some experts warned at the time that it was only a matter of time before Russia completely cut off the gas supply to the “North Stream 1”. Seeing that the natural gas reserves in his hands were in a state of sitting on the mountain, Habeck was even more restless, and even considered revising the “Energy Security Law” to allow energy companies to pass on the sharp rise in costs to consumers, and warned that if there is real inventory in the future, see At the end of the day, natural gas, as a strategic resource, will be forced to enter the stage of rationing management.
  Fortunately, on July 21, as the “Beixi No. 1” turbine turmoil temporarily came to an end, the Russian side resumed the gas supply of “Beixi No. 1” as scheduled, but it still only delivered 40% of the output. But on July 25, Gazprom said that due to a technical problem with one of the last two turbines in operation, daily gas supply fell to 33 million cubic meters over the next three days.
  When the gas supply of “North Stream No. 1” fluctuated, anxiety and panic all over Germany also fluctuated, and they were worried about how they could spend this winter safely. And in Europe, it is not just Germany that is troubled and anxious. European Commission President von der Leyen warned on July 25 that the EU should prepare for the worst case scenario for Russian gas supplies, which is to “stop gas supply completely sooner or later”.
“Beixi No. 1” Turbine Storm

  The energy crisis alarm that made the Germans nervous this time was originally a routine trivial matter, but in the extraordinary year of 2022, it has caused a huge shock wave.
  ”Nord Stream 1″ is a natural gas pipeline from Russia to Germany through the seabed of the Baltic Sea. Before this pipeline was built, Germany and other Western European countries imported natural gas from Russia through land-based Eastern European countries, including the “Yamal-Europe” pipeline via Belarus and Poland, or through Ukraine, the Czech Republic and Slovakia called “Union”. ” and “brother” pipes. It is not difficult to see from the name that these land pipelines were originally part of the oil and gas pipeline system built by the Soviet Union and countries within the system of the Committee for Mutual Economic Assistance during the Cold War. It was originally used by the Soviet Union to provide cheap energy to the socialist countries in Eastern Europe, including East Germany. .
  But times have changed. After most of the Eastern European countries joined or moved closer to the EU and NATO, cracks appeared in their relations with Russia. In the past, whenever countries such as Russia and Ukraine clashed, their oil and gas supplies to Western Europe were affected. At the same time, countries such as Germany also have to pay high transit fees to countries such as Poland and Ukraine. As early as Schroeder’s tenure as Chancellor, Germany has already begun to study a joint venture with Russia to open a direct submarine pipeline project to avoid various political and economic problems that may arise from land pipelines. In 2011, the 1,230-kilometer “North Stream No. 1” pipeline was completed and officially transported gas to Germany. In the past ten years, the Nord Stream pipeline with a diameter of 1.22 meters has transported more than 50 billion cubic meters of natural gas to Germany every year, accounting for more than 40% of Germany’s total natural gas demand.

  As the world’s longest subsea gas pipeline project, Nord Stream 1 requires large turbines to transport huge quantities of natural gas into pipelines laid on the seabed of the Baltic Sea. These turbines are produced by Germany’s Siemens, and the company is also responsible for routine maintenance. According to the agreement between Germany and Russia, Russia sent 6 turbines in need of maintenance to Germany last winter, while Siemens sent the turbines to the Canadian branch for maintenance.
  Unexpectedly, the conflict between Russia and Ukraine intensified this spring, Russia launched a “special military operation”, and the sanctions against Russia by Western countries were escalated in an all-round way. These turbines, which had been sent to Canada before the outbreak of the war, became “equipment that may obtain funds for the Russian government,” and Canada refused to return them on the grounds of sanctions against Russia. In mid-June, Gazprom also used this as an excuse to reduce the natural gas transmission volume of the “Beixi No. 1″ pipeline to 40% of the usual level. The move immediately affected supplies to direct destination Germany and other European countries that rely on the German pipeline system to import natural gas. In July, Gazprom further stated that if the six turbines are not delivered, the turbines that require routine maintenance every summer will not be able to be replaced. Starting from July 11, the supply will be completely cut off for ten days. It depends,” leading to an unprecedented energy panic.
  Technically speaking, unlike electricity, natural gas delivered by pipeline can be compressed and stored. At this time, it is summer when gas consumption is not high, and supply fluctuations in a short period of time will not cause such a major impact on a country of the size of Germany. influences. However, in the context of the intensified conflict between Russia and Ukraine, Western countries have fallen into fear of it.
  A few months ago, seeing that the ruble was being sanctioned by the entire Western world, it was almost kicked out of the global payment system of the Society for Worldwide Interbank Financial Communication (SWIFT). The Russian government, eager to protect the exchange rate of its currency, proposed that European countries import Russia. Gas must be settled in rubles instead of euros as stipulated in the contract. Although the two sides finally reached a compromise, Gazprom set up a special bank to be responsible for collection and settlement, bypassing the Western ban on Russian financial institutions.

  With the “Beixi No. 1” turbine turmoil once again triggering the panic of “gas-suffering”, Germany certainly understands that it needs to prepare for a rainy day, and the top priority is to step up the reserve of natural gas for winter. At the same time, in order to quell the turbine turmoil, Germany immediately launched diplomatic mediation to get Canada to return the detained turbine as soon as possible, and finally succeeded in making an exception for Canada to release it. The German government has also softened its position and repeatedly stated in public that the “turbine impoundment” is a technical issue, avoiding politicizing this issue to escalate the dispute. Recently, the Spanish government proposed to assist the hundreds of decommissioned and sealed “Leopard 2” main battle tanks in Ukraine, which were also stopped by Germany, the country of origin of the tanks. The meaning of not wanting to stimulate Russia at this juncture is very obvious.
  On the other side of the Atlantic, the United States, which has always been a high-profile critic of the Nord Stream project and led sanctions against Russia, has lowered its tone this time. On July 11, US State Department spokesman Price issued a statement saying that the United States supports Canada’s return of the turbines to Germany, believing that this will improve the energy security and resilience of European countries “in a short period of time”, but at the same time it is also not polite to criticize Russia. The practice of “weaponizing energy”. Price’s wording is very particular, he calls the turbine “returned to Germany”, not “returned to Russia”. Although these turbines are theoretically the property of the German-Russian joint venture, and they are also installed in Russia, only if it is said to be “returned to Germany” and then handed over by Germany, Canada can “do not bear the blame for violating sanctions.” .
  However, the Ukrainian government said it was “unacceptable” after Canada agreed to return the turbines to Germany. The “World Congress of Ukrainians”, an organization of overseas Ukrainians, simply took the Canadian government to court and asked Canada to withdraw its decision. For more than a decade, Ukraine has been strongly opposed to the Nord Stream project. In addition to losing a lot of tolls because the submarine pipeline bypassed Ukraine, what is more important is that Ukraine knows that the dependence of Western European countries on Nord Stream will make them Restricting hands when sanctioning or confronting Russia, there is even a risk of “appeasement” against Russia.
The natural gas “life gate” for Germany’s energy dependence

  Governments had expected economies to rebound in 2022 after the coronavirus spread across Europe and battered economies. However, after the intensification of the conflict between Russia and Ukraine, oil and gas prices continued to soar, and OPEC, the most important oil-producing group outside Russia, refused to significantly increase production, which made major European and American countries face extremely high inflationary pressures. In the latest economic data released by the United States, the United Kingdom and the European Union, the inflation rate has basically reached a level close to 10%, and the transmission effect of rising energy prices is one of the key factors.
  Among NATO countries, Canada has long been a global energy export giant, competing with Russia. Although the United States is the world’s second largest energy consumer and the largest natural gas consumer, in the past its imports of oil and gas resources mainly came from the Middle East and did not depend on Russia. After the technology of shale gas exploitation has matured in recent years, the United States can not only meet the huge demand of its own country, but since 2017, it has become a net exporter of natural gas in one fell swoop, and its surplus has continued to expand. After the Russian-Ukrainian conflict intensified this year, the total amount of natural gas exported by the United States to Europe even jumped to more than that of Russia. It can be said that if Europe gradually decouples from Russian energy, the United States and Canada may become the beneficiary countries.
  European countries have different energy structures, and the supply sources of natural gas are also very different. Similar to Germany, Italy is highly dependent on natural gas supply from Russia, and Italy’s power sector mainly relies on natural gas for power generation, so it is more sympathetic to Germany’s current experience. Southern European countries such as Spain and Portugal can obtain natural gas supply from Africa through the bottom of the Mediterranean Sea. They express their clear opposition to the “one-size-fits-all” gas conservation initiative proposed by the European Union, believing that this will affect their own industrial development and recovery plans.
  Before the construction of the Beixi Project, Hungary, the Czech Republic, Slovakia and other countries that used to transport a large amount of gas to Germany through land pipelines and collected tolls are now quite sad. On the one hand, the Nord Stream project has cost them a lot of toll revenue, but on the other hand, they are also deeply afraid that Russia will suddenly cut off the energy supply. Eastern European countries generally have small economies, a single source of energy, insufficient alternative sources of supply, and no large-scale storage capacity. Once the supply of natural gas is cut off, their economies will quickly become unsustainable. According to estimates by the International Monetary Fund (IMF), Hungary, the Czech Republic and Slovakia could lose up to 6% of their gross domestic product (GDP) if Russia cuts gas supplies to the European Union, including Nord Stream and the land pipeline. Therefore, it is not difficult to understand that they have reservations about the full energy decoupling of Europe from Russia.
  Because the United Kingdom has oil and gas resources in the North Sea, about 40% of its natural gas needs can be self-sufficient, and the rest is mainly transported by pipelines from Norway and the Netherlands, with a very small proportion from Russia. France is the country with the highest proportion of nuclear power in the world and the world’s largest exporter of electricity. Fossil energy is basically only used as fuel for cars and aircraft in France. Therefore, Britain and France are generally indifferent or even happy to see the energy decoupling between Europe and Russia. Such decoupling of energy will at best affect global energy market prices and cause domestic price fluctuations, but it is far from affecting national security. Although Britain and France often have very different positions on Russia’s diplomacy, in the face of the current energy dilemma in Europe, Britain and France have basically remained silent.
  But for Germany, the largest country in Europe, natural gas is precisely the “life gate”. Objectively speaking, Germany’s external dependence on energy supply is not the highest among Western countries. As an established industrial powerhouse, Germany’s energy sources have traditionally been supported by the country’s huge coal reserves. Until the beginning of this century, more than 25% of Germany’s energy consumption came from coal, making it the third-largest coal consumer in the world. However, due to high costs and the need to reduce emissions, Germany has shut down all hard coal mines in 2018, and only a part of lignite mining is currently reserved for power generation.
  Another big challenge for Germany is its environmentalist policies, which are extreme even among European countries. Germany’s population and economic size determine that it cannot be completely transformed into green energy for a period of time. However, mainstream public opinion in Germany is “far ahead of the trend”, not only against traditional fossil energy, but also a strong and continuous anti-nuclear energy movement. The shadow of the Chernobyl nuclear disaster has shaped the fundamentals of the anti-nuclear energy movement in the entire European society. However, in the context of today’s global call for carbon reduction, nuclear energy, which is stable in large quantities and can achieve almost zero emissions, is at least as low as fossil energy. Suboptimal choice. What’s more, Germany also has a long, technologically advanced and fairly safe nuclear power record.
  However, the German Green Party, as the vanguard of the anti-nuclear movement, made it clear that Germany would completely phase out nuclear power generation by 2022 when it first participated in the Red-Green Alliance government led by Schroeder in the late 1990s. Although the subsequent Merkel government once postponed the plan, the leakage of the Fukushima nuclear power plant in Japan has caused anti-nuclear noise in Germany to roll up again. In desperation, Merkel could only restore the original denuclearization schedule. Nuclear power, which once accounted for more than 30% of Germany, has been shut down in the past ten years, and now only three nuclear power plants remain in operation, quietly waiting for the end of this year.
  Coal and nuclear power have been phased out, and green energy will take time to fill. This makes Germany, which basically does not produce oil and natural gas, temporarily highly dependent on oil and gas imports. Germany has a special place in the field of natural gas imports. In addition to landlocked countries, Germany is a rare country in the world that has no liquefied natural gas (LNG) interface at all. Its annual demand for more than 100 billion cubic meters of natural gas is all transported through land and ocean pipelines. The kind of LNG carriers that are very common in major ports around the world and carry several large balls are useless in Germany. In other words, even if the country’s natural gas reserves bottom out, there is currently no way for Germany to directly import natural gas from North America or the Middle East to meet its urgent needs. The “North Stream 1” pipeline, which meets 40% of Germany’s natural gas demand, is like the aorta of Germany’s energy security, but the “heart” is placed at the other end of the Baltic Sea – Russia.

How to implement the determination of “zero dependence”

  As Gazprom resumed 40% of its gas supply as scheduled on July 21, the crisis of the complete cut-off of “Beixi No. 1” was temporarily eliminated. However, Germany, which has repeatedly been caught in the “suffocation panic”, is trying to find a medium and long-term solution.
  Germany’s top priority is to expand storage capacity and to step up gas storage work. Germany plans to have its natural gas reserves reach 75% of its reserve capacity by September 1, and 95% by November 1. In any case, it will have to get through this winter, which is doomed to not be too good. The second is to improve the energy crisis plan. The German government has begun to reflect on the rigidity of the previously established three-phase emergency plan for gas supplies. Germany entered the first phase of its emergency plan at the end of March, shortly after the Russian-Ukrainian conflict intensified. However, this kind of low-level warning has been difficult for the German people, who have been bearing the highest electricity prices in EU countries, to have much vigilance.
  In most European countries, energy supply is a “highly regulated and limited competitive market”. In a relatively free market, household consumers can choose an electricity and natural gas supplier that is more suitable for their needs, and generally sign a fixed-price contract with the supplier for a period of one to two years. During the contract period, energy suppliers cannot adjust unit prices based on fluctuations in energy market prices unless permitted by government regulators. In general, this system does better ensure that end consumers will not be affected by the ever-fluctuating international energy market prices, and stabilizes the level of household consumption expenditures, but it also makes the European people more concerned about their monthly energy consumption. Spending bills are less sensitive. After all, electricity and heating needs are largely fixed for a family, and unexpectedly sky-high bills don’t pop up suddenly.
  In June, after the Nord Stream 1 turbine turmoil, Germany entered the “second level” of the emergency plan, which theoretically allows public utilities to transfer high prices to users, thereby stimulating users to reduce demand to cope with shortages. However, this price increase still does not happen automatically, and must first be formally approved by the Federal Network Administration. It was not until July, at the peak of the crisis, when the federal government began to discuss the possibility of price increases and released the wind, ordinary Germans did not realize that sky-high bills were really possible. Combined with the high oil prices that have been refurbished every day in recent months, the German people panicked in a short period of time. Therefore, how to make this early warning system use faster speed and lower cost to motivate users to change their habits has become the focus of the next policy revision.
  At the same time, even the Greens are now willing to compromise on Germany’s timetable and plans to completely scrap coal and nuclear power. Deputy Prime Minister Harbeck presented a new energy security package on July 21. From October 1st, Germany will restart lignite power generation to replace the current natural gas power generation. Even in the field of railway transportation, Germany, which has already completed the electrification of railways, will give priority to restoring the use of steam and diesel locomotives in stock to save electricity. Germany needs enduring strength, “not only about the coming winter, but also about the next one,” Habeck said. Habeck’s implication is that in order to achieve the goal of basically getting rid of dependence on Russian natural gas by 2024, in the short term, the Green Party can also accept Germany’s temporary reversal of the highway on the elimination of traditional energy.
  In addition, Germany is also carefully selecting sites and plans to build LNG terminals in the northern states of Schwarzwald and Lower Saxony as soon as possible to receive natural gas shipped by ships, which is also scheduled to be completed before the end of this year. As for whether all nuclear power plants will be decommissioned by the end of the year, the government has not yet made it clear. It seems that the Green Party wants to reserve a little chance for a result that it has worked hard for 20 years, and does not want to break its promise. But what is certain is that if there is another energy gap before the end of the year, there should not be too many political obstacles for Germany’s nuclear power plants to come back to life.
  Although German Chancellor Scholz is a Social Democrat, the Green Party is now the second largest party in the coalition government, and its influence on energy issues cannot be underestimated. In particular, the two important figures in the cabinet, Deputy Prime Minister and Minister of Economy Harbeck and Foreign Minister Belle Burke, are both from the Green Party. They are in charge of the diplomatic and energy security issues between Germany and Russia caused by the Russian-Ukrainian conflict. This time, the Greens will have to prove they can transform from an environmentalist party to a governing party that can deal with the bigger picture.
  It should be admitted that after experiencing repeated energy panics, a considerable number of people in Germany are now more war-weary and more hesitant and anxious about their government’s unconditional support for Ukraine. The federal government, including the Green Party, must figure out how to balance the complex and delicate public opinion of “sympathizing with Ukraine” but also “doing not want to be frightened”.
  Since the intensification of the Russian-Ukrainian conflict, among the major European powers, the British government has expressed the most positive attitude. Even when Johnson announced his resignation as prime minister, the citizens of Kyiv seemed more saddened than the citizens of London. France, on the other hand, insists on its diplomatic strategy of reconciliation that it always likes to stand in the middle of the two camps.
  However, Germany’s current situation is quite embarrassing. This energy crisis has made some Germans hope to take the opportunity to ease or even promote peace between Russia and Ukraine. However, the two world wars and the unique history of splitting the country for nearly half a century after the war have made today’s Germany a part of the world. A special kind of “political correctness”, that is, in matters like Russia and Ukraine, the German government has never dared to take the initiative to provoke the heavy responsibility of persuasion like France, and even the German people are generally ashamed to openly discuss the possibility of persuasion. . It can be said that even if it may be most affected by sanctions against Russia, Germany does not have much choice in diplomacy other than expressing a tough position similar to that of most allies.
  The Greens have been vocally pro-Ukraine and anti-Russian since February. The current German President Frank-Walter Steinmeier once criticized NATO for over-stimulating Russia when he was foreign minister in 2016. As a result, although Steinmeier apologized this year and admitted that he had miscalculated the situation, Ukraine still declined. Steinmeier, the head of state, visited Kyiv in April to express his support for the request. Even among the German people, who have always been known for their “shameless admission of mistakes”, many people feel that the Ukrainian government is too small-minded and repays virtue with resentment. However, as foreign minister, Bell Burke visited Kyiv very quickly in May, and her photo with Ukrainian Foreign Minister Kuleba was also exquisite like a movie poster. During this visit, Bell Burke once again declared to the Ukrainians that Germany will definitely reduce its dependence on Russia for energy “until zero”.
  After the Russian-Ukrainian conflict intensified, the EU took the lead in proposing an initiative to save gas and tide over the difficult times. European Commission President von der Leyen proposed that member states can reduce their natural gas use by 15% in the next 8 months on a voluntary basis, and gradually reduce their energy dependence on Russia according to their own conditions. But the implementation of the initiative is by no means a one-day achievement, not to mention that some EU member states mentioned above may oppose the saving initiative because of their small impact. In the context of the current high international energy prices, it is simply to find a stable alternative. It will take a considerable period of time to source and build sufficient reserve facilities. At present, Europe’s willingness and determination to realize the decoupling of energy from Russia is stronger than ever, but to what extent this determination can be put into practice, it involves how Europe can coordinate internal differences and analysis, and the next step of the Russian-Ukrainian conflict. As well as many internal and external factors such as Russia’s response, it still needs to be observed.