Energy security as an issue in Europe

Surging energy prices and the Russia-Ukraine conflict are making European leaders think hard about energy security, particularly their decades-old reliance on Moscow for natural gas.

Russia accounts for more than one-third of the EU’s supply, and its dominance is entrenched in the Baltic states, Germany, Italy and parts of southeastern Europe.

With soaring gas prices raising fears of an intensifying crisis as winter approaches and concerns that a full-blown war could interrupt pipeline flows from Russia, the EU is focused on getting liquefied natural gas, or LNG, by ship from the United States, Qatar, Algeria and elsewhere until renewables catch up.

The crisis shows Europe’s vulnerability after years of limited progress in completing an “energy union”, a 2015 vision to allow affordable gas and electricity to flow across borders while diversifying suppliers and reaching climate goals.

As renewables like solar and wind are slowly built up and coal and other fossil fuels are phased out, Europe still needs natural gas, and it’s dependent on Russia to get it.

That came into sharp relief as Europe’s gas supply dropped and prices soared partly because Russia sold less gas than normal, squeezing households and businesses with rising costs.

Depending on their severity and targets, European Union and U.S. sanctions could prompt Russia to curtail oil and gas exports to the West, forcing prices to rise and punishing NATO economies.

Now Governments are talking about creating a strategic reserve of gas, either shared among several countries or organized at the EU level. Energy-consuming countries have done that with crude oil since the 1970s.

In particular, Germany's decision to halt the certification process for the Nord Stream 2 pipeline, which would carry Russian gas directly to Germany, is a potential paradigm shift in Europe's energy politics.

Yet, ClearView Energy Partners cautioned yesterday that Russia's "connectedness to global markets" as well as oligarchs' ownership in energy companies may make repercussions difficult to completely avoid.