It’s only been over a week, but so far Russia has let the gas flow. But this presents another problem.
Russia is making hundreds of millions of dollars a day from its oil and gas exports, easing financial sanctions introduced by Western powers to shut down funding for Putin’s war effort. The European Union, Russia’s biggest gas customer, is now grappling with the reality that its energy spending has helped empower Putin to wage a bloody war on its borders.
With prices at record highs, the value of Russian natural gas exports to the European Union has increased by about €500 million ($545 million) every day, according to European think tank Thanks Bruegel. This is up from about €200 million ($220 million) in February. Before the invasion, Russia was also exporting oil worth millions a day to Europe.
European Union leaders have been talking about reducing dependence on Russian gas for years. Polish Prime Minister Mateusz Morawiecki put it bluntly last week. “We’re buying, like [the] EU, a lot of Russian gas, a lot of Russian oil. And President Putin is taking money from us, the Europeans. And he is turning it into aggression, aggression,” he said at an EU summit, according to reports.
For gas alone, the 27-country bloc relies on Russia for 40% of its needs. By country, Germany is Russia’s biggest customer, depending on the country for more than half of its gas, according to Bruegel.
Moscow’s international reserves now stand at $630 billion, the largest war fund ever. But its financial firepower has been severely hampered by Western sanctions, with analysts estimating that nearly half of those assets have been confiscated.
Those sanctions are battering the Russian economy, but they haven’t yet directly targeted fossil fuel exports, so Western governments are concerned about rising energy prices and the cost of living. Ultimately they want the Russian gas to flow at least.
Oil is another story. While the price of benchmark Brent crude rose this week, trading at around $115 a barrel on Friday, Russia’s leading Ural crude was offered at a discount of $18 a barrel, a sign that some buyers will take it. are away.
Banks and merchants fear being caught in financial sanctions, and shipping companies and insurers are concerned about the risk of tankers in the Black Sea.
Apart from this, Europe can buy oil from elsewhere. Russia’s natural gas is more difficult to replace.
Reducing heat can save huge amounts of gas
Supporters of climate action have for years balked at plans to wean the world away from natural gas, a powerful planet-warming fossil fuel. It has taken an energy crisis and bloodshed in Ukraine to finally kick EU institutions into gear.
EU energy chief Kadri Simsson said on Thursday that the bloc will release its plan next week to reduce its reliance on Russian gas and accelerate the adoption of more renewable energy.
“Beyond the short term, ultimately … the only sustainable solution is the Green Deal, promoting renewable energy and energy efficiency as quickly as possible technically. That’s why we still rely heavily on fossil fuel imports,” she told a news conference. said in. International Energy Agency.
Germany, which had set a target of transitioning to 100% renewable energy by 2040, has already pushed its target by five years, as Russia invaded Ukraine last week.
IEA executive director Fatih Birol suggested Europeans could turn down their thermostats as part of the solution.
Actually asking people to do this would be a last resort, said Ben McWilliams, a climate and energy analyst at Bruegel.
“But who knows? It’s an unprecedented situation. I can imagine a political campaign of sorts, a real push by European leaders saying, ‘Look, if you can help us by lowering 1 degree on your thermostat’ So it’s going to help. And you can see the people behind it coming together against Russian gas,” he told CNN. “But ultimately, you’ll need much more than that in the response.”
McWilliams said one approach would be to replace about half the gas from other sources. The United States is already sending Iiquefied Natural Gas (LNG) to Europe, and EU officials are also looking at countries such as Azerbaijan and Qatar.
The other half will need to come from demand cuts, McWilliams said, especially as Europe prepares for next winter.
Heavy industries such as steelmaking and chemical production will need to scale down their operations. Homeowners investing in solar panels and heat pumps can help take some of the pressure off the heating system.
Tara Connolly, a campaigner for the international NGO Global Witness, which specializes in gas, says an emergency program to help Europe insulate homes, replace gas boilers with heat pumps and accelerate the transition to renewable energy should start.
“It is absolutely clear that Europe’s gas dependence has provided Putin with the resources to engage in his bloody enterprise in Ukraine, while impeding Europe’s response,” she said. “This moment has shown that fossil fuels are not only ruining the climate, they are contributing to a more unstable and dangerous world.”
CNN’s Charles Riley and Julia Horowitz contributed to this report.