The escalating situation in Ukraine has focused the minds of Europe’s leaders on their countries’ energy needs and how to meet them. Energy security has quickly become a strategic priority for the EU, faced with the possibility of gas price rises.
Political unease across Europe is understandable. Relations between Russia and Ukraine over gas supply have not been harmonious, with state-owned Russian energy firm Gazprom repeatedly threatening to cut off gas supplies to Ukraine because of unpaid debt.
President Putin has already warned Europe of gas shortages over Ukrainian debts. Cutting off Ukraine, and in doing so interrupting the supply to Western Europe, remains a powerful political tool should events escalate any further. Europe remains strongly import-dependent for energy, and Russia is hands down the largest exporter to EU member states, supplying 19.2% of coal, 24.5% of petroleum and 29.4% of natural gas.
The promise of “additional and far-reaching” action from the US and Europe if Putin sends in troops to eastern Ukraine or further destabilises the region puts EU nations in danger of Russian economic retaliation. Gas supply would threaten economic recovery across Europe, and in colder regions could cost lives.
The energy trilemma
Although little can be done in the short term to fix Europe’s import dependency, current events are certain to provoke a policy rethink. This is driven by three needs: to lower CO2 emissions, to keep energy costs competitive, and to maintain the security of energy supply. Together, they form a challenging triangle.
Energy security itself requires a diverse supply to lessen the effects of price shocks or supply interruptions, reduced dependency on imports, and above all to keep the lights on, homes warm, and businesses running.
Over-reliance on a single type of fuel, especially one sourced from volatile parts of the world, has already driven nations to try to reduce their dependency on imports.
But the danger at present is that urgent steps to reduce dependency on Russian gas will be to the detriment of other energy policy priorities. An example knee-jerk reaction would be subsidising investment in new coal-fired power stations to reduce reliance on gas; such action would be a major blow against cost and carbon-reduction targets.
Even if carbon capture and storage emerges as a renewed priority for new coal plants, this solves the carbon issue at the expense of an even greater cost burden for consumers. And where would the coal come from, when Russian imports account for such a large percentage?
Flexible gas power plants are viewed as the natural interim partner to the variable nature of energy generated from solar and wind – gas plants are low carbon (relative to coal), and open cycle machines can be started within minutes to meet demand when energy supply from solar and wind is insufficient (by comparison coal and nuclear cold starts can take days). For this reason EU energy policy has gravitated towards flexible gas in support of renewables, but the Ukraine situation highlights why this vision may be revisited.
Looked at another way, reducing Europe’s reliance on imported Russian gas could be viewed as a good thing for cost and decarbonisation in the long run. Doing so could reduce nations’ exposure to wholesale gas price volatility and provide strong leadership on developing domestic renewable energy.
If we are to continue with the partnership of renewables backed by gas power stations then new suppliers will be needed. This points to an urgent need to quickly develop Europe’s domestic shale gas supplies, and its renewable energy resources. Power from wind, marine, solar, geothermal and biomass offer significant diversity of supply and geographic location.
Taken together they provide a supply of energy generation that is more stable and constant than any single one alone. Ideally, they would be linked together with smartgrids, so that the windy north and sunny south of Europe can share each others’ natural resources in an interconnected EU power grid.
In order to avoid going backwards and undoing the considerable progress in rolling out renewable energy generation across the continent, the EU will need to redouble its efforts to manage the problem of electricity supply variability from wind and solar – with energy storage and demand side response (altering demand to meet supply), as well as taking important steps to reduce energy demand through energy efficiency.
The flashpoint of Ukraine presents a timely reminder of how much of our energy is geopolitically risky. Now is the opportunity for politicians to reassess priorities and fine-tune policies to balance cost, decarbonisation and energy security, in a world of political footballs where gas suppliers are hard to find, and even harder to keep.