European natural gas prices have soared so high that hundreds of millions of people could be facing cold homes or inflated energy bills over winter. There’s also fears of a knock-on impact as carbon dioxide used in food production — a byproduct of fertilizer made with natural gas — also gets more expensive.
Politicians are blaming the surge in prices on an increase in natural gas demand as the world wakes up from the pandemic, supply disruption caused by maintenance, and a less-windy-than-usual summer that saw a drop in wind-generated power.
But really, Europe’s crisis is in its renewables sector. The region has invested heavily in renewables, such as wind and solar, but it can’t get enough of this green power to the people who need it.
After the UN published its state-of-the-science climate report in August, warning the world must make deep and sustained cuts to greenhouse gas emissions this decade, there has been a growing understanding among political leaders that the transition away from fossil fuels needs to happen more quickly than planned.
There are other incentives to moving faster on renewables, however. A fuller transition would free Europe from the disruption of volatile energy markets and reduce its dependence on other oil and gas providers, such as Russia. Europe could avoid its energy security getting tangled up in geopolitical storms.
More than 40 European Union lawmakers, mostly from eastern and Baltic states, have appealed to the European Commission to launch an investigation into Russia’s state gas company Gazprom. They suspect it had been restraining its supply to push up prices and pressure Germany to expedite the launch of Nord Stream 2, a gas pipeline that runs from Russia and under the Baltic Sea to Germany.
Gazprom told CNN Business that it was supplying gas to customers abroad “in full compliance with existing contractual obligations” and that supplies were “at a level close to the historically record high” over the past eight months.
The International Energy Agency said Wednesday that Russian exports to Europe were down from 2019 levels and that the country could do more to increase supplies ahead of winter.
“In terms of the Russian state, there is clear evidence that it uses its gas exports for its own geopolitical gain, it uses that strategically, it’s not just a commercial venture,” said Manchester University’s Matthew Paterson, a professor of international politics who researches climate politics.
“It’s used gas to get leverage over Ukraine very, very aggressively, and it seems to use it in relation to other eastern central European states,” he added.
Europe has long been a world leader in renewables. Last year, the European Union and United Kingdom used more renewable energy than fossil fuels to generate electricity.
But at the same time, the United Kingdom relies on gas for around 40% of its electricity and Europe is expanding and investing heavily in gas. The European Union currently has €87 billion ($102 billion) worth of gas projects in the pipeline, according to a report by the Global Energy Monitor (GEM).
The bloc is looking to increase gas imports by 35%, which GEM says sits “at odds with the EU’s stated goal of net-zero greenhouse gas emissions by 2050.”
Gas has been widely regarded as a “cleaner” bridging fuel to use during the transition from coal to renewables for electricity. But there are some problems with that. While gas emits less carbon than coal and oil, it is made mostly of methane, a very harmful greenhouse gas that leaks from pipelines and abandoned wells.
Smart grids are part of the answer
The gas shortages are being felt more sharply in the United Kingdom, where prices have more than quadrupled and some small energy companies are going bust.