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The Ukraine War and the European Energy Crisis

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Europe’s energy dependence on Russia manifested itself in all its severity after the Russian invasion of Ukraine, provoking, on the one hand, a huge blackmail by the Kremlin and, on the other hand, a significant increase in energy prices.

Russia has the world’s largest natural gas reserves and is the world’s largest exporter of natural gas. It is also the second largest exporter of oil and the third largest exporter of coal.

Even before the conflict, Gazprom (Russia’s largest energy company) began to gradually reduce the volume of natural gas sales to European customers.

Daily natural gas from Russia to the EU from August 2021 in million cubic meters per day. Source: ENTSOG Platform (gasdashboard.entsog.eu).

Moscow exerts significant influence on the price of natural gas in Europe, controlling all major suppliers to the European Union.

European countries importing Russian gas in 2021 in billions of cubic meters. Source: IEA.

German energy sabotage

Germany’s dependence on Russian gas began in 1970, when the construction of the first major gas pipeline between the Soviet Union and Germany was negotiated. The decision was part of “Ostpolitik,” a policy initiated by Willy Brandt to bring Germany closer to the Eastern Bloc countries. By 2020 – 50 years later – Russia accounted for more than half of the entire European country’s natural gas supply.

In 2011, the Nord Stream pipeline was opened, connecting the two countries. Only three years later, Russia invaded Ukraine and annexed Crimea. Despite this violation of international law, in 2015 an agreement to build Nord Stream 2 was signed for Gazprom to take over German gas storage facilities, putting control of German energy reserves in the hands of a foreign power.

All this happened despite repeated warnings from Central and Eastern European countries. As many experts in Poland and the countries of the region have predicted, Germany’s policy of rapprochement with Russia ended up becoming a tool of aggression, blackmail and extortion on the part of Moscow.

German imports of Russian gas in billions of cubic meters. Source: Researchgate.

Climate fundamentalist regulations and their consequences

However, it is not only war and Moscow’s actions that are driving up energy prices. Another fundamental factor in the European energy crisis is EU climate policy and regulations.

Established in 2005, the EU Emissions Trading Scheme (EU ETS) is the cornerstone of European climate change policy and a tool that bureaucrats see as key to sensibly reducing greenhouse gas emissions. It currently accounts for more than three-quarters of international carbon trading, making it the world’s largest carbon market.

The EU ETS operates on a cap-and-trade basis, meaning that organizations are entitled to emit a certain amount of greenhouse gases, above which they need to buy allowances from other organizations that have not reached their limit.

Each allowance (EUA), is equivalent to one ton of carbon dioxide (CO2), the most common greenhouse gas, and companies can buy and sell them to each other as needed.

What started out theoretically as a sensible system to reduce dependence on fossil fuels ended up in practice drastically increasing energy prices in countries just beginning their journey along the energy transition path.

Emission allowances traded in the EU ETS are highly susceptible in the face of speculation: their price has risen from €10 per tonne of carbon dioxide in 2018 to over €90 in 2022.

When energy prices began to rise sharply in 2021, Poland was the first country to call for a suspension of the EU ETS for the duration of the crisis, and reiterated the call in August 2022. Poles launched a campaign through the Polish Electrical Association, informing citizens that energy prices were rising due to the war and the EU’s unwillingness to suspend the carbon credit system. The Green Deal had come at the wrong time.

All this green dictatorship will condemn small and medium-sized companies to being unable to compete with the big ones. On the other hand, the poorest European countries will not develop on par with the strongest. This system will generate inequality disguised as good intentions. Moreover, it will become more impossible than ever to compete with China, turning Europe into a continent dependent on the Asian giant, which has no concern about being the most polluting country of all, since Beijing will continue with its energy policy.

Ranking of countries producing CO2 emissions in 2021 in million tons. Source: Datosmacro.

Poland’s strategy

For years, Poland has been warning about the dangers of dependence on Russian raw materials and has been taking the necessary steps to diversify its energy sources to ensure its energy independence.

In March 2022, Warsaw called for sanctions on Russian gas, oil and coal, which are the Kremlin’s main sources of income. Poland’s permanent representative to the EU, Andrzej Sados, argued that as long as Europe does not stop buying raw materials from Russia, it will continue to finance Putin’s war in Ukraine.

After criticizing the EU for incomplete sanctions against Moscow, the Polish government decided not to wait for everyone to react and moved alone, i.e. with a unilateral decision, to stop importing Russian energy sources domestically. At the end of March, Warsaw decided to ban the import of Russian coal. Previously, Poland had imported about 8 million tons of the resource, which accounted for about 20% of the country’s annual consumption.

Subsequently, when Putin tried to force Europe to pay for energy inputs in rubles, Poland rejected the blackmail. As a result, on April 27, Moscow stopped pumping gas, contracted under the Yamal agreement, to Poland.

It should be noted, however, that Warsaw began to pursue a policy of diversifying its supply sources long before the Russian attack on Ukraine. Consequently, when the Kremlin tried to blackmail Europe to stop supporting Ukraine, Poland continued the diversification process, securing multiple energy suppliers and energy independence from Russia.

Future actions in the face of the European energy crisis

The European Union’s production of carbon dioxide emissions is unmatched by those countries that pollute the most – and lack any commitment to reducing them – coupled with a European energy crisis that is pushing the economic and social stability of most of its member countries to the limit. However, some unconscious or ill-intentioned people prefer to prioritize the Green Deal.

While the autonomy and progress of countries could be seriously affected by the ideology of climate change, the quality of life of citizens would also be condemned by bureaucrats who care more about greenhouse gases than about the consequences of a war that could escalate even dragging NATO into the battlefield.

If politicians concentrate on the fundamentalism of the green pact and not on the conflict with Russia, European industries and economies will not be competitive with Asia in the face of high taxes and, moreover, will hardly be able to survive the European energy crisis.

Europe’s leaders will have to decide if they want to solve the real problems of their nations, away from any leftist ideology that only enriches a handful of individuals over the majority. It is time to choose between sovereignty and development or dependence and poverty.

Candela Sol Silva es columnista y es la jefa de prensa de Fratelli d'Italia en Argentina // Candela Sol Silva is a columnist and is the press officer for Fratelli d'Italia in Argentina