Energy Geopolitics: Part 3

War, COVID and climate. Change of energy security priorities.

The energy transition is still to a greater extent related to electricity production, as well as heat and industrial energy than to transport, i.e. in European realities it affects more producers and consumers of natural gas than crude oil.  Meanwhile, the entire energy sector has found itself in a global crisis due to the COVID-19 pandemic.  Its reception influenced the assessment of the shift to the renewable energy (RE), also in the context of international security, understood as the alleged security of humanity from biological threat.  Assumed advantage of RE is its flexibility and the ability to adapt to crisis conditions, so the pandemic period can be regarded with a certain degree of tolerance as a falsification of these expectations. 

Pandemic drill

Scholars agree that the pandemic slowed down the shift to RE, but paradoxically (?) COVID-19 may turn out to be a global transition accelerator.  The problems of the RE sector were direct, related to the threat to the RE sector employees’ life and health and the interruption of the global supply chains.  Equally important, however, was the observed global decline in energy demand, caused by reducing production during subsequent lockdowns.  International Energy Agency data estimated decline in 2020 at 6%, while with the gradual recovery of the economy in 2021, it increased by 4.6%, i.e. to a level lower by 0.5% from 2019.  Demand for electricity increased in 2021 by a record 6%, which was accompanied by a 7% increase in CO2 emissions from power generation.  RE’s growth in 2020 was lower than in 2019 by 13%.  There have been signals that the pandemic crisis, combined with the speculative rise in energy prices in Autumn 2021, may encourage a return to coal (China) and strengthen the vision of a ‘grey transition’ based on natural gas (EU).  However some analysts consider the period 2020-2022 as proof of the shift to RE necessity.  Transition was never supposed to meet present demand, but just opposite: to limit it.  Moreover, the lockdown policy has shown that it is possible to administratively reduce economic activity, and thus cause a decrease in energy consumption, on a global scale.  The disruption of supply chains is a signal for transition countries to take up the challenges and try to overcome China’s competitive advantage in the RE market.  Investments in RE are an important element of recovery plans.  Especially that instead of the predicted delay in the shift to RE and return to dirty fossils – the Russian-Ukrainian war turned out to be another direct threat to international security, and as a result the energy transition even accelerated.

Last minute war

Understanding the concerns of the current energy-exporting countries is crucial to prevent any drastic counteractions as threats to international security.  This applies in particular to Russia, which is the largest exporter of natural gas, the second largest exporter of crude oil and the third largest exporter of coal and which already used resources advantage in terms of the international relations (IR).  Along with the global shift to RE, it was obvious that Russia will have to face the inevitable reduction of its exports to both main recipients: Europe (53.2%) and in future also China (32.1%).  The volume of Russian export would decrease by 15%, and revenues by 17%, which would mean a reduction in the annual GDP growth rate from 4.4.% as in 2021 to 0.6% -1.7%.  In fact Russia attacked Ukraine before these transformations of her market started to be more burdensome and when the current EU policy, especially German Energiewende, was strengthening the path dependence on Russian natural gas.  These factors could be considered by Russian strategists, together with calculation of how to finance the war and mitigate its economic.  The Russians simply could not wait for further expansion of NATO, as their strategic and economic development would gradually weaken.  The crisis in Russian-Ukrainian relations has been growing since the pro-Western coup in Kiev in February 2014, and the Anglosaxon-Russian rivalry to influence Ukraine’s policy as a transit country for Russian gas to Europe has been systematically more and more intensive.

 

Russian reaction prompted IR actors to redefine their energy strategy.  In 2021 the EU imports from Russia amounted to around 140 bcm of natural gas and 15 bcm of LNG.  It is 45% of EU gas imports and 40% of gas consumption.  The new ‘10-Point Plan to Reduce the European Union’s Reliance on Russian Natural Gas’ assumes replacing Russian import with natural gas from other directions and LNG from the USA and Qatar, maximum filling of storages, delay in decommissioning of nuclear power plants and a faster shift to RE, with highlighted long-term role of hydrogen technology.

Plan ratings vary between “ambitious” and “unrealistic”, but even its supporters foresee problems with its full implementation.  The adopted assumptions, including the reduction of industrial energy consumption by 5-10% and individual energy consumption by up to 14% before the next heating season, may be met if the conflict and its consequences last no longer than 2 years.  That is, if Russian natural gas continues to flow through Ukraine and the NS2 delay will be no longer than to 2025 (Aurora Energy Research, 2022).  Meanwhile, as we already know, political decisions may completely prevent the launch of NS2.  Nobody denies the political-propaganda (but not energy) potential of hydrogen technology, but it is still rather a promise, burdened with a large dose of uncertainty, requiring large investments and a lot of time, which a rapid change does not leave. 

The arbitrary withdrawal from natural gas with the simultaneous increase in its prices has an impact not only on the energy sector, but also on industry, including production of fertilisers, steel, indirectly carbon dioxide and thus even pigs slaughtering, so supply in meat, soft-drinks, food packaging etc.  It is also doubtful whether inelastic energy demand can be reduced so fast and drastically, what increases the risk of blackouts.  These often ignored economic and social interdependencies prompt even shift to RE supporters to advise securing additional energy sources.  Decision to accelerate the pace and scope of changes is clearly political.  In fact, it securitises not so called the Climate Target, for sure nor energy supply, neither peaceful IR, but preferred political system in Ukraine and Western hegemony over that state.  The change itself may turn out to be too fast, with debatable long-term assumptions, and potentially destabilising international security, especially if longer Russian-Ukrainian war is accompanied by an economic collapse and stagflation in Western Europe. 

Energy insecurity

Another global security crisis, hegemonic dynamics, and a diversified approach to energy transition by major states and corporate actors are present elements of uncertainty.  Of course we could blame for the inevitable catastrophe only renewable energy ideology as a failed socio-economic experiment and further evidence of the unlearnable naivety of the human species.  In fact, however, at no point should we be surprised by the course, effects, or especially the motives of the forced changes.  Let’s be honest – it is not only the fault of the Climatists, especially not true believers.  Real change takes place within the dominant paradigm of capitalism, so why should remain unchanged such an element as the understanding of energy security?

Security that no longer exists and that we cannot easily regain.

By Konrad Rękas Via https://oneworld.press/?module=articles&action=view&id=2824