Energy has been one of the secondary fronts of the war in Ukraine, used as an economic weapon by Russia and Europe.
As the war in Ukraine has entered its second year, the “eco word” today is twofold: Ukraine and energy. In a year of conflict, a kind of revolution has taken place in the energy sector: reorganization of markets, waltz in prices, and acceleration under constraint of the march towards energy transition.
franceinfo: To fully understand what is happening, let’s go back to the “movie” of the year…
Gregoire Lecalot: As soon as the Russian invasion began, Moscow began to put its hand on the gas tap. And Europe understands its pain. It depends on precious Russian molecules for half of its consumption, even all of it in some countries. Throughout the spring and summer, in the height of the season for filling underground reserves, Russia waged a war of nerves by interrupting gas deliveries several times.
Today, Gazprom hardly exports any more to Europe, except for countries which have negotiated, such as Hungary. The price of gas will have increased by 200% with leaps to 340 euros per megawatt/hour on the markets, against 80 in February 2022.
Electricity prices have done even worse. Worse, because of the construction of the European price system, connected to gas. They went from a hundred euros per megawatt/hour when the war broke out, to almost 750 euros last summer.
Furthermore, the cap on oil prices and the European embargo are helping to keep the price per barrel high. Moscow has decided to reduce its production, as a retaliatory measure. For the greater benefit of producing countries. This pushes the price of a barrel to approach 90 dollars.
A year later, what are the consequences?
The energy no longer turns in the same direction! The global circulation of raw materials has been profoundly modified. European gas that came from Russia now comes from the United States. An old Washington dream come true, thanks to Moscow.
In an emergency, the Europeans have indeed turned to liquefied natural gas, which arrives by boat, and it comes mainly from the United States. Only, it is first of all more expensive than Russian gas, but also polluting, because it comes from hydraulic fracturing – shale gas – and it requires more energy for its treatment.
But there may also be a positive consequence to this energy showdown with Russia: the acceleration of the development of renewable energies and the energy transition. European states want to reduce their dependence on imported energy. The European RepowerUE plan provides additional funding and facilitates the installation of solar and wind farms.
A year after the start of the war, Europe has shown its flexibility and resistance. Contrary to what he hoped, Vladimir Putin did not manage to give him an armbar with energy. Europe has been able to adapt, find other suppliers, develop alternatives. But the price is heavy: environmental with LNG, and economic. Energy prices are not about to fall, and they drag down the economy, which only narrowly avoids recession. For the moment.