Despite the EU's swift and creative response to the energy crisis caused by the conflict in Ukraine, Russian fuel still finds its way to Europe, caught in the crossfire of sanctions.
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| In order to escape Russian energy, the EU will support the Vertical Gas Corridor project to diversify the supply of liquefied natural gas to Eastern, Southern and Central Europe. (Illustration photo - Source: Getty Images) |
Europe’s “divorce” from Russian gas after Russia launched a special military operation in Ukraine (February 2022) is not easy. In addition, Donald Trump’s election as US President with the Trump 2.0 administration plan and the challenges of the energy price gap between the old continent and the world’s number 1 economy may further complicate the energy situation in Europe.
It has been more than two years since the European Union (EU) launched REPowerEU, an initiative with the goal of phasing out Russian fossil fuel imports by 2027, using savings, diversifying supplies and producing clean energy.
In recent times, the EU has announced that it has succeeded in reducing gas consumption by 18%, overcoming Moscow's dependence on fossil fuels and producing more electricity from wind and solar than from gas for the first time.
Despite these achievements, however, the 27-nation bloc has struggled to overcome strong “tides” over the past two years. The EU has historically relied on Russia for fossil fuel supplies, especially natural gas transported via pipelines such as Nord Stream.
The geopolitical role of gas
A recent analysis by the Brookings Institution notes that despite Europe's swift and creative response to the energy crisis caused by the conflict in Ukraine, Russian gas still finds its way to the EU, surrounded by sanctions.
Russian gas accounts for 14.8% of Europe’s total gas supplies, highlighting the energy vulnerabilities of EU member states. The strategy of weaponizing gas supplies for political leverage is part of Russia’s efforts to make Europe increasingly dependent on its energy.
Moscow is struggling to redirect its gas exports to markets other than the EU. One drawback is that the current infrastructure does not make it easy to transport Russian gas to major markets such as China. However, the good news for Moscow is that its partners in the EU remain steadfast in their support for Russian gas.
This summer, Slovakia and Hungary rejected a European Commission proposal to use Croatia's Adriatic oil pipeline to replace Russian supplies, citing high costs and reliability concerns.
Despite sanctions, Hungary and Slovakia have successfully resumed oil imports from Russia via the Druzhba pipeline, which passes through Ukraine. This move shows the flexibility in energy relations between Russia and some Central and Eastern European countries.
Accordingly, in September 2024, the Hungarian oil and gas company MOL transported about 300,000 tons of oil to refineries in Hungary and Slovakia. This is the result after successfully resolving the supply crisis related to the Russian company Lukoil.
Diversify supply sources
Another analysis by Ember, a global energy research group, said many member states are still falling short of EU energy targets. Draft national energy and climate plans (NECPs) and policies show that renewable energy will play a major role.
Forecasts suggest that renewables could generate 66% of the EU’s electricity by 2030. And in fact, ambitious targets for wind and solar have increased significantly since 2019. However, they are still short of the 72% target set by the REPowerEU plan.
The EU will support the Vertical Gas Corridor project to diversify gas supplies in Eastern, Southern and Central Europe and strengthen regional energy connectivity. The project will expand the capacity to transport liquefied natural gas (LNG), especially from the United States, to Europe.
Although EU imports of Russian pipeline gas have fallen, higher prices have reduced the economic impact of cutting Russian energy supplies. Therefore, US LNG, which will play a key role in alleviating Europe’s energy crisis in 2022-2023, will remain essential.
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| Although the amount of gas the EU imports via Russian pipelines has decreased, higher prices have reduced the economic impact of cutting off energy from Russia. (Source: Reuters) |
The impact of the “Trump factor”
Faced with global challenges, with Donald Trump returning to the White House and a potential but unclear proposal for a peace settlement to the conflict in Ukraine, Europe has an opportunity to strengthen its energy strategy and support Kiev in the process.
The Centre for Research on Energy and Clean Air (CREA) has called on the European Commission to implement strict guidelines to phase out Russian oil and address loopholes in the sanctions package, including the operation of tankers deemed “illegal”.
To avoid the temptation to turn back to Russian energy, the European Commission is encouraged to implement its stated objectives. CREA argues that only by prioritizing binding policies can the 27-nation bloc support Ukraine, secure its energy future, and demonstrate its leadership amid global geopolitical upheavals.
The energy price gap will get worse
High energy prices are threatening the global competitiveness of European companies, according to a study by BusinessEurope. By 2050, even with support policies, energy costs in the Old Continent could be at least 50% higher than in the US, China and India.
The study calls for action to close the energy price gap and manage carbon costs, and finds that removing barriers to renewable energy development and optimizing siting could reduce wholesale electricity prices by nearly 40%.
Although energy prices in the EU have fallen, they are still higher than they were before 2022 and higher than elsewhere. According to estimates by the International Energy Agency (IEA), electricity prices in Europe will be twice as high as in the US by 2023.
An analysis by the Bruegel Institute suggests that while energy prices are important, they are only one determinant of competitiveness. Studies show that countries with high energy prices tend to export higher-value products.
The analysis concludes that Europe can maintain its competitiveness by focusing on improving the efficiency of climate policy reforms. This approach could help achieve decarbonization at lower costs, even with higher energy prices than the US.
Source: https://baoquocte.vn/ly-hon-khi-dot-nga-tac-dong-tu-chinh-quyen-trump-20-con-duong-doi-pho-khung-hoang-nang-luong-cua-eu-khong-trai-hoa-hong-295496.html
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