The Financial and Environmental Costs of Preserving Energy Security
Written By: Wiley McGowan
Edited By: Jumana Khafagi
Russia's monopoly over European Energy and the ongoing war in Ukraine - what does it all say about energy security?
On February 24, 2022, under the leadership of Vladimir Putin, Russia launched a war on over 44 million people inhabiting Ukraine (BBC, 2022). The initial reasons behind Putin's attack stemmed from a desire to overrun Ukraine's government, preventing them from joining the North Atlantic Treaty Organization (NATO) (BBC, 2022). Just over a month and a half into the war, as the world looks on with terror and empathy, we are beginning to understand how interconnected the world is in the domain of energy.
Russia holds a monopoly over European energy as it is the European Union's biggest supplier of natural gas and oil (NYT, 2022). Nord Stream 2 is a 1200km long pipeline beneath the Baltic Sea, transporting gas from the Russian coast to Lumbini in Germany (BBC, 2022). Nord Stream 2 runs parallel to Nord Stream 1, which has been in operation since 2011 (BBC, 2022). In tandem, Nord Stream 1 and Nord Stream 2 deliver approximately one-quarter of all European gas (BBC, 2022). Despite its efficiency, countries such as the United States, Britain, Poland and Ukraine are opposed to Nord Stream 2 as they fear it will provide Russia with a monopoly over gas supply in the region (BBC, 2022). In fact, UK Prime Minister Boris Johnson stated that Europe needs to "snip the drip feed into our bloodstream from Nord Stream" (BBC, 2022). With the mounting consensus among European countries that Nord Stream 2 is a political weapon, since the onset of the Russian Ukrainian war, Germany has placed a temporary hold on Nord Stream 2’s operating license inhibiting it from supplying gas to European countries (BBC, 2022). While this move is monumental for helping curb the climate crisis as the supply of gas decreases and nations are forced to turn elsewhere for energy, it begs the question as to whether or not this is a political maneuver that will outlast the duration of the war? Germany was clearly motivated by the political climate to suspend the license. However, will the environmental benefits of this move have a lasting impact, changing the trajectory of the European energy supply?
The ongoing war has played an instrumental role in pushing the green energy transition to the top of the political docket. As reality sets in, the European Union has realized that continuing to rely on Russian fossil fuels as primary sources of energy essentially helps Putin finance this atrocious war (Financial Times, 2022). The pause on Nord Stream 2, and the subsequent shift away from fossil fuels towards renewable energy, will be accompanied by a drastic rise in costs. Rising costs, which we have already begun to experience, will undoubtedly pose an obstacle to policy makers trying to gather support from the public to successfully shift away from fossil fuels. (NYT, 2022). Some countries in the European Union, such as Germany and Poland, raise serious concerns about whether or not the energy innovation from the Ukrainian War will have a net-positive effect on the green energy transition. Germany plans to construct domestic terminals to receive liquefied natural gas and other fossil fuels since they have cut ties with Russian supply sources (NYT, 2022). Unsurprisingly, policymakers continue to prioritize the security of energy sources over contributing to the global effort to reduce emissions to net-zero in 2050 (as outlined by COP26) (Financial Times, 2022). Poland is a prime example of a country backtracking on its green energy transition efforts in light of energy security concerns stemming from the ongoing war in Ukraine. Poland relies on approximately 70% of its energy from coal and is capitalizing on the energy shortage crisis, arguing that the push to close down mines was a mistake as countries are left scrambling for energy sources (NYT, 2022).
The war on Ukraine marks not only a period of unprecedented violence and loss, but it could be the push needed to open the door for innovation in the green energy transition. Will the European Union rise to the occasion and invest in renewable energy sources as they sever ties with Russia? Or will the weight of financial costs plague policymakers, inhibiting them from choosing green in the short-run, and ultimately affecting their ability to accomplish the goals of COP26 in the long run?