With the soaring price of natural gas in recent weeks prompting fears of a harsh winter in Europe, ministers representing governments across the EU have met to discuss how best to tackle this latest energy crisis.
From January to September 2021, the price of natural gas has risen from €16 per megawatt hour to €98 as reported by Euronews. This is due to a number of factors, including increased energy use from households across Europe during the hot summer months as well as the increasing willingness among East Asian countries to pay higher prices for natural gas.
European ministers are keenly aware of the problems facing their constituents, with French economy and finance minister Bruno Le Maire commenting that the situation has become “unbearable” for EU citizens and companies and requires a “European response”. However, exactly what this response would entail has been the subject of debate in Brussels.
Spain’s First Deputy Prime Minister Nadia Calviño has advocated for a “strategic gas reserve” which would allow the EU to purchase gas in a manner similar to how it purchased vaccine doses to tackle the Covid pandemic. In contrast, Finnish finance minister Annika Saarikko has urged caution and moderation in tackling the looming energy crisis, a sentiment shared by the European Commission.
As a major exporter of natural gas to Europe, Russia has been accused of exacerbating the problem over its reluctance to boost exports to match global demand. In response, Russia has offered to meet the demand by exporting greater volumes of natural gas through the Ukrainian pipeline into the EU.
However, Russian president Vladimir Putin has complained that the Ukrainian route is “economically unprofitable for Gazprom [Russia’s state energy provider], because it is more expensive” and has expressed a preference for the Nord Stream 2 gas pipeline through the Baltic Sea to be completed and operational as soon as possible. This process has faced considerable opposition among many EU states, especially Poland, which has long expressed concerns that Russia would use the pipeline as a political tool to take advantage of the EU.
Russia’s intervention is sure to put some minds at ease over the winter. However, in the longer term, the EU will continue to search for ways to prevent a repeat of this type of emergency. The coming weeks and months will see what steps the European Commission decides to take as well as a renewed impetus among EU member states to diversify their energy sources.
Much of the focus will be on increasing renewable energy outputs as preferred by many EU member states such as Germany and Sweden. However, others such as Poland and Finland have already made moves to either make a switch to nuclear energy or boost their nuclear energy output. In any case, many European states will seek ways to address some form of energy shortage for at least the next few years and craft longer term strategies to ensure their citizens do not go cold during the winter months.