Written by Jens Haug, product and platform manager at Embriq.
Why has Europe tied itself so closely to Russia? Why have EU member states not ensured a greater degree of energy independence?
This is due to multiple overlapping factors – Europe’s transition from coal to gas in its power and industrial production, the lack of development of European gas fields and last, but not least, the belief that Russia would forever be a cheap and stable supplier.
Judged by the historians of the future
Europe’s lack of diversification and dependence on Russian energy was particularly striking in the days before and after the invasion of Ukraine. In the first 24 hours, media outlets reported that the EU, the United Kingdom and the United States had bought 3.5 million barrels of oil and refined products from Russia. Worth more than $350 million. The West also bought gas worth $250 million, plus raw materials such as aluminium and coal worth tens of millions of dollars. In total, Russia most likely received $700 million – a staggering 6.2 billion Norwegian kroner.
Simultaneously, there were calls for Europe to punish Russia by stopping all purchases of energy. Instead, several European energy companies reacted by buying more natural gas. Although Europe’s leaders have now changed direction and are clearly leading the way, we can easily imagine how they will be judged by the historians of the future.
Lack of alternatives
Long-term contracts and few alternative suppliers make it difficult for the industry to turn around quickly. When as much as 40% of Europe’s consumption of natural gas and 27% of its oil comes from Russia, it goes without saying that there will be problems.
The use of natural gas for power and industrial production has increased considerably in recent years – due to a reduction in coal power – but also as a result of the closure of German nuclear power plants. Reducing coal power production has been important in the reduction of greenhouse gases, but the decision to close nuclear power plants may prove to be the biggest mistake made by Europe in recent times – both in terms of power production and climate considerations.
Europa has to become energy-independent
The measures proposed until 2030 are multifaceted. Renewable power production is already underway to a certain extent, but has to be intensified, especially the development of offshore wind in the North Sea. Networks have to be significantly expanded for the transport of new renewable energy production, green hydrogen with energy storage has to be established and it must be converted to liquefied gas. Digitalisation and smart software is capable of contributing to flexibility solutions, energy efficiency and collaboration. Overall, the initiatives are many and effective, but they are also threatened by weak incentives, low willingness to invest, bureaucracy and lack of regulation. The crucial aspect for Europe is that all countries cooperate on this as isolated decisions made by individual countries are far from optimal.
In light of the Ukrainian crisis, Norway must (unfortunately, from a climate perspective) continue its oil and gas production in order to help ensure Europe’s access to energy. It is our commitment to the community to manage and offer these resources. Norway’s production forecasts will be falling from 2025 onwards, and new fields or the development of existing fields should therefore be considered in order to ensure further supply. Investment has to be made in renewable energy sources, such as offshore and onshore wind, streamlining and developing hydropower and strengthening the grid both in Norway and for exchange with Europe. This is not the time to isolate Norway on the energy issue.