GIF COMMENT: Russian gas supply cuts reveal Putin’s tactics and expose long-term weaknesses in Western energy policy

LONDON (ICIS)–Russia lowering natural gas supplies to European companies below requested volumes in June has aggravated energy security concerns for this winter.

Several authority figures on the EU and national levels have acknowledged the risk with EU energy commissioner Kadri Simson being one of them to say: “We are not just looking at high prices, there is a real risk that we do not have enough energy for our societies.”

Energy sector observers echoed these concerns saying that Russian president Vladimir Putin is using gas supplies as a weapon to hurt European economies and gain advantage in the war in Ukraine.

“Russian leverage is not that great,” Alexander Gabuev, a senior fellow at the Carnegie think tank was quoted as saying . “It doesn’t have that many great cards to play and gas is obviously the card that the Kremlin has.”

Several European countries, including Germany, the Netherlands and Austria, immediately responded to the alarming signals by reaching for what is available as the cheapest and possibly the most effective solution – coal. Effective, but clearly not the one Europe’s environmentally-minded leaders and population would like to see.

“The energy crisis exacerbated by the war in Ukraine has seen a perilous doubling down on fossil fuels by the major economies,” UN secretary-general Antonio Guterres, was quoted as saying at the Austrian World Summit in mid June. European Commission’s president Ursula von der Leyen spoke in chorus:

“We have to make sure that we use this crisis to move forward and not to have a backsliding on the dirty fossil fuels,” she said. She reiterated that net zero targets remain in the forefront of her office’s agenda, along with replacement of Russian gas with LNG from the US, Qatar and other ‘trustworthy’ sources.

Doubling down is a good word to apply to Europe’s and, more recently, America’s idea of long-term energy security.

The last decade or so has seen concerted efforts to disincentivise or ban investments into traditional energy sources that allowed Western market-based economies to thrive. Bankers who no longer make investments based on economic rationale are essentially turning into activists.

Research articles citing Climate Policy Initiative’s (CPI) annual Global Landscape of Climate Finance reports , point out that investment into global climate change projects between 2011-2018 totalled US $3.66 trillion, 55% of which was spent on wind and solar energy. Thanks to that, wind and solar contribution to energy consumption worldwide increased from 0.5% to 3% during that time. Coal, oil, and gas accounted for 85%, with the rest covered by hydroelectricity and nuclear power.

Nevertheless, offshore wind, alongside a developed hydrogen economy, dominate the EU’s energy strategy with more money flowing in that direction. This is despite researchers like Oxford Institute for Energy Studies pointing out that growth in offshore wind projects is “too slow for the EU Commission to reach the EU’s offshore wind target of 300GW by 2050”.

Comments by various European politicians at the G7 summit indicate that squeamishness about investment into fossil fuels may have started to wane in the face of economic reality.

It is tragic to see Putin’s bombs destroying homes and families while propaganda and brainwashing are destroying minds. In the realm of realpolitik, Putin is using any weakness he can to reach his goals.

The responsibility, however, also lies with those who allowed the weakness to become glaring and continue to push European economies down the same path.