A not-so-neutral path towards carbon neutrality

Sustainable Leaders | Europe

By Laura Butula, Kingfisher Writer

Published April 24th, 2022

The past month has seen the Russia-Ukraine conflict escalate into a devastating war, forcing the EU Member States—particularly Germany—to re-think its relationship with the largest country in the world. However, because of Russia’s dominance in EU energy imports, this break-up could significantly impact the EU’s energy and climate targets.

The Russia-Ukraine war is now situated at the core of a battle paroxysm that has accelerated global turmoil in the past few weeks. The highly documented conflict has triggered the mass exodus of approximately three million Ukrainian residents from their homes and a lingering trepidation worldwide that has many pointing the finger at one key instigator: Vladimir Putin.

Protest against the Russia-Ukraine war, highlighting the widespread disapproval and fear of Russia’s President, Vladimir Putin. | Go To Van / Flickr

Despite a strong contingency of loyalists, the Russian president has faced a collective opposition from a large majority of the international community due to his decision to invade Ukraine. Through a series of Russian attacks and ultimatums, it has become clear that Putin’s ‘special military operation’ produces more extensive challenges for Ukraine than initially thought.

To hinder his progress, numerous nations have imposed unprecedented sanctions on Russia. For example, financial sanctions include the freezing of assets from Russia’s central bank, as well as removing some Russian banks from the Society for Worldwide Interbank Financial Telecommunications (SWIFT) system, which allows financial institutions to quickly send money around the world.

Russian oligarchs have also been individually targeted in an attempt to influence and potentially change the minds of those closest to Putin.

The sweeping sanctions have highlighted other matters that were temporarily set aside, including the European Union’s (EU) long-standing dependency on Russian energy imports. Indeed, Olaf Scholz, the Chancellor of Germany, recently decided to halt certification of the Nord Stream 2 gas pipeline, which runs under the Baltic Sea to transport gas from Russia to Germany.

‘The sweeping sanctions have highlighted other matters that were temporarily set aside, including the European Union’s (EU) long-standing dependency on Russian energy imports.’

Although completed in September 2021 at a cost of roughly ten billion euros and promising to double the gas pumping capacity to Germany, the Russia-Ukraine war triggered international leaders to oppose its operation.

Notably, some leaders were already antipathetic to the running of Nord Stream 2 prior to the conflict. For example, UK Prime Minister Boris Johnson stated that Europe must ‘snip the drip feed into our bloodstream from Nord Stream’. Similarly, Ukrainian President Volodymyr Zelensky called the project ‘a dangerous political weapon’. Indeed, there is a shared anxiety regarding the EU’s (over)reliance on Russian gas.

Russia is currently the EU’s main supplier of natural gas, crude oil and solid fossil fuels. In 2021, the EU imported 155 billion cubic meters (bcm) of natural gas and liquified natural gas (LNG) from Russia—roughly 45% of total EU gas imports and 40% of the total gas consumption.

Gas pipeline in Russia. | Anton Romanko / Flickr

Likewise, Germany receives 35% of its gas from Russia. Recognizing these national and regional dependencies, perhaps Mr. Scholz, along with other EU leaders, decided that freezing Nord Stream 2 would promote energy self-sustenance and a transition towards a greener economy.

Although Russia’s critics applauded Scholz’s decision to stop Nord Stream 2, others mocked him for a lack of pragmatic judgment. For example, an individual close to Gazprom stated that ‘the best strategy is to just not do anything, wait for three to five years, and then send gas through it once the Germans realize nothing else works’. It is also not surprising that persons affiliated with Gazprom, a Russian gas export state monopoly, may have such opinions.

Taking this opinion into account, many European politicians and citizens are left wondering whether the EU, and Germany specifically, will secure energy independence from Russia, and if so, how will this impact EU energy objectives and strategies?

EU goals for carbon neutrality

As part of the European Green Deal (EGD), the EU aims to be an economy with net-zero greenhouse gas (GHG) emissions by the year 2050. At the core of this mission, the 27-member bloc pledges to reduce GHG emissions by at least 55% by 2030 compared to 1990 levels.

This 2050 long-term strategy is in accordance with the objectives of the Paris Agreement. Set out on November 28th 2018, it includes all societal and economic sectors, meaning that virtually all signatories are expected to strive towards a carbon-neutral existence. The key elements of the strategy include the Emission Trading System (ETS), the development of renewables, and the European Climate Law.

Arguably the most crucial addition to the strategy is the ETS—the first ever scheme that promotes the ‘cap and trade’ of EU emission allowances (EUAs). EU installations are financially incentivized to cut their GHG emissions to stay within a regional annual emissions limit.

In simple terms, if a business pollutes less than the limit, it is possible to sell EUAs to higher-emitting businesses or save them for future needs. The ETS has proven that setting up a price on carbon is effective, and can be applied in other EU strategies.

Wind turbines, a source of renewable energy, in Mölsheim, Germany. | Karsten Würth / Flickr

Another ‘building block’ of the 2050 long-term strategy focuses on the deployment of renewables. A new renewables target of 32% has been set for 2030. Specifically, at least 14% of transport fuel must be derived from renewable sources by 2030. This means increasing the use of first-generation biofuels (made from food crops) and second-generation (i.e., advanced) biofuels (made from non-food biomass).

The EU is also pushing Member States to promote a renewable self-consumer era, which may resemble some kind of sci-fi utopia where individuals are rewarded for generating their own energy supply.

To track progress of the 2050 long-term strategy, the European Commission put forward the first ever European Climate Law in March 2020. It includes intermediate targets to ultimately adjust actions as deemed necessary. Similarly, individual EU Member States have proposed national long-term strategies to achieve the anticipated transformation.

For example, Germany has proposed the Energiewende as a plan to transition towards a low-carbon energy supply with relatively fewer environmental impacts. It mainly promotes renewable energy and the cutback of fossil fuels and nuclear power.

Similar to the Energiewende, EU national blueprints include not only action plans to promote circular economies and sustainability research, but also to evaluate potential socio-economic impacts of decarbonisation measures and strategies for energy independence.

EU energy dependence

The roots of the EU’s energy dependence on third countries include the post-2010 decline of EU natural gas production, the stabilization of EU gas demand over the past half decade, the fact that there is no major EU gas source, the planned reduction of coal consumption, and Germany’s post-Fukushima reluctance of nuclear energy usage.

Currently, the EU depends on non-member countries for approximately 60% of its energy product imports. Annual expenditures of fossil fuels were recently estimated at €266 billion per year.

‘Currently, the EU depends on non-member countries for approximately 60% of its energy product imports.’

A typical EU energy mix includes various sources such as petroleum products, natural gas, renewable energy, nuclear energy and solid fossil fuels. In pre-pandemic 2019, petroleum products, gas and solid fossil fuels made up 66%, 27% and 6% of energy imports, respectively.

As Russia dominates the energy importer role, the Russia-Ukraine war has stimulated two schools of thought: (i) the EU can boost clean energy production while simultaneously developing energy independence from Russia and (ii) the clean energy and climate-centered approach are no longer a priority—energy security is.

EU and Germany decouple from Russian energy

Fitting the first school of thought, the EU has announced that it aims to cut Russian gas imports by 66% by the end of 2022. According to the Vice-president of the EGD, Frans Timmermans, this will be ‘...bloody hard, but it is possible if we are willing to go further and faster than we have done before.’

EU Member States have followed suit. Belgium has started approaching other energy providers such as Norway, Qatar and the United States. Italy will soon begin the construction of six wind farms with a 418 megawatt capacity. Germany is considering building two of its own domestic LNG terminals and importing the natural gas from Qatar.

The German government is still taking countless precautionary measures to ensure that no sudden or irreversible mistakes are made. In fact, the country does not—for the time being—intend to ban the import of Russian energy completely, but merely wean off its reliance.

Nonetheless, the war has the newly-voted Green Party in Germany scrambling for a speedy clean energy transition. The national Economy Ministry is trying to get the Renewable Energy Sources Act (EEG) through parliament and implemented by July 1st, 2022. In short, the EEG would ultimately guide the country towards a new reality in which renewable sources make up 100% of Germany’s electricity needs by 2035. This would eliminate the nation’s heavy reliance on (imported) fossil fuels.

‘Nonetheless, the war has got the newly-voted Green Party in Germany scrambling for a speedy clean energy transition.’

Notably, Economy Minister Robert Habeck argues this move will support Germany’s detachment from Russian energy imports. Considering the optimistic strategies to amplify Germany’s offshore wind to 30 gigawatts, onshore wind to 110 gigawatts, and solar energy to 200 gigawatts, does this break-up not seem feasible?

Fuels based on clean hydrogen, known as Power-to-Hydrogen fuels, may also play a role in the EU’s and Germany’s accelerated energy evolution. Hydrogen is a flexible and safe energy carrier that can be used to produce heat and electricity. It therefore contributes significantly to the decarbonization of economies.

Importantly, some researchers and politicians argue that the space needed in Germany for renewables is limited and that the production of Power-to-Hydrogen fuels would be cheaper outside of Germany. Therefore, while the nation decreases its dependence on Russian gas, it might increase its dependence on other EU Member States and other non-EU countries.

So far, it has been noted that the war will increase the EU’s and Germany’s investment into renewables and LNG terminals. The high gas prices triggered by the war might also motivate the German government to re-think their conflicting position on nuclear energy. A short-term reliance on nuclear energy could even help the nation cushion the energy supply shock. The question remains whether a revival of ‘offline’ nuclear plants would even be possible.

Proportion of natural gas imported into the EU from different suppliers. | Eurostat / European Commission

Germany’s return to coal energy

Speaking to the second school of thought, it is important to note that energy independence is very different from energy security. David Victor, a professor of public policy at UC San Diego, states that the ultimate goal should be energy security, which is based on a stable and operational global market.

Many fear that the geopolitical tensions will prompt the EU, and Germany in particular, to resort to a historical energy source to ensure energy security: coal. Undoubtedly the most environmentally damaging fossil fuel, retrogressing to coal mining and burning on a large scale could prove disastrous for the climate.

Coal mining is associated with high rates of deforestation and irremediable land-use change. Moreover, it releases significant quantities of methane and carbon dioxide into the atmosphere— two of the most potent GHGs.

Notably, the newest report by the Intergovernmental Panel on Climate Change (IPCC) states that coal and fossil fuels are ‘choking humanity.’ Regardless of this danger, Germany’s plan to phase-out coal-fired power plants has been delayed by the war. Whilst Germany has a gas reserve that could prove useful, it is not a feasible long-term solution.

Russia-Ukraine war impacts on EU climate targets

The ongoing war could either create an unintended ‘positive’ impact on EU climate targets by pushing the clean energy transition, or it could flip that optimistic scenario and trigger a bygone over-reliance on highly-polluting industries, such as the coal industry. Of course, the energy ramifications are not as black-and-white as they may appear.

The effects of the Russia-Ukraine war on EU carbon neutrality objectives will ultimately depend on how EU Member States react and coordinate in response. Perhaps this conflict is a disguised catalyst that will jumpstart active work on the EGD.

‘Diversification of energy sources could help ensure that climate targets are achieved quicker and with less difficulties.’

Diversification of energy sources could help ensure that climate targets are achieved quicker and with fewer difficulties. Of course, EU governments need to take into account that national energy transitions have different timescales; some countries will require more time, and help, than others.

Whilst decoupling from Russian energy is not an easy feat, by keeping track of regional energy strategies and climate targets, the EU may stand a chance. It seems, in the eyes of many EU politicians, that energy independence and security are no longer a question of choice, but a prerequisite. Moreover, the EU now has a significant opportunity to achieve many EGD objectives.

It remains to be seen how this escalating crisis will play out.

Featured Image: Andreas Gücklhorn | Unsplash

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