Europe stands firm against Russian energy pressure

Key Takeaways:

  • Russia's attempt to hold Europe to ransom over energy supplies has failed, with European Commission President Ursula von der Leyen stating that Putin "has already lost the energy war he started."
  • European unity and a "smart" energy policy enabled the EU to withstand Russian pressure and reduce its dependence on Russian oil and gas.
  • The EU reduced its energy consumption, turned to alternative gas suppliers, and invested in clean energy and energy independence.
  • Finding alternative gas suppliers has come with a price tag, but the EU is making plans to jointly buy gas, benefiting not only the EU but also Ukraine and Moldova.
  • Europe's ability to withstand Russian pressure on energy supplies demonstrates the strength of unity and a smart energy policy.

How Europe Won the Energy War Against Russia:

European Commission President Ursula von der Leyen has declared that Russian President Vladimir Putin "has already lost the energy war he started." This statement is in response to Russia's attempt to hold Europe to ransom over energy supplies, which has failed. Von der Leyen explains that Putin assumed Europe's support for Ukraine would not last, and he thought it would be easy to hold Europe to ransom because of its dependence on Russian oil and gas. However, he was wrong.

The Lowering of Russian Income from Sales of Gas to Europe:

According to von der Leyen, one year after the war began, Russia has already lost the energy war it started. She pointed to the fact that Russian income from sales of gas to Europe has shrunk by two-thirds. Furthermore, the oil price cap means that Russia is losing €160 million in revenue every day. She explains that gas prices in Europe are lower today than before Russia's invasion of Ukraine, and Europe is now investing in clean energies and energy independence as never before.

The Impact of Russia's Attempt to Choke Gas Supplies to Europe

Russia gradually choked gas supplies to Europe through 2022, which helped push prices to record levels. Platts assessed the benchmark Dutch TTF month-ahead price at an all-time high of €319.98/MWh in late August. However, prices are now significantly lower on the back of healthy storage and demand curtailments, with Platts assessing the TTF month-ahead price on Feb. 14 at €52.80/MWh.

How European Unity and a "Smart" Energy Policy Helped the EU Withstand Russian Pressure:

Von der Leyen says that European unity and a "smart" energy policy meant that the EU was able to withstand Russian pressure. She explains that the EU's economy is performing significantly better than forecast, and Putin's attempt to blackmail Europe using energy has been an abject failure. EC Vice President Maros Sefcovic adds that the EU had to adapt and diversify "fast" given its previous overdependence on Russian fossil fuels.

Reducing Energy Consumption and Turning to Alternative Gas Suppliers:

Sefcovic explains that the EU reduced its energy consumption, with gas savings of 20%, and turned to alternative gas suppliers. EU member states agreed in July to a 15% voluntary gas demand reduction between August 2022 and March 2023, compared with their average consumption over the past five years. However, many saved more gas than expected. In the period August-November 2022, EU consumption was 20.1% lower than the average for the same period from 2017-2021, according to the EU statistics agency Eurostat.

The High Price Tag of Finding Alternative Gas Suppliers:

Sefcovic also mentions that finding alternative gas suppliers to replace Russia has come "with a price tag." The EU is making plans to jointly buy gas, pulling its political and economic weight for the first time ever. The EU hopes to have its joint purchasing tool "up and running" by April, benefiting not only the EU but also Ukraine and Moldova. EU member states and Energy Community contracting parties plan to use the procurement tool to aggregate demand for volumes of gas equivalent to 15% of their respective gas storage filling obligations for 2023.

Conclusion:

Europe's ability to withstand Russian pressure on energy supplies shows the strength of unity and a smart energy policy. By reducing energy consumption, turning to alternative gas suppliers, and investing in clean energy and energy independence, Europe has been able to lower gas prices and reduce its dependence on Russian oil and gas. Although finding alternative gas suppliers has come with a price tag, the EU is making plans to jointly buy gas, pulling its political and economic weight.