💬 "Can Europe Quit Russian Fossil Fuel by Next Winter?"

Host: Shayle Kann
Guest: Jesse Jenkins | Energy Professor | Princeton University
Category: 💬 Opinion | Russian Energy

Podcast’s Essential Bites:

[5:36] JJ: “The European Union's 27 members get about a quarter of their oil from Russia. And about 40% of all natural gas consumed in the EU is imported from Russia as well. […] They also supply […] about 40 million metric tons of coal to Europe each year. […] Europe is has been heavily integrated with Russia for its energy needs, and was actually strengthening those ties before Putin's invasion of Ukraine, with the completion and planned startup of the Nord Stream II pipeline, which is an undersea pipeline that was going to bring additional gas from Russia into Germany that was scheduled to go online this year, until the invasion changed pretty much everything.”

[7:55] JJ: “Many leaders in Germany thought that strengthening that tie between Europe and Russia would mean the Russia was so dependent on Europe for, trade and for their revenue, and Europe so dependent on Russia, for their energy needs, that that would actually strengthen peace and prosperity between the trading partners.”

[8:41] JJ: “On a whole, the United States has actually become energy self-sufficient, in net at least. We are net exporters of petroleum products, liquids, […] natural gas, and […] coal. That wasn't the case, when Barack Obama took office in 2008. We imported about 60% of our oil in 2008. […] Moving forward from 2008 to now, we've seen steady increases in production of oil and gas in North America. And now we have reached that […] point of energy independence, at least from a strict physical standpoint, which [puts] the United States in a very different place than Europe when it comes to physical energy security.”

[10:22] JJ: “I think if you look around and all of us are seeing the price at the pump here in the United States, we can see that there's another type of energy security, an economic security that we are still very vulnerable to, in the sense that oil is a global commodity. And so even though we don't directly consume much oil from Russia, the fact that Russia constitutes a substantial amount of the global oil trade means that potential embargoes and self sanctioning of private companies […] means that already just that small reduction in exports from Russia has caused ripples across the entire oil market.”

[12:27] JJ: “Even before the physical invasion, in the run up to the invasion, […] there were already tight gas market conditions in Europe. And in fact, many […] geopolitical observers believe that that factored into the timing of Russia's decision to invade this year. […] This was the point of maximum leverage that Russia had over Europe and others [and] the threat of withholding their supplies from the global stage would be most severe. […] And if you look at the storage volumes, for Gazprom owned storage assets in Europe, they were much lower than the average for other assets at the time. So it's almost as if the nationally owned Russian gas company was deliberately keeping the tanks partially full, going into this winter to further exacerbate the risk of shortfall.”

[21:58] JJ: “Already, […] the estimates are about 1.5 million barrels of oil a day, which is […] on the order of 1 or 2% of the global market, of what normally would have been Russian crude being exported, not finding a buyer. […] Even though the pipelines are still flowing, the seaborne trade is already starting to get locked in and they're having to sell their oil at a discount to […] China or other countries.”

[29:39] JJ: “The United States could easily step up our exports to Europe to eliminate Russian coal […] now. And we should do that from a moral and strategic imperative perspective. […] That's the easiest one of the three fuels for us to displace. […] President Biden and the EU Commission reached an agreement last week to increase our [LNG] exports by at least 15 billion cubic meters this year, and up to 50 billion cubic meters over the longer term. 50 is enough to displace about a third of Russia's imports, just with us LNG over the medium term. And that 15 BCM is about a 10th of the Russian imports right now. So we can knock out 10% of Russia's gas imports with us LNG […] today.”

[31:40] “Europe's current plan is to cut natural gas use by about two thirds before this winter. Can they actually go 100%? […] We think that they can do that. We think that there is a viable strategy that with the right wartime mentality, it would be possible to do what people probably thought was impossible just a month ago, and that's get off of Russian gas entirely by this October. […] It would take a lot of effort, but wars often have a way of making what seemed impossible possible.”

[34:08] JJ: “In the near term, there are very costly measures, we have to take from either a climate or air pollution perspective, or from an economic perspective […] in Europe. […] But in the longer term, we can ramp up new energy supplies and start to ease off of those more costly measures. […] By 2025 or 2026, in the sort of three to four year timeframe, it should be possible to get back to […] typical European conditions, albeit with dramatically lower oil and gas consumption, particularly gas consumption. And that's going to be achieved by accelerating the kind of clean energy transition that Europe was already on as rapidly as they can. So that includes deploying wind and solar, ramping up biomethane production, trying to birth a new hydrogen industry, […] improvements in energy efficiency, switching to heat pumps and buildings, all those sorts of measures that are also exactly what we need to do to confront climate change.“

[43:04] “Switching from natural gas to coal and power generation will lead to increased emissions from the power sector. But if the European Union is also dramatically reducing natural gas consumption overall through demand side measures and conservation, it may be that that nets out. That the reduction in total gas burn is enough that it compensates for the temporary increase in emissions from coal consumption. […] I think the near term climate implications are less dire than some folks might think. And I agree that the long term looks like an acceleration of our transition away from fossil fuels, especially in Europe. But I think it is also likely in the United States as well.”

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🕰️ 50 min | 🗓️ 03/31/2022
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