While pouring billions into inefficient power sources such as windmills, the EU is hobbled by strict fracking regulations that mean 470 trillion cubic feet of natural gas can’t be extracted
The Ukraine crisis is generating a lot of tough talk about Russia’s expansionist agenda into its former Soviet territory. Since the downing of a Malaysia Airlines flight by pro-Russia separatists in the war-torn region last week, the United States and Europe have tightened sanctions against some Russian industries and threatened more.
But the threat may mostly be bluster. On Tuesday, European foreign ministers backed away from imposing the toughest sanctions to continue with their strategy of pinprick sanctions and threats of toughness. The reason is simple: Europe desperately needs a steady supply of Russian natural gas, a tight spot that Europe’s policies have only made tighter despite years of warning.
That’s, in part, why Western actions and rhetoric haven’t deterred President Vladimir Putin, who has escalated belligerent operations since invading and annexing the Crimea in March. Last month, national behemoth Gazprom shut off gas to Ukraine, and Moscow has continued to fund and arm a proxy war against Kiev in a mission to peel off more territory for annexation.
Europe purchases 30% of its gas from Russia, and about 50% of that has to travel through Ukrainian pipelines to reach its customer base. Germany, the world’s fourth largest economy and the mightiest in Europe, purchases one-third of its natural gas and one-fourth of its oil from Putin’s empire.
More than a dozen countries are even more reliant than Germany. According to Deutsche Bank, eight nations get 80% or more of their gas from Russia, including the Czech Republic. Finland, Lithuania, Latvia and Estonia get 100%. Disruption by such a primary supplier — whether made as a retaliatory act against sanctions or due to war-oriented pipeline damage in Ukraine — holds dangerous consequences for a European economy already on the edge with near-zero growth.
The current showdown is not the first gas war between Russia and Ukraine that has affected economic stability in the European Union. In 2006 and 2009, Moscow shut off the flow of gas to and through Ukraine, leaving neighbors farther west high and dry in the middle of winter. Since then, little has been done to reduce this vulnerability.
To the contrary, anti-competitive policies to increase comparably expensive “green energy” options are exacerbating pressure on access to power across the continent. For example, while pouring billions into inefficient power sources such as windmills, the EU is hobbled by strict fracking regulations that mean 470 trillion cubic feet of natural gas can’t be extracted to provide some measure of self-sufficiency. Further limiting options are taxes on carbon use and anti-diversification plans, such as Germany’s intent to shut down all its nuclear-power production within eight years, increasing the need for imported energy.