Gas prices have reached record highs in Europe, and supplies are running low, stoking fears for the coming winter.
Europe is facing a deepening energy crisis as it prepares for a cold winter. Gas prices have reached record highs, and supplies are running low, stoking fear for the incoming winter.
Here is all we know about the energy crunch and what is coming up in the next few months.
What’s currently happening?
- The continent is struggling with record high energy prices as it gets closer to its winter season.
- One of the main causes is related to the Ukraine war. Russia has suspended the supplies of the natural gas that the continent used for years to run factories, generate electricity and heat homes.
- Russia supplied about 40 percent of the European Union’s gas consumption by pipeline, and those exports have been cut by 75 percent.
- The country still sends gas through Ukraine and also via Turkey and the Black Sea through the TurkStream pipeline, but the prospect of a complete halt arrived earlier than many expected.
- Russia has said this is the natural consequence of economic sanctions imposed on Moscow by the West .
- ” … The very sanctions that prevent the maintenance of units, which prevent them from moving without appropriate legal guarantees,” Kremlin spokesman Dmitry Peskov said in September.
- As a result, European governments have tried to diversify supply by buying more liquified natural gas, as well as introducing measures to reduce demand and save energy.
- “Europe doesn’t have any supply of natural resources,” Adam Pankratz, a professor at the University of British Columbia’s Sauder School of Business, told Al Jazeera.
- “They decided that they are going to move away from fossil fuels and not drill out their own natural resources. Europe actually has a lot of gas, but they decided that they are not going to do that, and they became dependent on imported Russian gas and oil, and now that that’s been cut off, they don’t have a backup plan,” he said.
- The EU imports about 80 percent of its total gas needs, with domestic production halving in the past 10 years. Germany, which has gas deposits of its own, banned fracking, as did France and other countries.
What has this meant for people in Europe this year?
- Energy is used for a range of activities including in transportation, households, industry, services, agriculture and forestry. In food production, energy is used for fertilisers, harvesting, refrigeration and heating.
- Markets related to the dairy and bakery industries have been hit hard because they are energy intensive.
- According to European Commission data [PDF], butter prices surged 80 percent in the year to August, while cheese was up by 43 percent, beef was 27 percent higher, and milk powder was up more than 50 percent.
- Fertilisers have also been hit hard, and their prices have increased by 60 percent annually, putting farmers under economic strain and halting 70 percent of the region’s production.
- As gas and electricity prices surge, millions in Europe are now spending record amounts of their income on energy. Experts are also seeing “huge levels of fuel poverty”.
- “Fuel poverty is basically when people are unable to keep their homes warm. And that causes huge problems,” Simon Francis, coordinator of the End Fuel Poverty Coalition told Al Jazeera.
- “If you already have pre-existing health conditions, such as asthma or a heart condition, or if you are trying to recover from surgery, or if you are kind of elderly or if you’re disabled and you’re living in a cold, damp home, that can make all of your pre-existing health conditions worse,” he said.
- Francis said that some disabled people were not charging their wheelchairs over the summer in the UK because they were concerned about whether they would be able to afford the utility bills. There were also stories of families who have already started to try and think about “the conversations that they’re going to have to have with their kids about ‘we’re all gonna be sleeping in one room’ [to save energy]”, he said.
- According to the International Energy Agency (IEA), in the European Union, Italian and German families are among the worst hit by surging gas prices.
How bad could the energy crisis get?
- Europe has already managed to refill its storage facilities and has met a target to have them 80 percent full by November, according to reports. The continent is likely to have enough power-generation fuel this winter.
- The region has also searched for alternatives to gas supplies, such as having shipments of liquefied natural gas (LNG), and more pipeline gas from Norway and Azerbaijan. Governments have also approved measures to aid people in dealing with soaring prices.
- However, the stability of the continent depends on having a relatively “normal” winter because if temperatures drop, it could make demand increase to levels that Europe’s reserves cannot handle.
- “The worst-case scenario is a super cold winter in Europe,” Pankratz said.
- “[In this case,] the worst economic scenario is that the European economy goes into an absolute freefall … because they can’t produce anything, because it’s too expensive … and the government prioritises sending gas for heating people’s houses rather than industry,” he said.
- “The other worst-case scenario is that they actually run out of gas, and people can’t heat their homes, but I don’t foresee that probably happening,” he said.
- So far, the European Centre for Medium-Range Weather Forecasts has said Europe could suffer a colder, drier and potentially less windy winter.
- Experts agree that despite this being a hard season, Europe will probably make it through winter, but the concern is what happens next year.
- “I think there will not be a huge energetic crisis that all of a sudden the lights across Europe go off. But definitely, there needs to be rationing and some consciousness that you cannot just lead a normal life,” said Carlos Torres Diaz, head of power at Rystad Energy.
- “Europe is saying we can go through this winter, but the storage is filled still with a lot of Russian gas. So now, we are assuming that Russian gas will not be returning, and then it will be very difficult to fill the storage just again for the next winter,” he said.
- “It’s going to continue to be tighter next year, regardless of what happens, because the storage will be emptying,” Diaz added.
- Pankratz said Europe should be thinking about what to do in the coming years.
- “The problem is not going away … they’re going to need to consider what they do in the years to come, where they’re going to have this same problem again, and it’ll probably be worse,” he added.
What could we see in Europe next?
- In the current scenario, if utility bills continue to rise, unemployment numbers increase, and there is an economic slowdown, experts believe this could reflect in the streets, too.
- Speaking from the UK, Francis said: “There are protests already planned. There’s a whole range of things that the government is doing and not doing, and that is basically causing the cost of living crisis and the fuel poverty crisis to be exacerbated, and we’ll see. I think the anger grows by the day.”
- Meanwhile, while Europe tries to sort the energy crunch and people’s demands, one of its biggest challenges is the time it needs to execute solutions.
- The problem Europe has is that “all of the solutions [Europe could have], all of them take time. It takes time to build a pipeline; it takes time to build a nuclear reactor, it takes time to build an LNG import facility,” Pankratz said.
- “And Europe doesn’t necessarily have that time. [It’s saying] I need an LNG import facility or a nuclear reactor in a few years; well that’s like saying I need it tomorrow morning … It’s got to happen really fast, and these things are very complicated,” he added.
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