Mitigating the crisis

Hany Ghoraba
Tuesday 11 Oct 2022

Oil is an increasingly important factor in the Ukraine war, writes Hany Ghoraba


“There is no room for neutrality in Russia’s war against Ukraine,” the Belgian Prime Minister Alexander De Croo said at the United Nations assembly on 24 September. The statement summarises the European stance on the Russian invasion, which almost led to an EU boycott of Russian oil among other economic sanctions on Russia to dissuade the Russian President Vladimir Putin from continuing with the invasion.

This month  the EU has imposed a price cap on Russian oil in an aim to reduce the Russian oil revenue by imposing significantly lower prices to import it, in effort to cripple its ongoing invasion of Ukraine. This measure is set to be activated starting on 5 December.

As a result of decades of European reliance on Russian oil and gas supplies and cutting down on the production of their own energy sources to protect the environment, the EU countries are facing an unprecedented energy crisis. Contingency energy-saving plans are set to be carried out this winter to mitigate the shortage and inflation.

Alternative energy developments have been underway for decades and while significant progress has been made in the solar, wind and hydro generated energy, they are not as reliable as nuclear energy or oil derivatives and gas. Simply put, oil and gas as well as the nuclear energy are not weather - or location - dependent and will continue to yield energy as long as they are connected.

Nuclear energy may therefore be the only tangible long-term solution to the European energy crisis. For example, some 70 per cent of France’s energy needs are generated in nuclear reactors. That is why it was the first country in the European Union to announce that it has all its strategic gas storage tanks at 99 per cent of storage capacity ahead of the winter season. Though this put the politicians’ minds at ease, a series of energy-saving policies for the winter are nonetheless being implemented.

The acting French Minister of Energy Agnes Pannier-Runacher announced that the country will start a “general mobilisation” plan to save energy and reduce energy consumption by 10 per cent. The long-term plan announcement followed a short-term plan for the winter season called 15 Flagship. The plan includes strict measures on homes and offices which can only be heated to a maximum of 19°C, with no overnight advertising lights, and no hot water in public buildings. Those are some examples of what France is doing to save energy. The aim of the plan is to avoid blackouts or major drops through the winter. Paris may no longer live up to its sobriquet, the City of Light.

But the situation is far more dire in Germany, as the German government announced this month that it will provide a 200-billion Euro aid plan for German households, industries and businesses to help them face escalating prices. The plan includes policies to curb natural gas and electricity prices domestically.

In Britain where the annual average domestic energy bills will rise to £2,500 from £1,971 representing a 27 per cent increase from last year, the situation is no less alarming. With plans introduced by former prime minister Boris Johnson to build eight nuclear plants in the United Kingdom already activated, incumbent Prime Minister Liz Truss has agreed with French President Emanuel Macron to build a new nuclear plant, Sizewell C, on the Suffolk coast.

The plant will be developed by the French company EDF. Since time is of the essence the government approved the plan for the nuclear plant as early as last July. Britain is convinced that nuclear energy is the most practical saviour amid this crisis, and the British politicians led by Liz Truss have expressed their vehement will to end their dependence on Russian oil.

Energy prices have risen by as much as 200 per cent in the Netherlands, paralleling 17 per cent inflation in September. This is the highest inflation rate there since records began in 1963. The inflation rates, Covid-19 restrictions and higher costs of living have sparked protests across the country.

Relying on Russian resources is not new to the British economy. It started with former prime minister Margaret Thatcher shutting down coal mines in the early 1980s and relying on cheaper coal, oil and gas supplies from Scandinavian and Russian sources. Britain’s escalating energy crisis started long before the Russian invasion of Ukraine but it grew full blown after the Ukrainian crisis and the consequent sanctions on Russian oil exports.

Similarly, former German chancellor Angela Merkel has pursued a nuclear-free energy plan in the country and sought more environmentally friendly resources, shutting one nuclear plant after the other. Three of the last six nuclear reactors were shut down last January, a month before the Russian invasion. This burdened Merkel’s successor Chancellor Olaf Scholz with an economic and energy crisis, prompting him to halt the closure of further plants till after the end of winter.

Relaunching power plans across Europe has become common practice. For centuries Europe relied on its own coal to power its homes and industries. The coal and steel industries formed the basis of the Industrial Revolution but coal is no longer a desirable source of energy due to its excessive carbon imprint.

At the moment, Europe has to rely on alternative sources of natural gas and oil including North African producers such as Egypt, Libya and Algeria, along with the traditional Middle East oil and gas producers.  A power link to supply Europe with 3000 MW RES of clean energy produced through solar and wind parks from Egypt via Greece is underway and may be a game changer for Europe and eventually reduce its reliance on Russian energy.

To many in Europe the energy crisis is a cost borne by everyone for surviving the Russian onslaught and avoiding being taken hostage by Russian policies. It is a hard won lesson for all European leaders. Nevertheless, the crisis forces European leaders to exert more effort to mitigate its effects on citizens who are paying a hefty price for the lack of realistic vision for energy over decades.

The writer is a political analyst and author of Egypt’s Arab Spring and the Winding Road to Democracy.

*A version of this article appears in print in the 13 October, 2022 edition of Al-Ahram Weekly.

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