“A Perfect Storm”: A Massive Energy Crisis Rocks Europe

By Liz Peron

Europeans don’t need to look further than their energy bills to feel the effects of the massive energy crisis gripping the continent. According to the Bank of America, Europeans can expect their household energy bills to rise by a striking 50% this winter. Many experts attribute these price increases to poor planning by European officials, a rocky transition to renewable energy, over reliance on imports, and the ongoing standoff between Russia and Ukraine, among other factors. Senior fellow at economic think-tank, Bruegel, Simone Tagliapietra, says it best: “Europe is seeing a perfect storm in its natural gas market.”

Energy as a “hot topic” of European Politics

Remember “les gilets jaunes?” In 2018, over 280,000 French grassroots protesters, calling themselves, “les gilets jaunes,” or “yellow vests,” stormed through French cities to protest fuel price hikes, leaving at least 400 injured. 

Energy has always been a sensitive subject in Europe. As European countries move away from hydrocarbons to greener alternatives, tensions over who will foot the bill for the transition have caused much controversy. For example, Northern Europeans agreed to fund an extensive aid package in 2020 to serve as an impetus for creating long-term energy investments. Instead, the aid money is being poured into Southern European countries to cover the costs of citizens’ unbearably high utility bills.

Much of the blame for winter 2022’s energy crisis has been apportioned to the European Commission. While Japan and China were buying up liquified natural gas (LNG) to prepare for this winter, the European Commission was finalizing its ambitious decarbonization plan to reduce carbon emissions by 55% by 2030. European politicians thus failed to fully stock gas storage for the winter; Bloomberg reports that gas storage sites are only 56% full, a staggering 15 percentage points below the ten-year average. Increased global demand driving up prices and an incomplete transition to renewable energy has left Europe in a vulnerable position–desperate to increase its gas supply and over reliant on foreign imports of LNG.  

How did Russia become embroiled in Europe’s current energy crisis?

In normal years, Russia supplies roughly one-third of Europe’s natural gas. However, this year, Russia tightened their outflow of gas to Europe, only shipping the bare minimum contractually required of them. The last notable instances of Russia restricting energy supplies to Europe were in 2006 and 2009

Experts fear that Russian President Vladmir Putin is using Europe’s energy crisis as a bargaining chip in Ukraine negotiations. Others argue that Putin would not be willing to lose one of its largest markets for oil. Putin denies any political motivations behind his actions, citing increasing internal demand this winter for lower energy exports. Either way, current European reliance on Russian oil, highlighted by the crisis, has inhibited Europe’s ability to respond to Russia’s aggressive geopolitical maneuvers in Ukraine. Russia is also suspected of limiting gas exports to force through their Nord Stream 2 pipeline agreement with Germany, whose progress has stalled. U.S. President Biden and German Chancellor Olaf Scholz have presented a united front towards the Russia-Ukraine standoff, with Biden claiming that the Nord Stream 2 agreement will be halted in the event of an invasion and Scholz committing to unity with the U.S..

Future of the Energy Crisis

The United States has aided its NATO allies by exporting LNG, even outpacing Russian exports this year. Fortunately, the European energy crisis looks to be on the road to recovery; benign winter weather and low energy demands from Asia coupled with shipments from across the world have mitigated the effects of the crisis. The International Energy Agency estimates that LNG shipments to Europe more than doubled from January 2021. 

Although Europeans have managed to emerge from this winter’s energy crisis relatively unscathed, they cannot always rely on luck. If Europe plans to continue its admirable transition away from fossil fuels towards greener alternatives, European officials must have contingency plans to shield their citizens from extreme fuel price hikes and geopolitical tensions for the chilly winters to come. 

Liz Peron is a freshman majoring in International Studies at Johns Hopkins University. She is originally from Westchester, NY and is a member of the Editorial Team at Hopkins Podcast on Foreign Affairs.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s