“RUSSIA IS ON bear now, it’s not about bullies. This is what Sergei Ryabkov, Russian Deputy Foreign Minister, joked this week when he spoke of the crisis in the European natural gas market. His country favors stability and lower prices at prices that are racing, he insisted: “We would prefer to have a bear market here.”

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Russia is responding to the growing opinion in European capitals that Gazprom, the state-controlled energy goliath that is the continent’s largest supplier, has fueled the continent’s energy crisis by suspending gas exports natural. MEPs call for Gazprom to be investigated for not shipping more gas, allegedly as a ploy to gain final regulatory approval for the controversial Nord Stream 2 pipeline designed to ship Russian gas to Germany .

The Cassandras are half right. Europe is indeed plunged into an energy crisis. The price of natural gas has skyrocketed in recent times across Europe. This has caused panic in Britain, where the government is now considering offering subsidies and other state aid to steel, chemicals and other major energy consumers. October 12 E.ON, a German energy company, has taken the extraordinary step of suspending new gas supply contracts for residential customers.

Worse yet, the continent is heading for a gloomy winter with the possibility of severe gas and electricity shortages. Matt Drinkwater of Argus Media, an industry editor, observes that official forecasters fear that the La Niña weather phenomenon could produce a particularly harsh winter not only in northwestern Europe, but also in northeast Asia. and North America, which competes globally for energy.

Natural gas stocks in Europe were well above the five-year average at the start of 2021, but a long winter combined with lower production in Norway and Britain (in part due to pandemic issues) means storage is now at worrying levels. Edward Morse of Citigroup, an American bank, predicts that if this winter is really harsh, those stores could run out.

Changing fuel was an option in the past, but it’s difficult now. For example, green activism has hampered nuclear development in Europe. James Huckstepp from S&P Global Platts Analytics, a research firm, notes that the region “cannot easily revert to coal-fired power plants because some of them have been closed and others are made unattractive due to carbon policies.” And as the recent painful episodes of weak wind and depleted hydropower reserves in parts of Europe have clearly shown, renewables are not yet a reliable substitute for gas.

Using less gas will be difficult, at least in the short term. But is it possible for Europe to get more gas? One way is to try to intimidate Russia into exporting more. Ursula von der Leyen, the president of the European Commission, recently praised Norway for its help in the gas crisis, but pointed an accusing finger at the Kremlin: “This does not appear to be the case in Russia. But analysts believe the gas giant is actually exporting more gas to Europe this year than before the pandemic, and its large mainland customers recently confirmed that it is meeting its contractual obligations. There is little hard evidence that Russia is a major factor in Europe’s current gas crisis.

Another possible way to increase supply would be to increase imports of liquefied natural gas (LNG) by boat. Over the past two decades, the European strategy to reduce dependence on Gazprom has led to significant investments in LNG, which today represents around 20% of the continent’s gas (compared to none a few decades ago). When the global gas market was well supplied a few years ago, Europe benefited from low gas prices through access to excess cargo. But the combination of stagnant investments in new production and a sudden increase in global demand for gas linked to the global economic recovery has led to a mad race for LNG for some time.

Some in Europe point, with a little more justification, to another foreign bogeyman. Morse notes “a tendency among European officials to blame China.” LNG imports have skyrocketed in the Pacific region, with mainland imports climbing 25% in recent times. Cargoes from America and the Middle East are jostling European ports, attracted by the high price premium offered by Asian buyers. One of their advantages is the explicit support of the state. In China, energy security issues have led the authorities to ensure adequate winter supply “at all costs”.

The other advantage they have, explains Michael Stoppard of IHS Markit, a research firm, is that most Asian gas is still bought on long-term contracts tied to the price of oil, a practice abandoned by Europe as it liberalized gas markets. Since Asian buyers are covered, they experience less pain than their European counterparts fully exposed to today’s astronomical prices. Mr Putin has, with some justification, ridiculed Europe’s adoption of ‘market-based’ gas pricing as the work of some ‘smart alecs’ at the European Commission, and suggested that Gazprom is ready to revive the old-fashioned kind of petroleum. contract bound.

In the end, no foreign bogeyman offers a satisfactory explanation for the gas crisis in Europe. There is another plausible, albeit controversial, explanation found closer to home: the continent’s headlong rush to decarbonize its energy system. Mr Morse argues that what Europe’s leaders are hiding on the eve of the UNNext month’s big climate summit in Scotland is the first crisis in the energy transition. As it moves away from fossil and nuclear energy and embraces renewables, the region has not properly addressed the need for grid redundancy. America also has such problems, but he notes that it is self-sufficient in energy. Europe is far from it.

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This article appeared in the Europe section of the print edition under the headline “Uncomfortable Truths”

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