From Monday the time has come: Nord Stream, the gas pipeline from Russia to Germany, will be closed. It is yet another move in a chess game that has so far led to ever higher gas prices. Experts explain to NU.nl how the power game works and what we need to do to turn it around, so that we can prevent a chaotic crisis during the new heating season.
The planned closure of the controversial Nord Stream pipeline will put an indefinite end to direct supplies of natural gas from Russia to Germany, further exacerbating gas scarcity across the EU.
Officially, this is the annual maintenance of the pipeline. That should take about ten days, after which gas transport would be resumed.
Such a maintenance stop was previously compensated by supplying more gas via other pipelines, says Georg Zachmann, energy expert at the European economic think tank Bruegel. So we didn’t notice it. The current situation is completely different, because the gas supplies are used as a means of power.
For example, gas supplies by Russia have been scaled back step by step for months. The intention is to cause scarcity within the EU and to drive up the energy price even further.
Does Russia want to rack up high prices, or break Europe?
For Russian President Vladimir Putin, who is heavily dependent on gas revenues from Europe, this is a balancing act, explains gas expert Jilles van den Beukel. Putin is now in the so-called sweet spot: hurt Europe, but still make good money from it. We only receive about a quarter of the amount of gas, but we pay a price ten times higher for it.”
Financially, it is useful for Russia to prolong this situation and, according to Van den Beukel, that would mean that the pipeline will reopen after the official maintenance period of ten days, so that the revenue for the Kremlin remains maximum.
“But maybe Putin is more concerned with his geopolitical goals: to hurt Europe to the maximum and to sow divisiveness.” This is in line with turning off the gas tap for a longer period of time, and makes it more difficult for Europe to fill the gas storage facilities in time and get through the winter, according to Van den Beukel, affiliated with the The Hague Center for Strategic Studies (HCSS).
“Russia will analyze very carefully whether European panic signals that it is a good time to break Europe, or whether limiting flows to Europe is the better strategy to extend Russia’s influence into the politically critical winter period” , Zachmann adds.
EU must reverse the game of supply and demand
In Europe, for example, we are always lagging behind, says Kees van der Leun, director of energy consultancy Common Futures. To break the game, you have to take equal steps yourself that influence ‘the law of supply and demand’. So get more gas from elsewhere. And if that doesn’t work, especially reducing gas consumption.
“Measures such as the supply of more liquefied natural gas and the lifting of restrictions on coal-fired power stations have been initiated. Other measures have been announced, but will still take time to take effect. For example, the savings tender for companies has yet to be set up and for the strengthened energy-saving obligation, the consultation has yet to be started.”
This obligation to save will be extended to large users, but only from 2023† The national energy saving target recently announced by the government is also is still on the drawing board.
15 percent saving makes EU independent
Still, saving energy is the key to gaining complete independence from Russia. If gas consumption in the European Union is only 15 percent goes down, we can move on to other sources, Zachmann calculated last week. The challenge differs per country. For the Netherlands it is 16 percent, while in Germany, which has become relatively heavily dependent on Russia, gas demand should be reduced by 29 percent.
This appeals to mutual solidarity in EU countries, says Zachmann. “Mostly unaffected countries must either produce more gas themselves or contribute to demand reduction to free up gas volumes needed in the hardest hit countries. And the more dependent rich countries should make substantial financial contributions in return.”
Every saving counts, says Van der Leun, regardless of the country in which it is made. “The European gas market is still functioning, and there is sufficient pipeline capacity to spread the scarcity across the EU.”
‘Deploy Groningen before chaos breaks out’
Van den Beukel thinks that the current plans in Europe are insufficient. “If the gas tap remains closed, I don’t see a ‘regulated shutdown’ as governments envision, but rather a chaotic shutdown for financial reasons. Security of supply becomes a question of who has the deepest pockets.”
In order to take back control and avoid chaos, Van den Beukel advocates, among other things, making a list of companies and sectors that we want to prevent them from switching off at even higher energy prices.
In addition, all three Dutch gas storage facilities should be filled to the maximum during the remainder of the summer, including worry child Bergermeerwhich is partly owned by Gazprom.
In order to make it possible to fill the gas storage facilities while the Nord Stream pipeline is already closed, Van den Beukel argues in favor of not delaying the use of additional gas extraction in Groningen. “Additional production is needed at a low level, and we should start now instead of waiting for a crisis moment in the coming winter.”
‘Government must start communicating seriously’
But as long as we don’t want to do that, there is only one alternative: save as much as possible, in the shortest possible time. To this end, the cabinet must now try to reach agreements with sector organisations, says Van der Leun. “Shops no longer leave their doors open permanently, the catering industry keeps the patio heaters off, large companies close half of their office floors and switch the airconditioning from.”
“Compliance with such agreements is not legally enforceable, but the government must clearly communicate that it is necessary. It is time for the cabinet to introduce more urgency and less reassurance in communication. Then the measures will also be better understood.”
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