SALEM, Ore., March 12, 2014 — Fossil fuels still drive the world’s economy, supplying 80 percent of human energy consumption. They’ll do so for decades to come.
The crisis in Ukraine has left Europe in a hard situation. There are legal and moral reasons to stand up to Russia and for Ukraine, as well as strategic reasons to want Ukraine out of Moscow’s orbit. But at the same time, Europe is heavily dependent on Russia for natural gas. It also imports millions of barrels of Russian oil every day; Germany alone imports over 700,000 barrels.
It won’t help in the Ukraine crisis, but shale technology — not green energy — will finally end Europe’s dependence on Russian natural gas.
Energy and international politics
No easy military option exists for the U.S. and the E.U. in Ukraine. The best options are diplomatic and economic, including the possibility of freezing Russian assets and ejecting Russia from the G8. The great unknown is how Russia will react to these sanctions. Russia says there will be repercussions if economic sanctions are imposed, but it doesn’t say what those will be.
Russia has cut off natural gas flows to Europe disputes. In 2008, Russia stopped natural gas flow to Europe during the Russian invasion of Georgia. In that conflict, Russia took territory it still holds today. Russia was not seriously challenged by Europe or by the United States.
The threat of war
Military preparations are underway on the edges of Ukraine. Called “training exercises,” NATO forces are moving military assets close to Ukraine. These exercises are intended to reassure other eastern European countries, like Poland and the Baltic states, that NATO will support them, as well as raising the stakes for Russia should it decide to invade Ukraine. The United States sent a dozen F-16 fighter jets, AWACS (Airborne Warning and Control System) and 300 service personnel to Poland. Patrols along Ukraine’s border are to start immediately.
In response, Belarus has asked Russia to send it 15 fighter jets to counter NATO forces. So far, Russia has sent six jets and three transports.
Russia already holds Crimea, taken without firing a shot. It scuttled ships in Crimea’s Danuzslav Harbor to prevent Ukrainian naval vessels from sailing. Russia moved troops northward into southern Ukraine and is conducting “military exercises” in three places just east of its shared border with Ukraine.
Natural gas influence
There are high expectations for a diplomatic solution in Ukraine. Should diplomacy fail, though, sanctions and natural gas politics will take center stage.
Germany’s reliance on Russian gas can effectively limit European sovereignty, I have no doubt
– Prime Minister Donald Tusk of Poland, New York Times, Mar. 13th 2014
Poland’s Prime Minister Donald Tusk said he’d speak with German Chancellor Angela Merkel to make it clear to her that “existing climate and natural gas policies risk posing a threat to the security and sovereignty of Europe as a whole”.
Russia and Europe have symbiotic natural gas economic ties. Russia supplies 40 percent of Poland’s natural gas and 30 percent of western Europe’s through a vast network of Russian-owned pipelines. Seventy-five percent of Russia’s foreign trade, mostly in the form of natural gas, is with Europe.
The current situation is beginning to look a lot like Georgia. This time, though, Europe has decided to take a much stronger stand to prevent further Russian aggression.
Sixteen percent of all of western Europe’s natural gas flows from Russia through Ukraine via pipelines, according to the U.S. EIA. Ukraine, Turkey, Poland and Germany get substantial portions of their total energy supplies from Russia.
European energy transformation to begin
Unconventional techniques, like fracking and horizontal drilling, have fundamentally changed the energy future of the United States for the next half century. It’s about to change the balance of energy power in Europe.
Europe has vast untapped shale gas and oil deposits, more than enough to meet its own needs and wean itself from dependence on Russian energy. Poland, Ukraine, France and Turkey have more than enough untapped resources to meet the need. All are heavily dependent on Russia today.
To jumpstart the energy shift, last week Poland began offering shale gas companies 6-year tax breaks to develop its shale gas.
There is a move afoot in the U.S. Congress to legalize export of now abundant natural gas to Europe to compete with the Russian monopoly.
Up to now, the E.U. has discouraged fracking and development of shale energy. But the Ukraine crisis and high cost of green energy is making the E.U. rethink its position. It also sees how shale gas is being used in the United States to reduce its carbon footprint, and that is a primary EU goal.
Europe is heavily dependent on Russian natural gas. Europe, though, has vast untapped shale gas deposits of its own that can be used to break its Russian dependence.
Europe and the rest of the world will inevitably follow the United States lead and develop shale gas. It’s an economic and environmental imperative. The current crisis and national security considerations will speed up the process.
However, none of that will help in today’s Ukraine crisis.
If Russia cuts off natural gas supplies to Europe again in retaliation for economic sanctions, then it will have to act quickly before it goes broke. Seventy-five percent of its national income comes from energy sales to Europe. For Russia to survive, it must quickly renormalize its European economic ties.
If that can’t happen, a desperate Russia might start a shooting war that spreads well beyond the Crimea.