New article for Energy Post
New article by Hans-Josef Fell for Energy Post:
A massive expansion of domestic renewable energy stops wars, not just climate change.
A massive expansion of domestic renewable energy generation over the last decade would not only have saved the planet from a future climate catastrophe, it would be stopping wars today Firstly, 70% of Russia’s state revenues come from oil, natural gas, coal and nuclear energy deals. State revenues fund its military. Secondly, an EU dependent on imports from any geopolitical adversary will always struggle to impose sanctions on it. Fell explains that if the EU cuts energy imports from Russia it cannot easily get supplies from elsewhere, leading to a further increase in prices, more inflation, economic hardship and therefore political consequences at home. Reversing dependence on imports will take time, and Europe is now paying for the lack of foresight, says Fell. Yet wind and solar prices have been dropping for a decade, are now at record lows and are still getting cheaper. Studies for “100% renewables” have been available for a long time. So nations should start implementing them.
Import dependence is a security risk
For decades, there have been warnings about how the strong energy import dependence of industrialised nations like Germany in the fossil and nuclear sectors poses a major security risk. Today, we see a massive increase in these geopolitical distortions and the threat to peace in Europe as a result of strong energy dependencies.
Indeed, the lack of a shift to domestic renewable energy, especially in the last decade under Angela Merkel’s chancellorship, was one of the main reasons why Germany and the EU did not have sufficient political means to counter the Russian deployment of more than 130,000 Russian troops on the Ukrainian border. One of the reasons why Russia’s military attack on Ukraine, which is against international law, could not be prevented is due to the fact that Russia is in a very powerful position because of the EU’s immense energy dependence. It is now taking advantage of the fact that the EU and Germany, under pressure from the gas and oil lobby, have continued to rely on fossil fuels instead of domestic renewable energies over the past decade.
The EU’s massive dependence on energy raw material supplies from Russia has led to great political powerlessness in the conflict over Ukraine. The recognition of the Independence of Donetsk and Luhansk as independent could not be prevented by the West, because the West kept buying energy from Russia, even during these last six months with significantly higher revenues for Russia’s war chest. About 70% of Russia’s state revenues come from energy deals with oil, natural gas, coal and nuclear fuel.
Russia’s riches are based on the revenues from oil, gas and coal
Russia has thus been able to accumulate considerable wealth with the revenues from oil, gas, coal and nuclear fuel, which allowed Russia’s massive armament in the first place. At the same time, the EU’s energy dependence has led it to believe that it cannot do without Russian energy supplies. In order to secure energy supplies, the EU could not quickly announce, let alone carry out, threats of sanctions. It is certainly no coincidence that the escalation of violence against the Ukraine comes at the very moment when the EU economy is already in a massive crisis due to high fossil fuel prices.
Not certifying Nord Stream 2 is a long overdue step
In response to Russia’s recognition of the regions of eastern Ukraine, the President of the European Commission, Ursula von der Leyen, and the German government announced sanctions. They had remained very nebulous the weeks before, which led to fear that these sanctions would remain as weak and ineffective as the EU and US sanctions after the occupation of Crimea. With Russia’s attack, we do see now that Russia hardly takes these sanctions seriously either.
Chancellor Scholz’s announcement to not certify the Nord Stream 2 gas pipeline is a long overdue step. This shows that t his fossil gas policy, which was enforced recently in the coalition agreement, was wrong from the very beginning and disregarded its inherent geopolitical dangers.
President Putin knows very well that the EU has its back to the wall
President Putin is very well aware of the fact that Germany and the EU cannot significantly endanger Russia’s crucial state revenues in the short term or even in the medium term. A ban on imports of Russian gas, oil, hard coal and nuclear fuel elements would lead to an economic burden for the EU that goes far beyond today’s energy price increase.
A collapse of the economy due to missing or expensive energy raw materials, uprisings of the population due to cold flats and missing fuel for cars and trucks, food shortages and raising prices for food due to missing or expensive fertilisers, pesticides and transport energy would soon be the consequence.
Strong increases in the prices of natural gas (+60%), oil (+43%) and hard coal (+180%)
With an oil price of just under 100 US dollars per barrel, even today 23% of German companies already classify the current energy prices as threatening to their existence, 65% speak of a “strong challenge”.
Many media as well as companies still see taxes and levies as the main cause of the increase in energy prices. However, the sharp increases in the prices of natural gas (+60%), crude oil (+43%) and hard coal (+180%) since mid-2021 are the main cause for this development, as they are driving up energy prices despite the sharp drop in solar and wind energy costs.
Oil & Gas lobby
Most of these companies, that are now under massive pressure, from BASF to OMV or other natural gas companies, share a large part of the blame and are responsible for their own plight. It was these companies, who lobbied against the expansion of renewable energies for decades. They hindered political support for renewable energies and failed to create sufficient renewable energy investments in their own companies. All warnings that this could lead to a dire dependence with rapid price increases were ignored so that they are now facing the shambles of their own actions.
Further price increases are to be expected
The rise in commodity prices has many causes, ranging from speculation to the current geopolitical tensions, wars, accidents and terrorist attacks. It is especially the decline in production of fossil raw materials in important producing regions, especially OPEC, that causes this development. Overall, the production of fossil raw materials, especially oil, is increasingly unable to meet demand. Further price increases are to be expected. The day Russia attacked Ukraine, the price of oil jumped above the 100 US $ per barrel mark.
The energy importing countries are now feverishly seeking diversification from Russian energy supplies. However, this will not lead to an increase in the total production. Shortages in the market will continue to increase and with them commodity prices will as well. The shortages have driven up energy prices in all sectors: power generation, transport, heating, industry. The unexpected outage of one third of the French nuclear power plants has put additional pressure on electricity prices in the EU, showing that nuclear energy cannot contribute to lowering electricity prices either.
The EU is stuck in a dilemma that cannot be resolved in the short term
The EU hence is stuck in a dilemma that will not be solvable in the short term. Finding effective sanctions that seriously affect Russia do not seem to be working. However, the EU is not able to impose strong sanctions in the one and only sector of the Russian economy that is seriously vulnerable, the energy sector, as this would lead to the greatest economic hardship and to popular uprisings due to the heavy dependence on energy – as the recent survey on the existential fears of businesses mentioned above shows.
Thus, the EU cannot adopt sanctions that would seriously affect the Russian state and it is not surprising that all the EU rhetoric of “effectively and severely burdening the Russian economy” hasn’t been taken very seriously in Russia.
Berlin cannot approve an embargo
The Ukrainian Ambassador to Germany, Andriy Melnyk, had made one thing clear a few days ago: among other things, he demanded an embargo by Germany and the EU on Russian gas, oil and coal exports, as well as the end of the Nord Stream 2 gas pipeline. As a matter of principle, he is right with these demands as this is the only way to seriously hit Russia’s economic power.
However, it is obvious that this will not be taken up by the government in Berlin: it cannot, because the consequence would be the collapse of the German economy. In the short time required, the missing energy supply from Russia cannot be replaced by alternative energy suppliers – nor will this be possible in the future because of the shortage tendencies on the world markets.
Russian energy supplies to the EU cannot be replaced in the short or medium term
Who is to replace the large Russian energy supplies to the EU in the short or medium term? The few supplier countries under discussion, such as the USA, Australia, Central Asia, North Africa or the Middle East, will not be able to organize the replacement in a few years and certainly not next winter. In addition, many of these countries are governed by unjust regimes, which foreshadows the next geopolitical upheavals.
Fossil energy prices, which have risen considerably in recent months, are the result of a shortage of fossil energy on the world market. Demand exceeds supply. So where would the missing quantities of oil, natural gas and coal in the EU come from, for an energy embargo against Russia, if they are currently already insufficient to cover global fossil energy demand?
Russia can sit back
Should the EU nevertheless impose an embargo, it would be cutting its own throat. Russia could sit back, wait for the economic collapses and popular uprisings in the EU and then dictate its terms for renewed energy supplies.
After all, Russia has amassed a financial reserve worth hundreds of billions with the revenues from energy sales. The reverse scenario is that even now at war, Russia could ignore contractual supply obligations and turn off the oil and gas taps on its own authority. The powerlessness of the EU would then come to light very quickly.
Previous expansion of renewable energies far too weak
Germany’s and the EU’s self-created dependence is a result of the extremely weak expansion of renewable energies. Solar radiation and wind do not have to be imported, neither from Russia nor from other countries.
A steep expansion of renewable energies in the last decade could have led the EU out of its dependence and powerlessness towards supplier countries like Russia. This is exactly what the G7 energy ministers demanded after the occupation of Crimea, precisely in order to achieve more energy independence from Russia. It has not happened. On the contrary, the annual expansion of renewable energies in Germany and the EU – politically decreed, for example, with the amendments to the Renewable Energy Sources Act (EEG) – has further collapsed. This is precisely what led to the EU’s current geopolitical powerlessness in the face of Russia’s military threats against Ukraine.
Ukraine is dependent on Russia’s energy supplies as well
Besides, the Ukrainian ambassador’s brisk demand for an energy embargo must also be seen in the light of his country’s own impotence. Ukraine still obtains large amounts of energy from Russia: electricity via the interconnection with Russia and Belarus, oil and coal as well as most of the fuel elements for the Ukrainian nuclear reactors.
To receive transit fees, Ukraine still insists on the transit of Russian natural gas to the EU and overlooks the fact that in doing so, it finances the Russian state budget and therefore the military threats against its own country. It is significant that the Ukrainian ambassador called for the end of Nord Stream 2, but not for the end of the transit of Russian natural gas on Ukrainian soil.
Share of renewable energies in Ukrainian energy supply well below 10%
For more than a decade, I have been pointing out in ministerial talks and hearings in the Ukrainian parliament in Kiev that as long as Ukraine keeps on buying large amounts of energy from Russia, it is completely powerless politically in the face of Russian aggression.
A steep expansion of renewable energies in Ukraine within the last decade would have been the right strategy to gain political independence from Russia. However, this hasn’t happened and the share of renewable energies in Ukraine’s energy supply is still well below 10%. The Ukrainian impotence towards Russia is therefore also partly self-inflicted.
For more than a decade, there have been ongoing warnings of geopolitical upheavals and even wars as a result of fossil energy dependence as well as calls for a rapid switch to domestic renewable energies.
In my Bundestag speech on February 11, 2011, on the EU energy summit, I stated: “The black-yellow German government failed to initiate the urgently needed transformation process towards a full supply of renewable energies while exploiting the large potential of energy savings. Europe is in danger of becoming more than 70% dependent on energy raw material imports from increasingly insecure supply countries. Instead of finally focusing on the development of the inexhaustible and free domestic energy resources from solar radiation, wind, hydropower, and geothermal energy, the EU summit is focusing on increasing import dependency from politically unstable supplier countries with new pipelines and terminals.”
The German Armed Forces also warned against dependence
The Transformation Centre of the German Armed Forces had also strongly warned of the serious security threats associated with a shortage of energy resources in its 2010 Peak Oil Study:
P. 17: “Oil-importing states are forced to be more pragmatic in their foreign policy towards oil suppliers and must subordinate normative aspects to the primacy of security of supply. On the part of the oil-producing states, a political instrumentalization of their power position and a corresponding formation of alliances along ideological lines of conflict is quite plausible.”
p. 25: “In addition, bilateral supply ties for gas could more easily turn into effective politically dependency relationships that override traditional political orientations or integration into alliances”.
p. 26: “Above all, an expansion of nuclear energy, however, exacerbates the problem of proliferation.”
These warnings of the of the German Armed Forces Transformation Centre from 2010 speak for themselves, but have nonetheless always been thrown to the wind.
Goal: establishment of a domestic energy supply in the EU and Ukraine, 100% from renewable energies
After the hopefully imminent end of the war, the clear realization of global politics must be to build a domestic energy supply in every country, especially in the EU and the Ukraine based on 100% renewable energies. This would deprive Russia of the revenues, which have been flowing into Russian high armament, and would make the political decisions of the EU and Ukraine more independent, since a collapse of the economy due to rising energy prices and energy shortages would no longer have to be feared.
Quite the contrary: renewable energies are now the most cost-effective way of generating energy, even as a reliable energy source with a mix of 100% renewables and storage technologies. Scientific studies, which show that the transformation to a full energy supply with renewables is not only possible within a decade, but would even be much cheaper than the fossil nuclear energy system, have been available for many years.
This geopolitical liberation strategy, which can be realized in the medium term, would simultaneously care for climate protection and reduce the long list of economic and social burdens caused by fossil fuel price increases, including increasing droughts, food shortages, heavy rains, storms, rising sea levels and other catastrophes. On the other hand, these catastrophes caused by global warming will lead to additional geopolitical distortions, which are likely to cause warlike tensions or wars in other places, as it is currently the case in the Ukraine.
