Europe’s self made energy crisis

Mercouris looks at how Europe got to where it is – in a severe “energy crisis”.

The sanctions imposed by the collective West on Russia over its intervention in Ukraine, have sparked a severe energy crisis in Europe which has spilled over to the global economy and global environment. The US-NATO moves may well have set in motion the irreversible collapse of Western hegemony which has blocked a comprehensive global response to tackling climate change and other environmental issues. Understanding the events leading to the crisis in Europe is therefore essential.

We are therefore publishing here an edited transcript of part of a very useful broadcast from Alexander Mercouris‘ YouTube channel, and re-posting the relevant section of the video.

He argues that one fundamental point to understand is that this narrative that Europe sacrificed its energy security in return for cheap Russian gas has an awful lot of mythology behind it.

The idea that the Europeans walked into some sort of Machiavellian plot set by an “evil” Putin, without understanding what they were doing is simply untrue, as is the narrative that the Europeans didn’t look for alternatives to Russian gas.

Mercouris cogently shows that it is European decisions on energy policy, energy needs, environmental concerns, and with respect to their support for Ukraine which have led to the present situation.


Edited transcript prepared by China Environment Net.

I’ve discussed how the economic situation in Europe is becoming increasingly bad i do want to discuss briefly some of the mythology about Russian gas supplies and I say that because the English speaking media has been spreading a lot of stories recently which need to be corrected. One particular story is that Putin supposedly yesterday allegedly confirmed that Russia had cut off gas supplies to Europe in retaliation for western sanctions and you know the Russians have now openly admitted that they’re engaging in some kind of gas war against the West.

…That is not what Putin or more precisely what spokesman Dmitry Peskov actually said. It is a mis-representation of some of his words over the course of a television interview. Peskov basically said that Russia abides by its contracts it’s a reliable gas supplier but the reason gas applies to Europe have been interrupted is because of sanctions. He didn’t say that that was a Russian decision – what he was basically saying is that the Russians cannot fulfill all the repairs to the Nordstream 1 pipeline because doing so in some way contravenes the western sanctions which have been imposed on the Russian energy industry.

… This supposed admission that the Russians have openly said that they’ve cut off gas supplies in retaliation for sanctions seems to me a misrepresentation and that Peskov was simply making points which the Russians have made many times before – that it is European actions that are in fact interrupting the gas flows.

How did we get here? One fundamental point to understand is that this narrative that Europe sacrificed its energy security in return for cheap Russian gas has an awful lot of mythology behind it.

It suggests that the Europeans simply didn’t look at or consider other options to Russian gas, but the reality is they did and they did to an extraordinary extent. I remember how, for example, in the early and mid 2000s the Europeans far from wanting to increase gas imports from Russia, were looking to build a gas pipeline it was going to be called the Nabucco pipeline (also referred to as the Turkey-Austria pipeline) supposedly to Azerbaijan across Turkey and it was quite openly spoken off at that time and this is long before any problems arose with Ukraine. It was spoken of quite openly as offering an alternative to imports of Russian gas. Nabucco failed because Azerbaijan isn’t in a position to produce gas in anything like the necessary volumes to fill Nabucco and that instantly rendered the whole project [non-viable] economically.

I’ve always believed the actual idea behind Nabucco was not that it would be joined up to Azerbaijan but that it would be extended across the Caspian Sea to Iran. There were alot of expectations at that time that the Iranian regime or government was about to fall or was going to take a reformist liberal direction and a lot of people in Europe at that time assumed that Iranian gas would be flowing west to Europe, and would in time replace Russian pipeline gas. It didn’t work and Nabucco had to be cancelled. And then of course there was all the hopes that LNG would provide the alternative to Russian gas and again the problem with LNG was not that this wasn’t looked at with considerable interest but that it was expensive and that the infrastructure was complicated and that Russian gas ultimately was cheaper.

The reason Europe have got into its current position ultimately has a great deal to do with European politics and the nature of European energy policy. The electrification of the European economy that took place over the first two-thirds of the 20th century until the late 1960s was largely carried out with electricity generated from coal, but coal came with various problems. It was cheap and it was plentiful but it was dirty. It damaged the environment at a time when environmental concerns were growing, even before climate change, and of course the workers who mined the coal not only had a hard and gruelling job which was often very bad for their health but the nature of their work working deep underground in mines created a team spirit amongst them which together with a harsh working conditions politically radicalised them, and made them a pain in the neck for many European governments, especially in Britain.

Starting in the 1970s there was a gradual switch towards oil except that didn’t really work because oil fuelled power stations turned out to be expensive and of course it also turned out to be the case that importing oil to generate electricity made Europe vulnerable to oil cut-offs from the Middle East and the Middle \East was a volatile place as the Arab oil embargo of 1973 and the explosion of oil prices that followed demonstrated. So then there was interest in nuclear power but that also ran into political problems.

One of the facts about the Green Party in Germany which today is completely overlooked is that yet it was an environmentalist movement but it was also in its origins a strongly anti-nuclear movement. it it was fired up by opposition to the installation of US nuclear weapon systems in Europe, in Germany, in the Netherlands but it was also hostile to nuclear power

and this hostility to nuclear power was widely shared and it gained renewed impetus as a result of the Chernobyl accident in the Soviet Union in the mid 1980s. So [for Germany] nuclear power was not really an option and in the meantime with oil, not being the success that people had wanted and with coal coming with many problems there was an increasing turn towards gas.

The trouble is there is never enough gas in Europe to substitute, to provide for energy to the degree that was needed. So unsurprisingly the Europeans increasingly from the 1980s began to look east and they began to look east towards the Soviets, towards the Russians who had gas natural gas in planetary dimensions and who were willing to supply it to Europe. That was when the gas pipelines from the Soviet Union, from western Siberia first started to be built.

Gradually over time the Europeans looked for alternatives to this Russian gas but they were never able to find them in anything like the quantities that they needed. Projects like the Nabucco pipeline fell by the wayside. Then something else happened and that takes us back to the events of the Schroder government. Gerhard Schroder, [former German chancellor] who has become a hate figure for many people, formed an SPD government in coalition with the Green Party, which was still very much committed to phasing out nuclear power.

The Greens wanted to phase out Germany’s nuclear power stations and Schroder being in coalition with them agreed to this. But where was he going to get the energy if Germany’s remaining nuclear power stations were going to be phased out? Inexorably he was drawn to the only viable commercial alternative which was Russia, and with the Green party at that time forming part of his coalition, he negotiated the Nordstream 1 gas pipeline and much of the energy infrastructure the gas infrastructure that has been created in Germany flows from that decision. So that was what happened and it’s important to stress that the Green Party was part of the Schroder coalition government that gave Germany Nordstream 1.

Now Nordstream 1 was supposed to be expanded and to include a second spur which was of course Nordstream 2, but then Schroder and the social democrats lost power and Angela Merkel became chancellor of Germany and she was for political reasons not keen on Nordstream 2. So the Nordstream 2 project went by the wayside even though Nordstream 1 continued. And then something happened – the Fukushima accident. Up to this point Merkel had slowed down or essentially reversed Schroeder’s decision made under the pressure of the Greens to close down Germany’s remaining nuclear power stations but after Fukushima the demand in Germany for the closure of nuclear power stations began to increase.

As a result Angela Merkel who was nothing if not adaptive to the ebbs and currents of German public opinion, dropped her scepticism to Nordstream 2 and adopted the Greens policy of closing down the nuclear power stations. The reason she dropped her scepticism to Nordstream 2 is that with the nuclear power stations being shut down she needed to find an alternative to all that nuclear power. So it was Merkel who in 2015 approached the Russians and suggested that the Nordstream 2 project which had been put on ice be revived. The Russians at that time were none too keen. Merkel had the previous year supported sanctions against Russia following the initial outburst of the conflict in Ukraine.

The European Commission had in the meantime been trying to bring the various north south stream pipelines which the Russians were at that time building across the black sea towards Bulgaria under the EU’s regulative remit through something called the third energy package which the Russians vehemently objected to. So the Russians had dropped north south stream redirecting the flow of gas towards Turkey and built Turkstream instead. Russia was saying at that time that they were not going to build pipelines to EU countries from that point on.

Well along comes Angela Merkel and tells the Russians can you please revisit that decision?” – I’m shutting down all my nuclear power stations I need energy tosubstitute for those nuclear power stations. All our efforts in Europe to find economic alternatives to your gas – Nabucco, LNG etc all of that all of that has failed and Ii need to find those alternatives because if I don’t Germany’s industries will be at a competitive disadvantage because they will have to pay higher energy costs. Well the Russians were extremely sceptical but President Putin himself was eventually won over north south stream. At that time he has having one-to-one meetings with Merkel meetings which took place even without interpreters present. He had one meeting in early 2015 at the time of battles in Ukraine, and others as well. Merkel speaks Russian, Putin speaks German so they were able to talk to each other without interpreters and that means by the way that there is no stenographic record of their conversation.

We do not know exactly what these two people spoke about to each other but I’ve always gained the impression that some kind of broader understanding was reached and I suspect that Putin believed that if he gave the green light to Nordstream 2 Merkel would help with the implementation of the Minsk Agreement which would ultimately resolve the political crisis in Ukraine. Well as we know if that kind of understanding was ever reached, Merkel never followed through with it leading to the crisis we now have. But anyway the key takeaway from all of this is that the Europeans have been continuously looking for alternatives to Russian pipeline gas – they’ve looked for gas from all sorts of other places they built up their various alternative to gas wind farms, solar panels etc and they’ve looked at LNG but they haven’t turned to these alternatives because ultimately the cost of doing so was prohibitively high and in the case of pipeline projects like Nabucco they simply weren’t coming up with the necessary quantities of gas, and coal which is the historic source of energy for Europe was being ruled out and pressure from the Greens was basically limiting development of Germany’s nuclear power industry.

So this is not a case of the nefarious Russians coming along and forcing their gas on the Europeans – it was the Europeans coming to the Russians and asking for gas because that was the only way that the Europeans could stay competitive.

Now I think there is another twist to this because I strongly suspect that the volumes of gas the Europeans were importing from Russia are considerably greater than they have been admitting to. I think it’s now clear at least to me that Britain despite all pretence has been importing natural gas from Russia and I suspect that other countries have been doing so as well, even whilst they’ve been pretending otherwise. I think what has been happening is that European energy companies have been quietly importing Russian gas but passing it off as gas from Norway, the Netherlands, Algeria, the North Sea in order to basically get this past the European Commission and to massage the numbers. They would have known that Russian gas was controversial and so they pretended that it was coming from other places. So European dependence on Russian gas has been greater than the Europeans themselves have admitted to but there was no Russian trap that the Europeans walked into. The Europeans made certain rational commercial decisions if they had not made those commercial decisions the Russians would have developed their gas industry in a different way, perhaps they would have invested in it less perhaps they would have prioritised providing gas to their own domestic customers, perhaps they would have looked east earlier than they did, but the talk that of some sort wicked trap was launched by the Russians is simply not true.

The idea that the Europeans walked into all of this without understanding what they were doing is also untrue and the idea also that the Europeans didn’t look for alternatives to Russian gas that is wrong as well. This was a sensible rational commercial alternative but it is now being destroyed because the Europeans instead of prioritisation it, instead of taking steps to safeguard it in the in their own economic interests and those of the people of Europe decided instead to engage in the [military] adventure in Ukraine and as a result they destroyed the relationship with their major energy provider.

It’s their own decision which has led to this. The talk is that they’re now having to use coal more than they once did though to be straightforward about this reopening coal mines is not really an option they’re going to have to keep some of their nuclear power stations going but then of course keeping nuclear power stations going longer than they’d intended, which is what German Vice-Chancellor Robert Harbeck is apparently now talking about, is all very well but those nuclear power stations have been in operation. The extra gas flows from Nordstream to would have covered the closure of those nuclear power stations but that would have been a future event. It doesn’t resolve the energy problems Europe is facing now.

It’s European energy policy, European energy needs, European environmental policies, which have led to these things. If the Europeans had wanted to stick with coal with all the environmental consequences if they decided to develop their nuclear power industry with all the consequences there as well, we would be in a different place but we’re not in that place and the decisions that were made were rational ones.

We need to put all this mythology about Russian traps, about the Europeans sacrificing their energy security to this evil Putin, we need to put all those myths to one side. It’s European decisions both with respect to their energy policies and with respect to their support for Ukraine that has brought them to this point.

Source: Alexander Mercouris on YouTube, 7 Sept 2022.