The U.S. and the majority of European countries have sought to oppose Russia throughout the year-long conflict in Ukraine by supporting Ukraine with arms and on international energy markets. When Russia invaded Ukraine, it served as Europe’s primary energy provider, and President Vladimir Putin vowed to leave Europeans to freeze like a wolf’s tail if they placed sanctions on his nation.
But because of planning and good fortune, Europe has escaped power outages and blackouts. Instead, because of the unaffordably high global natural gas costs, less developed countries like Pakistan and India have had to deal with power disruptions. As a specialist in international energy policy, I see this as the most recent proof that less developed countries frequently bear the brunt of these crises.
More turbulence, in my opinion, is possible. In reaction to Western energy sanctions, Russia has declared that it will reduce its crude oil production by 500,000 barrels per day beginning on March 1, 2023. This represents 0.5% of the global oil supply or nearly 5% of its current crude oil production. Although many analysts anticipated the decision, it raises questions about whether there will be other cuts in the future.
How Europe Has Kept the Lights On
Some governments and energy experts predicted that one outcome would be an energy crisis in Europe as Russia’s intentions towards Ukraine became evident in late 2021 and early 2022. But, the weather was one aspect that Putin had no control over.
Recent mild weather in Europe, along with proactive conservation measures, has resulted in a 25% decrease in natural gas usage in important European markets including Germany, the Netherlands, and Belgium.
European governments were able to postpone using natural gas reserves that they accumulated over the summer and fall of 2022 because there was less demand for electricity and natural gas. A European energy crisis is currently considerably less plausible than many predictions suggested.
The stockpiles of natural gas in Europe are currently about 67% full, and at the end of this winter, they will likely still be 50% full. The continent will be better-positioned thanks to this for the upcoming winter.
With coal, the scenario is similar. In 2022, European utilities reopened 26 coal-fired power facilities and stacked up coal in preparation for a potential winter energy crisis. Yet, the continent’s coal consumption has only increased by 7% thus far, and the average working capacity of the revived coal plants is only 18%.
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The U.S. Role
The summer and fall of 2022 saw record-high U.S. energy exports, which boosted European energy security. In 2022, the U.S. exported about 10 million cubic meters per month of liquefied natural gas, an increase of 137% from 2021. This amount accounted for about half of all the LNG that Europe imported.
Despite record-breaking domestic U.S. natural gas production, some producers had the chance to export their products too expensive international markets. As a result, summer natural gas surpluses did not develop on the American market as they would have.
The export rise hit US consumers with the highest natural gas prices they had seen since 2008 when combined with the exceptionally hot summer conditions, which increased energy demand for cooling.
Moreover, prices increased at American gas stations, rising to or exceeding $5 per gallon in early 2022, the highest average ever noted by the American Automobile Association. The United States increased its position as a net oil exporter, meaning that it exports more oil than it receives, by exporting about 1 million barrels of gasoline per day, mostly to Mexico and Central America and some to France.
Similar to consumers in Europe, Americans had to pay high rates in order to outbid other consumers worldwide for oil and natural gas due to supply interruptions around the world and competition for available cargo. Through the spring and summer of 2022, high gas prices caused the Biden administration political problems.
These high prices, however, ignored the fact that domestic gasoline consumption in the United States has plateaued. Predictions indicate that it will continue to fall through 2023 and beyond as the number of electric vehicles on the road rises and U.S. cars’ fuel efficiency keeps getting better.
Energy costs were a strain, particularly for lower-income households, but European and American consumers were able to withstand price increases brought on by the conflict in Ukraine and have so far escaped actual outages and the worst recessionary worries.
And in order to lessen their country’s reliance on fossil fuels, their governments are providing substantial financial incentives to transition to clean energy technologies.
Read More: How Power Plant Emissions Affect Cloud Formation in Utah Mountains (and Likely Elsewhere).
Developing Nations Priced Out
Consumers in developing countries like Pakistan, Bangladesh, and India, who have experienced the electricity cutoffs that were anticipated but didn’t happen in Europe, cannot say the same.
Interestingly, Europe’s extensive energy stockpiling in the summer of 2022 led to a sharp increase in the price of liquefied natural gas on the international market. In reaction, many utilities in less developed countries reduced their imports of natural gas, resulting in price-related power disruptions in some areas.
Countries in South Africa, Asia, and Latin America have been forced to rethink their reliance on imports due to the continued high global energy prices.
Although increased coal use has garnered media attention, renewable energy is beginning to offer more benefits due to its lower cost and the ability of governments to portray it as more secure and a source of domestic employment.
Read More: Despite Oil Industry Connections, COP28 President-Elect Vows to Maintain 1.5°c Temperature Target.
Energy Prices and Climate Justice
Renewable Energy Africa (@renewableenergyafrica.news) shared a blog entry.
The Russia-Ukraine crisis’ impact on poor nations’ energy needs has fueled a global conversation about climate justice. The fact that wealthier nations like the United States keep much of the available funds for climate finance domestically is one less-examined effect of massive clean tech stimulus initiatives.
Because of this, some leaders of developing nations are concerned that as the energy transition picks up speed, the knowledge gap in clean energy technology will expand rather than close.
Members of the G-7 conference of wealthy nations have tightened their monetary policies to limit inflation brought on by conflict, which has made the issue worse. As a result, borrowing money to invest in clean energy in poor nations becomes more expensive and difficult.
The United States is backing a novel strategy known as “Just Energy Transition Partnerships,” in which wealthy nations contribute money to assist developing nations in moving away from coal-fired power plants, retraining workers, and luring investors from the private sector to help finance decarbonization initiatives. Yet, the pace is slow because these solutions are negotiated bilaterally between different nations.
The next round of international climate negotiations will take place in the United Arab Emirates in late 2023, and wealthier nations, particularly Middle Eastern oil producers, will be under pressure to find new means to finance the improvement of energy security in less developed states.
Rich countries around the globe promised to give less developed countries $100 billion per year by 2020 to aid in their adaptation to climate change and economic decarbonization, but they are far behind in keeping this promise.
In order to fund climate adaptation in low-income countries, U.N. Secretary-General Antonio Guterres has urged wealthier countries to tax fossil fuel companies, which posted record profits in 2022. Without some sort of significant advancement, wealthier nations will continue to outbid poor nations for the energy resources that the world’s most vulnerable people urgently require.
Professor and Director of the Energy, Climate Justice, and Sustainability Lab at New York University
Amy Myers Jaffe has disclosed that she receives money from the National Aeronautics and Space Administration of the United States.