arms

Behind troop movements and sea blockades for the Third Gulf Warthere is a much quieter script twist that is shaking the foundations of the continental economy: false European security. A problem that comes from the other side of the pond. After the energy crisis due to the Ukrainian War (still valid), Europe thought it had solved its great energy vulnerability by changing the gas that arrived through Russian gas pipelines for liquefied natural gas (LNG) that crossed the Atlantic in ships from the United States. The idea of ​​the European Union was to bet its imports on Washington to diversify sources and avoid future geopolitical blackmail. However, the American lifeline has turned out to be punctured. With the global market in maximum tension due to the war in Iran, the US is not guaranteeing European supply and makes gas subject to trade wars and political whims. The real Achilles heel. Europe now depends on the United States for two-thirds of its LNG imports, according to the center for economic studies Bruegel. As global supply falls due to the conflict, Asian buyers — who traditionally sourced from the Gulf — are competing aggressively for flexible gas ships. The result is a bidding war to the highest bidder: according to Bruegelseveral shipments of American LNG have already been diverted from Europe to Asia in the midst of the conflict. At the diplomatic and commercial level, the situation with our “savior partner” is enormously unstable. In the midst of this crisis, Donald Trump has come to criticize European allies, urging them on social networks to “get their own oil,” according to Bloomberg. As if that were not enough, political friction over the conditions of the trade agreement between the EU and the US has caused senior US officials to threaten retaliation, casting serious doubts on Washington’s previous commitment to sell $750 billion in energy products (including its precious LNG) to the European bloc. The price of the “green illusion”. The impact of this imbalance is being brutal for European pockets. According to the Financial Times Based on data provided by the European Commission itself, the bill for EU fossil fuel imports has increased by 14 billion euros in just 30 days of conflict. Gas prices have experienced a rise of 70%, while oil prices have become more expensive by 60%. This puts in front of the mirror what in Euractiv have baptized as “the green illusion” of Europe: a glaring structural failure in the energy transition. Despite having invested nearly one trillion euros in renewable energy, the European Union’s energy dependence on imports remains at 60%, practically the same figure as in 2004. An ineffective design. The reason for this price contagion lies in the very design of the European electricity market. By operating with a marginalist system, the most expensive technology (usually gas) is the one that sets the price of electricity for everyone, as explained in Strategic Energy. In countries heavily dependent on gas to generate electricity, such as Italy, gas sets the price 89% of the time, exposing citizens directly to international volatility. However, there is hope if you do your homework. In Spain, the enormous growth of wind and solar energy has caused the gas only mark the price of electricity 15% of the hours, much better shielding the country against these external shocks. In fact, it’s not all bad news: solar electricity generation has saved the EU from spending 2 billion euros in fossil fuel imports only in the first 20 days of March. And now what? It doesn’t look like we’ll get a break anytime soon. The crisis will not be brief, as the European Commissioner for Energy, Dan Jørgensen, has strongly warned. who has made it clear thateven if peace were declared tomorrow, prices would not return to normal in the foreseeable future. The European Commission is already finalizing a “toolbox” with emergency measures that will suddenly return us to the scenarios of 2022. On the table in Brussels is the possibility of recovering taxes on extraordinary profits that fell from the sky (windfall tax) for energy companies. Drastic measures in sight. Brussels also foresees drastic measures to contain demand based in the well-known 10-point plan of the International Energy Agency. This would translate into recommendations to Member States to encourage teleworking, reduce speed limits on motorways and promote both public transport and car sharing. At the strategic level, to stop the bleeding in LNG prices and prevent the US from playing against Europe with Asia over shipments, the think tank Bruegel proposes a radical solution: that the EU act as a bloc and coordinate its gas purchases directly with large importers such as Japan and South Korea to avoid a bidding war. The invisible problem. To understand the complete picture, we must talk about the great bottleneck that almost no one talks about: concrete and copper. European renewable deployment is colliding with a lack of capacity in electricity networks. According to a report from the climate think tank Emberat least 120 GW of planned renewable energy projects in Europe are at risk simply because the grid cannot support them. The logjam is monumental, with almost 700 GW of renewable projects stuck in connection queues awaiting permits across European countries reporting this data. And this is not just a problem of the macro plants of large corporations; It directly affects the average citizen. According to calculations in the same report, 1.5 million European homes could face delays in being able to connect the solar panels on their roofs due to obsolete distribution networks that do not have the capacity to take on the energy. A chronic gap. The underlying problem is a chronic gap in the system itself. As pointed out EuractivEurope has changed how it generates its electricity, but it has not electrified its real economy. Cars continue to burn oil, heavy industry continues to use fossil gas and the general electrification of the economy has been stagnant for ten years. Europe has spent … Read more