After the shock of war breakout by Russian aggression on Ukraine subsides, we will have to focus on our domestic front. Homework is plentiful, costly and urgent. European energy system imports cca 40 per cent of its gas from Russia and a quarter of all oil imports. In this state, Europe and especially Central and Eastern Europe have to rethink their security architecture in energy with its chronic dependency on the Russian state.
That it is a herculean task shows the progress of measures taken after the 2009 gas crisis, when Russia cut off Eastern Europe gas supplies. Till today, some of the planned pipelines and infrastructure is still not on the market. To name just one – GIPL supplying natural gas island in Baltics is not yet finished 13 years later (commissioning is expected 05/2022).
Yet the current situation requires immediate action on all fronts with warlike conviction to reduce Russian energy imports to a minimum or prepare for complete disregard of such a source. CEE region will have to come up with the new architecture of electricity, heating and transport energy sources with two aims:
To eliminate winter supply disruptions and price impacts for next winters
To find a replacement of Russian energy to minimize scarcity of available import routes
Finding quick alternatives will be probably costly and given the needed volumes probably not fully successful. Basically, the whole of Europe will have to become a large global sink of all available pipe and LNG gas. That it may be possible, can be seen in Japan after Fukushima where it had to replace 140 TWh of electricity from nuclear. LNG played an important role by adding 70 TWh but LNG prices skyrocketed as a result. EU faces challenges of different magnitude with replacing cca 2000 TWh of Russian gas. With every single day, the probability that we will achieve something coming to the optimal solution for next winter is lowering. For that reason, immediate action is necessary. Finding the answer will be very difficult and here I can only sketch the optimal strategy. Maximizing pipeline imports from Norway, Algeria and LNG supply from the US and the Middle East are the best answer. Joint negotiation by the EU may secure the best, yet still expensive supply. That should be our immediate battlefront in the Ukrainian-Russian conflict in the energy sector.
New energy security architecture
The second line of measures should be even more pressing as the implementation time will require months or even years. Replacement of gas or minimising its actual need will be crucial to reach better affordability of our energy consumption. Unfortunately for the planet, the immediate answer will be coal, as it already is since last Autumn when the gas supply was reduced by the Russian side. Yet even if in the long run, if we ignore climate change, coal is already scarce in EU countries and we have to start seeking a replacement. But in the short run, we should be able to keep our capacity even in the older plants to overcome potential stress in the system. Security reserves should find their way to the CEE region until the full-scale transformation takes place.
The biggest effort should nevertheless be given to renewables development and nuclear. Firstly, renewables represent the biggest and the easiest tapped energy source for our countries. The Central and Eastern wings of EU countries were always rather sceptical towards higher RES development but the potential for growth is enormous if the construction capacity is developed. We calculated the potential for the Czech Republic of cca 10 GW of solar and 1 GW of wind, thus supplying 12 TWh of electricity in the current decade. If we simply extrapolate this potential by population to other CEE countries, we may reach new production of 114 TWh of renewable and fully secure electricity. More, if we add more wind in the mix, much of which may replace gas in electricity production, heating and transportation. It can be easily imagined that implementation time may be halved with existing projects and EU funding if it becomes the strategic priority of the state. Our biggest effort should be targeted at increasing the market throughput in installations and overcoming local disagreements.
Nuclear on the other hand will be a marathon race for the region. Nuclear programs are bogged in various national or industry issues with no chance to overcome them soon. Yet, coordinated effort to build nuclear project pipeline in CEE may renew existing nuclear portfolio and bring needed additions for cleaner energy mix. Teaming up in this mammoth initiative may bring costs down, secure confidence in delivery and overcome national issues. Available technology from the US or France also resolves security questions.
The traditional look on the energy industry is also ignoring three important factors which may further reduce dependency. Energy savings have been mostly overlooked, costly and sometimes, rather a dull topic to play a central role in energy security but now every kilowatt counts and prices are already soaring. Next in line are electric vehicles reducing further oil imports and bringing security questions to Europe under the condition that a battery chain will be established here and we can go cobalt-free. And lastly, we should not forget hydrogen which could further bolster European self-sufficiency already in this decade. If we tap just the lower bound of 5-10 per cent mixing potential with natural gas till 2030 we can replace as much as 263 TWh of gas, more than 10 per cent of Russian imports.
The current situation in Ukraine is tragic and the situation may develop either way. We can hope for the best but our goal in energy security is already set. Europe and mostly the CEE region have to maximize its internal energy gains and sources. Green Deal may look pompous in the wake of the current crisis but don’t be fooled – it provided us with vision, means and needed framework. Our single task is to simply execute it without flaw and that really is a gargantuan task in the conservative CEE region.