The European energy utopia

12.03.2022

Pressed by the high energy dependence (more than 50%), the high volatility of gas and oil prices due to destabilizing geopolitical factors and the urgent need to guarantee a secure energy supply, the EU implemented an energy strategy based on the preferential agreements with Russia and Algeria for the supply of gas, in the use of obsolete nuclear power plants instead of new generation atomic reactors EPR2 (European Pressurized Water Reactor) and in the extraordinary promotion of renewable energies (1st producer in the world), with the unequivocal objective of achieving self-sufficiency in energy and water resources on the horizon of 2030.

Likewise, the ambitious European Program on Climate Change was approved for 2030 (the Triple 30), with the commitment to cut carbon dioxide emissions by 30%, improve energy efficiency by another 30% and achieve 30% of the energy consumed comes from renewable sources, together with the Reorientation of Land Freight Transport by the new Motorways of the Sea and High-Speed Railways through the imposition of ecological taxes on road transport and vehicles without an ECO label. However, according to Marie-Helene Fandel, an analyst at the European Policy Center, "the EU's energy policy suffers from a high dependence on foreign countries due to its scarcity of resources and its limited storage capacity" which, together with the inability of Twenty-seven to develop a true common energy policy will slow down the entire process and make the utopia of European energy self-reliance unfeasible on the horizon of 2030.

Thus, the rise in gas and electricity prices would have surprised Europe with gas reserves at historic lows (60%) and would have staged the resounding failure of the energy policies of a European Union incapable of achieving utopian energy self-sufficiency, since the Russian gas supplies more than 70% to countries such as the Baltic States, Finland, Slovakia, Bulgaria, Greece, Austria, Hungary and the Czech Republic and more than 80% of the total gas that the EU imports from Russia passes through Ukraine.

Likewise, the total paralysis of the Nord Stream 2 project that connects Russia with Germany through the Baltic Sea with a maximum transport capacity of 55,000 million cubic meters (bcm) of gas per year and with a validity of 50 years, a vital route for Germany and the Nordic countries will force the EU into US fracking dependency. Thus, the US will take advantage of the Ukrainian crisis to replace Russia's European energy dependence (40% of the gas imported by the EU comes from Russia) with fracking dependence, flooding the European market with LNG (natural gas fracked in the US and transported by gas tankers), with which the US would achieve the objective it was pursuing after the Ukrainian crisis, leaving France as an energy island thanks to the new generation EPR2 nuclear power plants.

The International Energy Agency (IEA), in a report entitled "Global Perspectives for Investment in Energy", warned that it would be necessary to invest $48 Billion by 2035 to cover the world's growing energy needs, but the abrupt collapse in the price of crude up to $50, made it impossible for producing countries to obtain competitive prices (around $80) that would allow the necessary investment in energy infrastructure and the search for new exploitations, having as a collateral effect the bankruptcy of countless US shale oil companies.

The increase in world energy demand combined with the boycott imposed on Russian crude oil and the lack of resolution of the Iranian dispute have caused a daily deficit of 1.6 million barrels per day in 2022 according to the IEA and a dangerous "supply anxiety". ” to increase the inventories of the countries that has led to a rise in the price of crude oil to $130 a barrel and runaway inflation rates in the US, China and the EU that will have the collateral effect of increases in the price of money by the Central Banks and the economic suffocation of countless countries with a stratospheric Public Debt.

In the European context, in an attempt to satisfy a minimalist energy demand, dependent Russian countries such as the Baltic States, Germany, Poland and Romania will proceed to reactivate dormant coal-fired power plants while others such as Belgium, Spain, Bulgaria, Hungary and Slovakia will opt for the extension of the useful life of nuclear power plants suffering from a serious functional menopause after almost 40 years of useful life, with the added risk of a runaway increase in CO2 emissions and the possibility of re-editing a new Chernobyl.