As a region with relatively scarce fossil energy reserves in the world, European countries rely on Russia in all aspects of energy. Whether it is oil, natural gas or coal, Russia is the largest energy importer in Europe.
In 2020, Europe's total imported crude oil is 470 million tons, of which the largest source country is Russia, accounting for 29% of imports, Central Asian countries account for 14%, West African countries account for 14%, the United States accounts for 12%, and other sources are the Middle East and the Middle East. North African country. Among European pipeline natural gas imports, Russia accounted for the largest share with 37.5%, Norway 23.9%, and the Netherlands 6.3%. Among LNG imports, Russia accounted for 29%, other CIS countries 13.9%, West Africa 13.7%, the United States 12.2%, and the rest from the Middle East or Africa. In 2020, the main source of European coal imports is Russia, accounting for 50.2%, Colombia 17.1%, the United States 15.5%, and Australia 8.4%.
The conflict between Russia and Ukraine and the sanctions against Russia will reshape the trade pattern of the international oil and gas market, and will have a comprehensive impact on the EU's oil and gas supply, power security and key resource supply chain, aggravate European financial volatility and waterway logistics risks, and the risks will continue to ferment. The ECB estimates that the energy price shock will reduce EU GDP growth by around 0.5 percentage points in 2022, and that persistently high energy prices will exacerbate poverty, weaken business competitiveness and bring the European economy forward into recession. Faced with the impact of Russia's energy exports, the EU is trying to deal with it.
First, Europe is shifting its strategy to deal with the risks posed by continued turmoil in its energy security structure.
In the 2021 WEC Energy Trilemma Index, which evaluates the energy policies of various countries, France and Germany ranked 5th and 7th in the comprehensive index, but ranked 10th and 17th in terms of energy security. With the gradual escalation of sanctions imposed by the West on Russia, oil and gas prices will diverge in the future and further aggravate EU energy security.
The EU is promoting the following changes: First, to shift the focus of global oil production and refining to the Middle East and North America, reducing dependence on oil and gas in Russia and Central Asia; second, to significantly increase polar oil and gas development. The EU supports Norway in vigorously exploiting Arctic oil and gas resources. The Norwegian government has issued 12 new oil and gas exploration licenses in the Barents Sea. Currently, Statoil is focusing on the development of the Wisting oil and gas field in the Barents Sea, which is located 310 meters away from the Norwegian mainland. The third is that the EU, Canada and the United States accelerate the integration of oil and gas supply and demand. Judging from the gradual disappearance of the oil price difference between Brent and West Texas, the market’s expectations for the United States to export European crude oil have increased, and the trend of energy integration between the United States and Europe has accelerated; fourth, The transfer of financial capital from the United States and the West to new production centers (Australia, Qatar, and Africa) has intensified competition between China and Europe for third-party energy development.
Second, the EU will accelerate the implementation of the policy of de-Russification of energy supply.
The European Union plans to suspend the integration of natural gas supply and demand in Europe and Russia, reduce and gradually suspend seaborne LNG, and gradually reduce the level of pipeline oil and gas transportation; Oil and gas companies have imposed restrictions such as fines, but will not disrupt supply for now. The EU is also strengthening the power grid integration construction in Ukraine. On the one hand, it plans to restart the trans-Mediterranean submarine power grid to import electricity from North Africa, and on the other hand, it will build the digital management of the EU regional power grid and promote the power grid integration with Ukraine and other regions. For Ukraine, Moldova and Georgia, the EU stands ready to provide support to ensure reliable and sustainable energy if necessary. The European Union has built an emergency synchronization system for continental European power grids in Ukraine.
Third, the EU promotes energy diversification policies.
The European Commission has proposed a "REPowerEU scheme" that works on affordable, safe and sustainable energy supply, increasing LNG imports and pipeline imports from non-Russian suppliers. On the one hand, the EU will push to gradually get rid of its dependence on Russian fossil fuels by 2030, and plans to reduce the concentration of imports from Russia by about 30% by the end of 2022. And support the diversification of LNG and pipeline sources to replace Russia, including the annual import of more than 50 billion cubic meters of liquefied natural gas (from Qatar, the United States, Egypt, West Africa, etc.), and import through pipelines from Azerbaijan, Algeria, Norway and other places , to replace 10 billion cubic meters of Gazprom imports per year.
On the other hand, the EU will promote coordination among major consuming countries to improve the bargaining power of buyers while diversifying supply. The European Commission will continue to discuss medium-term market developments within the G7 and with major global gas buyers (Japan, South Korea, China, India, etc.).
Fourth, the EU accelerates the transition to clean energy.
As the Ukrainian crisis continues to ferment, high oil prices and sanctions against Russia have stimulated global capital to flow into clean energy, clean transportation, nuclear power and biofuel power for decarbonization investments, and the global energy transition has accelerated significantly. The EU's enhanced energy-saving and energy-efficiency revolution will significantly reduce dependence on fossil fuels, and the Ukraine crisis will accelerate the EU's clean energy transition, increasing energy efficiency, increasing the share of renewable energy and addressing infrastructure bottlenecks.
France and Italy are preparing to restart nuclear power successively. Germany plans to achieve energy independence and diversification based on renewable energy several years ahead of schedule. In February, the German climate department proposed a new draft legislation to achieve 100% renewable energy power generation. The target is 15 years ahead of schedule to 2035, of which the newly installed photovoltaic capacity will gradually increase from 7GW in 2022 to 20GW in 2028, and then maintain this level until 2035, an increase of 64.8% compared to the previous expectation. The European Commission's RePower EU programme aims to address the dual energy security and price challenges Europe is currently facing. Meanwhile, Europe's solar capacity is expected to reach 1TW by 2030, according to the CEO of the European Photovoltaic Association.
Fifth, the EU accelerates the construction of a hydrogen energy supply cooperation system and plans to become a global leader in clean hydrogen energy.
The EU is intensifying the construction of the energy level of the hydrogen energy economy, promoting the formation of a support policy for the entire hydrogen energy industry chain, promoting the EU Hydrogen Strategy and the Energy Systems Integration Strategy, and establishing a clean hydrogen Clean Hydrogen Alliance. The EU plans to quadruple the current 2030 green hydrogen supply target, adding 15 million tons of blue hydrogen to 5.6 million tons of green hydrogen production, and to replace about 20% of Russia’s imported natural gas.
The European Commission will further develop a regulatory framework to facilitate the development of the European hydrogen market and support the development of integrated gas and hydrogen infrastructure, hydrogen storage facilities and port infrastructure, driving new cross-border infrastructure compatible with hydrogen. Specifically for process carbon emissions in industries such as ammonia synthesis, methanol, iron ore reduction, petrochemicals for the production of plastics and fuels, and plastics recycling. The European Union released the No-regret Hydrogen strategy, which is based on the design of the backbone of the hydrogen pipeline based on the natural gas pipeline network, covering factories in Belgium, the Netherlands, Germany, Eastern Europe and the Mediterranean coast. Combined with the distribution characteristics of wind energy in northern Europe, photovoltaics in southern Europe, and wind-solar hybrid energy resources in the Middle East and North Africa, the EU will deploy distributed outlets on the basis of no-regret hydrogen energy, and gradually transition from blue hydrogen to green hydrogen.
Under the conflict between Russia and Ukraine, the violent fluctuations in the international energy market have brought pressure to the energy transition of Europe and China. The financial capital of the United States and the West has triggered the turmoil in the global capital market with the help of geopolitical events. drop" competitive high ground. Against the background of the Russian-Ukrainian conflict and the global climate crisis, the EU's clean energy transformation has further accelerated, which to a certain extent has strengthened the competitiveness of new energy products. At the same time, it is also necessary to see that China-EU green cooperation has broad prospects. With the crisis in Ukraine brewing, the EU has significantly advanced decarbonization investments in clean energy, clean transportation, nuclear power and biofuel power, and Europe's energy transition process may make a breakthrough before 2030.
