Climate Denial Crock of the Week

These news items are not unrelated.

Radio Free Europe:

What You Need To Know: The decision last week by Germany — not only to allow other countries to send German-made Leopard 2 tanks to Ukraine but also to provide Kyiv with its own Leopards — is significant, not only for the Ukrainian war effort, but also for the credibility of organizations such as the European Union and NATO.

Atlantic Council:

Vladimir Putin expected to use gas exports this winter to blackmail Europe and weaken Western support for Ukraine. Instead, this tactic appears to have backfired disastrously and critically undermined Russia’s position on European energy markets.

In September 2022, I anticipated that Putin’s plan to cut gas supplies to Europe and leave consumers to freeze would fail. With the cold season now almost over, this prediction has so far turned out to be correct. Contrary to the Kremlin’s expectations, Western consumers not only stayed warm in their homes; many European companies have actually been turning to Ukraine to place surplus gas volumes in local storage facilities.

Admittedly, Europe has been lucky. Demand and supply have been balanced because consumption remained muted thanks to unseasonably mild temperatures and falling industrial demand. Meanwhile, there have been sufficient alternative deliveries of liquefied natural gas (LNG) from the global market amid a lack of competition from China, which has been struggling with the aftermath of the Covid pandemic.

Much was also due to the resilience of European markets, which responded promptly to Russia’s decision to cut gas supplies to a trickle in 2022, forcing gas prices to reach record levels. Far from breaking Europe’s resolve, Putin’s energy war against the EU has shocked the bloc into fast-tracking its energy transition, completing projects which had been long overdue or forgotten and seeking alternative supplies to plug the gaping Russian shortfall.

With Russia’s share of European imports plummeting from 40% to less than 10% towards the end of 2022, European companies turned to global LNG markets, sourcing 96.3 million tons in 2022, up from 56.3 million tons the year before. Thanks to a raft of policies mandating storage targets, most underground facilities reached 90% fullness or higher by the start of the heating season on October 1, overshooting the target by ten percentage points. This means that as winter comes to an end, storage facilities remain at some of their highest levels and gas prices have fallen to a 16-month low.

There are still lingering risks. An unexpected cold snap later in February or the early weeks of spring, a steep recovery in Chinese demand, or the possibility of a major escalation in Ukraine could spook markets and lead to more volatility or price spikes. Despite these potential threats, European energy markets are now clearly better prepared to absorb potential shocks.

Europe has been working to expand its LNG importing capacity, which is set to increase by no less than 20% this year. Undoubtedly, much will also depend on the availability of LNG supplies globally. However, the fact that Germany managed to commission three LNG terminals within less than a year to replace lost Russian pipeline imports points to the extraordinary ability of European markets to respond in the face of formidable challenges.

Projects that have been long delayed or forgotten have not only been resurrected but also promptly completed. For example, after many years of hesitation, Bulgaria managed to bring an interconnector with Greece into commercial operation that allows the Bulgarians to tap alternative Caspian gas and LNG. Meanwhile, Germany and France established bidirectional gas flows, which will allow not only Germany to export gas to France, but also to import from this direction. Even Romania, which had long been averse to exporting domestically produced gas, has seen some volumes shipped physically to neighbouring Bulgaria.

Putin’s energy war against Europe has served as a catalyst for renewable projects. With the permitting process fast-tracked across the EU, installations of solar panels and heat pumps had one of their best years to date. Solar capacity shot up by 41.4GW or 25% year-on-year to 208.9GW in 2022 and is set to grow even faster in 2023.

Andre Gurkov in DeutscheWelle:

It would be premature to talk about Russian military defeat in Ukraine. But Vladimir Putin has lost the gas war against Germany — that much can already be said for certain. Germany has the largest natural gas storage capacities in the whole of the EU. And if these are still more than 90% full in mid-January, at the height of the heating season, it means the loss of Russian gas supplies no longer constitutes a threat.

When Russia invaded Ukraine almost 11 months ago, Germany was importing more than half its natural gas from Russia. Blackmailing Germany was therefore the centerpiece of the economic pressure Moscow piled on the European Union, aiming to undermine European support for the Ukrainian people and their army.

The plan has failed. Germans are not freezing in their homes; they have not been forced to shut down their factories. Politicians in Berlin are no longer afraid that Moscow could take revenge on Germany and bring the country to a standstill. No — Germany itself renounced coal and crude oil from Russia as part of the EU sanctions, and since the end of August it has not received any natural gas from Gazprom, either.

In other words, Germans have been living without gas from the supposedly indispensable Russian pipeline for five months now — and Europe’s largest economy appears to be coping well. Yes, a recession is still anticipated; that would not be surprising, given the collapse of decades-old supply chains and the explosion of energy prices. But indicators increasingly show that the downturn will probably be fairly mild. Even the record inflation is slowing.

Meanwhile, Berlin is expanding its military support for Kyiv, which can be seen as further, indirect evidence of the failure of Putin’s “gas special operation.” In early January — when Germany was storing gas for the third week in a row, most uncharacteristically for the time of year — the German government changed its position and was finally persuaded to deliver armored personnel carriers to Ukraine. Heavy battle tanks may follow; discussions are already underway.

In further evidence that Putin has lost the gas war, the German economy and population have been given an unequivocal all-clear by two sources at the same time: the state regulatory authority, and an industry association.

First, the Federal Network Agency officially announced that “a gas shortage this winter is becoming increasingly unlikely.” In a newspaper interview, the head of the agency, Klaus Müller, added that he now expects gas prices to stop fluctuating and stabilize around the current level. This is still considerably higher than before, but far lower than the record levels seen in the summer. At these prices, the energy-intensive sectors of German industry “could finally work on gaining ground again,” Müller said.

Shortly afterward, INES, the Association of German Gas and Hydrogen Storage Operators, presented scenarios for 2023 at its monthly press conference. Assuming normal weather and temperatures, the fill level at the end of this winter would be 65%, he said. That would be an extremely comfortable starting point for gas storage during the summer months, and for ensuring fill levels of 100% as early as September.

In other words, industry experts are assuring German businesses and households that they need not expect any problems with gas reserves either this winter or next — provided “the current heavy reductions in consumption are maintained.”