Europe’s green push set back by war in Ukraine

Europe’s efforts to shield itself from any Russian energy supply shock mean its green push will face a setback, at least for now.

The invasion of Ukraine is forcing Europe to tap all energy resources to help protect against potential gas stoppages from Russia, its biggest supplier, and cut its dependence on the country. Some of the region’s top economies plan to increase gas-import capacities, build new LNG terminals, stockpile more coal and reopen power plants that burn the dirtiest fossil fuel.

That will inevitably lead to more emissions in the short term, just as countries are targeting long-term cuts to pollution.

Europe gets about 40% of its gas from Russia and Ukraine is a transit route for some of it. Worries are mounting that supplies could be halted in retaliation for sanctions at a time of record prices. The problem is that it would take years to build enough renewable capacity to fill the gap. That’s making the task of balancing energy security with tackling global warming more difficult.

“For Germany, or any other country, it will be difficult to admit it is stepping back on its environmental pledges,” said Dirk Uwer, a partner at Hengeler Mueller, a law firm specializing in energy. “It’s an unprecedented situation, which makes it very hard for the government to reconcile its environmental policies with the imminent risk of an energy supply shortage.”

Under EU law, nations have the right to decide what energy sources they want to rely on. While the bloc has adopted a stricter binding emissions-reduction target for 2030, a set of laws to implement it hasn’t been agreed to yet. There have been split views: Some countries were pushing for a faster deal on climate and energy reforms, while others say the green shift should slow.

Poland — which relies on coal for most of its power and had already planned to expand LNG capacity — said proposals to toughen EU climate policies should be revised in the wake of the energy crisis and war in Ukraine. It also called for the bloc’s carbon market to be suspended.

“The risk is always that in the midst of a price crisis — and we should remember that the current EU energy-price crisis is overwhelmingly about gas prices — there’s always a temptation to take short-term measures that contradict the strategic goals,” said Mark Lewis, Andurand Capital Management’s head of climate research.

Efforts to tap more gas in the short term risks further increasing dependence on the fuel, including from “other conflict-ridden and undemocratic parts of the world,” environmental group Deutsche Umwelthilfe said.

Moscow has given no indication it intends to cut off gas, and flows have even increased since the invasion and global measures to isolate Russia’s economy. Companies have been snapping up the supplies to secure volumes, even as energy majors start to distance themselves from the nation.

Some EU states want a faster implementation of a massive energy and climate package to aid a target to cut emissions 55% by 2030 from 1990 levels. Ireland and Denmark are among nations urging stronger actions, while Germany is bringing forward a goal to generate almost all its power from renewables by 15 years to 2035.

“The … measures need to be implemented as soon as possible,” the European Commission said in a draft strategy seen by Bloomberg. That will lead to more affordable energy services and make Europe less vulnerable to fluctuations in fossil-fuel prices, it said.

Andurand’s Lewis agrees.

“The way for Europe to have energy independence is to decarbonize its energy system as quickly as possible,” he said.