Bleak winter ahead: Who’s to blame for Europe’s energy crisis? | To The Point

as industrial economies emerge from the pandemic demand for energy is soaring and with it energy prices that's angering vulnerable consumers and worrying governments fossil fuels power costs are exploding driven by record high demand here in europe natural gas is six times more expensive than at the start of the year energy markets and firms are ratcheting up prices and at least in the case of russian monopolist gazprom resisting calls to expand supply as countries consume larger amounts of alternative fuels like coal co2 emissions are also rising exacerbating the climate crisis our topic bleak winter ahead who's to blame for europe's energy crisis [Music] [Music] hello and a very warm welcome to to the point it's a pleasure to welcome our guests malta koitzfeld is economy editor with the berlin daily newspaper the tats and his opinion is to reach our climate goals fossil fuels will have to become even more expensive we must switch to renewables the sooner the better and it's also great to have with us christoph berger he works with the berlin based european school of management and technology esmt and he says russia's gazprom is a global firm that is simply trying to maximize profits it's the job of european policy makers to ensure sufficient competition on energy markets and joining us from paris is thierry bros he is a energy expert and professor at seance poe university and he believes it doesn't make sense to switch from nuclear to renewable energy as germany does because it entails higher co2 emissions so let me get everybody's take on how bad the current crisis is and malta europe of course is not alone in this crisis some experts are predicting the crisis could come to rival the shortages that were experienced in the 1970s with the opec oil embargoes do you think that's right i wouldn't think so actually i think the problem might be exaggerated a little bit in some of the media reports if you compare the prices for this year you see a steep increase in oil and gas prices that's true but if you look on a longer scale if you look at the last 10 or 15 years then you see that we are coming back to the level now that we have had um between 2010 and 2016 already so you could also say we have had very low energy prices in the last four years and compared to that it's now high but this expectation that energy should always stay cheaper than it was in 2012 is not really very realistic in my opinion of course this sharp increase now is a problem for consumers who have problems paying paying their bills if they have low income but in general i feel we should like put the things into perspective and if you look at a longer perspective it's not as bad and it's also compared to last year the sleep increase where we had the corona crisis and econo economic things were down now everything's picking up even i want to come back to the causes in just a moment but if i can just briefly pick up on your opening statement you said that we must switch to renewables and for that we need to let energy prices rise but the fact is many countries are making that switch are transitioning out of fossil fuels so it seems counterintuitive that just at this moment prices go up well um primarily if trans is is is going down you would see prices decline yeah but demand isn't going down that much yet so at the moment we see a rising demand worldwide and a limited sort of delivery so we have at the moment higher demand than what is delivered in in terms of gas especially to europe so that's natural that you see rising prices then but in general over the time the um it will go down but prices will still be high because i mean we have the emissions trading systems here we have the co2 price which makes it more expensive and also maybe um the um gas prompt will also try if it's clear that the that it's a limited time where they can earn money with that to get as much out of it as possible coming right back to that but let me go over to paris to try and if you would just unpack the causes for us please to what extent is the current crisis the rise in prices attributable to extraordinary factors like extreme weather supply chain disruptions brought on by the pandemic and to what extent is it simply bad policy i think it's mostly bad policy i think what we are missing in the energy transitions are two things it's the energy storage and it's the education of the population and as long as we haven't done this we can put as much renewable as we want if we don't have storage then there will be intermittency and then we will need to use gas and cool to burn and to make this electricity that otherwise isn't coming so i would say it's mostly bad policy or at least it's having a policy that we want it to be too fast gustav many fingers are pointing at vladimir putin as was mentioned by malta and we will delve into that shortly but putin himself says europe's crisis is self-inflicted that essentially european policy makers bad made bad choices would you agree uh partly yes partly no let me say no because i think the the increase of gas prices to a certain extent is simply driven by the current situation yeah we had the corona crisis then you have to ramp up basically the storage facilities aren't filled as in past years and that was very difficult for any company to predict right i mean what kind of volumes do you expect so that's one part the other part yes bad policy to some extent i agree to that because if we look from a european perspective we need to diversify our supply structure and as jerry just mentioned we also need to think about storage capabilities but storage capabilities might be seasonal capability so a little bit more large scale but of course we will see a lot of innovation coming in decentral storage capabilities like batteries and that we need to keep into account so we face an energy future which is highly uncertain so we are phasing out large scale and we are getting more and more decentralized sources and at the same time basically we switch from fossil to renewables and we have to live with that uncertainty so in other words we need more back-up uh sources of supply than the eu has been has been planning for the eu apparently decided that it could rely on liquefied natural gas imports on spot energy markets short-term energy markets is that where the failure lies i think it's not only lng terminals it's a little bit and that is what i try to say with the mid or long term uh perspective of the energy transition even if you build now these large infrastructure projects they take i don't know 10 years 15 years and in 10 15 years time we will see a completely different energy landscape you think about e-vehicles you think about decentral storages you think about that you produce and consume your own electricity and then when you now establish these large infrastructure projects they might look very nice but the question is will they be able to recoup their their investment once they're alive in 10 or 15 years and this is really very difficult and is highly uncertain i advocates speaking of big investments let's drill a bit deeper on the german russian natural gas pipeline nordstream 2. it has long been a bone of contention germany insisted on finalizing this very very expensive project despite pressure from other eu members and the u.s which argued that the project would deliver germany's energy security into vladimir putin's hands are the critics being proven right following years of construction and billions in investments the north stream 2 gas pipeline is now finished it directly connects russia's natural gas storage facilities with germany via the baltic sea germany buys more than half of its natural gas supplies from the kremlin affiliate gazprom critics say the new pipeline will increase dependency on russia german chancellor angela merkel has always supported the project the russian president vladimir putin has distanced himself from the accusation he is using natural gas as political leverage she hasn't accused us of anything because we both assume that the pipeline is an economic project the u.s has a different view it temporarily imposed sanctions on companies that participated in the pipeline's construction partly as punishment for interfering in american elections poland as well as the baltic nations also fear that europe is becoming increasingly politically dependent on russia the energy business is it really just an economic project let me put that question straight away to tierrate certainly the gas shortage is now being used by the kremlin to tout the need for nordstream too does the crisis offer definitive proof that in fact this pipeline always was a political project i i think any any energy project is a political and an economical project i would disagree with what i said earlier i mean i don't think we need more infrastructure we in this case need more supply and in in the case of this crisis the infrastructure is there we have the ukrainian transit and maybe there is some extra supply available in gas from hands and they are not using it because they are not interested in using it but i don't think this will solve the the crisis and i don't think it can even solve the crisis in terms of timeline the other thing i'd like to add is the fact that um we there is this dependency and we call it interdependency or dependency but i think what we have to keep in mind is with today's record high prices what we are doing in europe and as you said it can be bad policy or it can be weather or whatever we are pushing 10 billion dollars per month to uh the russian state extra so i think those are the kind of elements you have to think so it's not only for political it's economical it's geopolitical is there clear evidence of market manipulation on the part of russia and gazprom clear evidence i can't say because i don't have like primary access to that but uh what and everybody says they are fulfilling their obligations what was agreed before they are doing that but at the moment there's higher demand than that was agreed on before and apparently they don't fulfill those because they say if you want more then let the new pipeline go into operation first so we will only give you more gas if you if you start not stream two which they don't say that clearly but the message seems to be quite clear there is more capacity in the pipelines that come through the ukraine or the southern one the yamaha pipeline there would be capacity so it's not a problem that there isn't enough gas available it's not a problem that there isn't enough pipeline capacity they want this pipeline because they don't want to give share money with the ukrainians anymore for the transport and they don't want them to be have the strategical importance that they are needed for the transport so it's really not an economic thing it's a it's a it's a power thing concerning international relations so christoph your opening statement said that gazprom is simply looking to maximize profits like any other company does that really make nardstream a purely commercial project let's say gazprom wants to maximize profits but clearly the russian state also has an interest in this project i think i can't comment on any political background because they simply don't have enough information if i look from an economic perspective gasprom is an international company they try to optimize their profits there is europe as a market and there's asia as a market and europe wants to diversify asia has a huge demand for gas so therefore of course you try to balance those customer groups from a european perspective i think it's very important that we create a loving playing field of different technologies and the broader we set that up the more independent we are and the better is our negotiation position for any kind of situation that we are facing right now but isn't it indisputable that if nordstream 2 goes into operation as planned as a project between germany and russia that it ultimately increases both germany and ukraine's vulnerability to vladimir putin's whims well i would if we if we think about germany then we have an additional capacity for gas and that is within the energy transformation not a bad thing to have still keeping in mind that we need to diversify our supply structure and there are many different opportunities like renewables or storage solutions and so on so i think we need to keep that in mind and i would say that this is the key priority that we start thinking a little bit more mid or long term we have an energy transition in front of us we want to be net zero in 2050. so let's think a little bit about backward how will the energy landscape look like in 2015 you would assume that you can produce you can consume your own electricity do we need a lot of regulation i don't know so then basically the question is how can we ease up those markets and that there's a path that enables innovation we will see many different new business models and that we can help them and then we have a look at those people so that we do not lose them if prices are rising within that energy i want to come back to that last point in just a moment but let me let me go now uh to tre and the fact is uh thierry france has long opposed north stream too along with other eu members as well um it now seems to have allies in at least two of the political parties that are likely to be part of the next german governing coalition so what would paris want to see from a new german government when it comes to nordstrom 2 well uh perhaps i'd like to answer the first question you've uh said earlier i mean ukraine is going to be negatively affected that's for sure on the french system you're right i mean some in france we're against a bit again remember ng was it's part of of this of this pipe so i think what what the french situation perhaps now is more aligned with the european situation which is against this pipe because this will be negatively which will impact negatively ukraine so i think this is really what what what's now here and again we've seen the u.s extinction we've seen the us removing sanction we are going to see what the german government whatever the new german government will do vis-a-vis nordstrom 2 but for me i mean this pipe is not going to be up and running very soon anyway malta what would you expect to happen now with nordstream 2 should it be put on pause right at a moment in time when europe is desperately thirsty for natural gas well as i said i think the thirstiness for gas has nothing to do with a north stream too because there is other pipeline capacities available so you don't need north stream too we didn't have it before we never had problems at winter so there are enough pipelines but i still feel that um the expectation that the new government will stop it is not very realistic i feel there was a chance to stop it when the u.s imposed the sanctions that was a mechanism that actually would have been able to stop it if they would have sticked with that but um after biden gave in to mackel on that point i see now it's sort of a point of no return where you have these technol technological things where you sort of have to give this this regulation uh permissions so on but in the end i don't think that there's a real leverage to sort of stop it um in the end um gas prompt could even sell like the last bit of the pipeline that goes through european uh land uh to somebody else then they would be out of the whole regulative issue so i think at this point where it's really finished it's probably too late i would hope so i always was against this project and i agree with with the critics in france or in the u.s that it's a geo strategical mistake and also in economic failure will be eminent because it will never pay off because we won't need that much gas anymore if we want to become climate neutral so it's really a mistake to build this pi this pipeline but now this mistake has been made and i don't see it as a very realistic perspective that it's not going to go into operation let's talk a little bit about what other energy sources we might need and the fact is that renewable energy which germany has very much been banking on holds the promise of making energy systems both cleaner and more independent of unreliable fossil fuel producers yet even green pioneers are still a long way from 100 percent wind and solar does that make nuclear power the bridging technology of choice it will be a beautiful new world one in which wind and solar energy keep industrial nations going but the switch is not only expensive it brings financial burdens for companies and private households which is one reason for the current increase in energy costs while germany began dismantling its nuclear power plants after the reactor accident in fukushima japan other countries are continuing to rely on nuclear energy which has cheap running costs and a co2 free especially france we need to develop new breakthrough technologies to further develop nuclear power so-called small modular reactors are promising they are much safer and safety is a key issue in the debate on nuclear power after various incidents in older nuclear power plants in the u.s the biden administration also wants to build small modern plants russia and china too are depending on nuclear power do we need nuclear power to meet the world's energy needs and climate targets let me put that question straight away to christoph many people do in fact say nuclear is an absolutely crucial bridge to get to that green energy future are they right and is there any chance at all that germany would rethink the decision to phase out nuclear i think the question has to be answered by the citizens of that country and in germany we had social concerns that we exit nuclear energy and i think we would still get the majority on that one when we think about alternatives or nuclear power compared to alternatives so let me first say that basically if you build a nuclear power plant that takes quite a while so 10 15 years when then it's ready for operating the question will be how will the energy world look like in 10 and 15 years we will see a lot of innovation going on and i would like to stress that for me the disruptive factor is not a renewable part in the energy transition but it's the part where you can produce and consume electricity on your own so the decentralization part and there is no one size fit all because each region is different but for example in germany we have one one company one person who offers a house that is 100 electric autonomous and 70 thermal autonomous and you can rent that for 10 to 15 euros so you have in here the rent you have the heat the electricity and an electric car sharing and that would be a little bit a stretching idea right i mean it's still quite expensive okay in other words sorry i'm just going to cut you off because we don't have a lot of time left on the clock but what you're telling us is nuclear does not have a future in germany let is that right yes okay so let me go to tree because nuclear definitely does have a future in france and in fact in this year that marks the 10th anniversary of the fukushima natura nuclear power plant disaster we seem to be witnessing a renaissance of nuclear power in many places why is it that france the uk and other countries remain pro-nuclear when a country like germany is so risk-averse there are two things what christopher said is absolutely right it needs to be the citizens that decide and they've always been a higher social license for nuclear in france than in germany i mean radioactivity i think was discovered by marie curie in paris so i think that's the first point the second point but it's important because it leads to education second point is the fact that the intermittency of the renewable have has an impact it has an impact on the backup and we've seen here i mean it's because we didn't get enough wind that we had to use more gas and i think this is also why we need nuclear in this energy transition we did i think in nuclear we need storage and again i understand christoph saying we we have we are going to see loads of innovation but we can't bet everything just on innovation thank you very much and let me go uh to malty you may speak if you like to the nuclear point but i would also like to come back to the title of our show which is bleak winter ahead because the fact is given the current situation we are seeing rising energy prices likely to affect very vulnerable consumers in terms of heating for their houses in terms of people who depend on their cars to go to work do we need to bring energy prices down perhaps by foregoing taxes on fossil fuels that in fact you say in your opening statement need to go up in order to get us to switch to where we need to be on co2 uh neutral sources yeah um briefly on that i think it wouldn't be a good idea to tamper with the energy prices now um for everybody if you have a problem with poverty that people can't pay their electricity bills or their heating bills then you have to do something against poverty and not change the energy prices increase social security increase welfare payments and so on and also give support to people to sort of minimize their energy consumption help them invest in new um heating systems in insulating their houses in better appliances where you need less energy that's that's the solution not to keep using energy and just subsidizing it by the state but i also would like to say something to the nuclear thing because i really disagree on that one i think it's it's neither a bridge because nuclear power relies on running all the time and it's not really you can't turn it up and down technology it's wise it's a problem and also economically it's a problem they are meant to run almost all the time that's where all the calculations are based on and even with that it's not economical at all the nuclear power plants cost like the cost of the ones that are built now in france and flammonville and in in great britain the cost has increased six six times by now the building time has tripled and it's much more expensive than renewables even if you take into account that you need a backup for these renewables there's simply i think this whole debate is is not really based on on reality in a way and i don't also see this arena songs because in the next 20 years will you see the majority of the existing power plants and nuclear power plants being shut down and a very limited number being built and those won't pay off in the end unless you get huge subsidies from the state so i think that's a dead horse let me come again back to our title bleak winter ahead and ask you christoph to avoid bleak winters in the coming years you've told us a lot about the long-term perspective for energy but staying in the short term right now and the next couple of winters to come what do energy policy makers need to do top priorities i think they should let the markets work and not interfere and i think that this situation that we have right now is to a certain degree triggered by the current situation with the corona with ramping up and they should focus on the mid and long term to set the policies and incentives and what about those vulnerable citizens as he just said so basically if you think about poverty then do a poverty program thank you thank you very much to all of you for being with us thank you to thierry in paris and ladies and gentlemen thanks for joining us hope to see you soon [Music] [Music] [Music] you

Channel: DW News

Views: 180,454

Keywords: DW News, energy crisis, russia gas, gazprom, nord stream 2, russa energy, energy crunch, gas crisis, energy prices

Id: UeS0m1UTy2o

Length: 26min 4sec (1564 seconds)

Published: Thu Oct 21 2021