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IEA warns that Europe’s energy war with Russia is not over

by SuperiorInvest

The head of the International Energy Agency has warned that Europe has yet to win the energy war with Russia despite a big drop in gas prices and urged governments to remain focused on maintaining and boosting supplies.

Fatih Birol said that while the EU has largely avoided full-fledged energy crisis after Russia’s weaponization of gas supplies, which once sparked fears of widespread shortages and outages, next winter could prove more of a challenge if the continent experiences colder weather.

“Russia played the energy card and did not win.” . . but it would be too strong to say that Europe has already won the energy battle,” Birol told the Financial Times.

“I think Europe he did a good job [its strategy has] she was a great success. But being overconfident about next winter is risky and it’s time to go ahead and step up efforts for 2023.”

European natural gas prices they fell a full 85 percent from August’s peak of over €300 per megawatt-hour as efforts to acquire alternative sources, preserve existing supplies and warmer weather have kept plenty of gas in storage as winter nears its end.

It led some industrial data to declare that Moscow has already lost the energy war it launched to try to weaken Western support for Ukraine as February 24 approaches the first anniversary of Russia’s full-scale invasion.

Birol said that while Europe has “moved mountains” to ensure it can replace Russian energy, and it has reduce Moscow’s income with retaliatory oil sanctions, it could not afford to lose focus on preserving or developing renewable energy sources.

European Commission President Ursula von der Leyen, left, and Fatih Birol, Executive Director of the International Energy Agency © Olivier Hoslet/EPA-EFE/Shutterstock

“Some of the successes achieved in clean energy and reducing Russian revenues are good, but they are not a permanent solution. The mild weather helped us. We have gained some time, which is vital, but we need to do a lot more.”

Birol warned that Russia could cut the remaining 20 percent of pre-war gas supplies it still sends to Europe via pipelines through Ukraine and Turkey, while competition for seaborne liquefied natural gas supplies is likely to increase as China’s economy continues to reopen.

This would make it difficult to replenish Europe’s storage facilities in the summer months and test the continent’s ability to avoid shortages if next winter turns out to be particularly cold.

He warned in November that a cold winter could leave Europe struggling to replenish its gas storage even to 65 percent of capacity by October 2023. But as of Monday, gas stock levels in Europe were already at 64 percent of capacity, far more than usually. for the season.

Despite some European countries increasing their use of highly polluting coal for power generation – to save gas for heating and industry – EU emissions are set to fall by 2.5 percent in 2022 due to lower gas consumption and a warm start to winter, the IEA chief said.

Birol is pushing for a longer-term transformation that not only adds renewables, but also ensures that a greater proportion of wind turbines or batteries are produced in Europe. He met European Commission President Ursula von der Leyen twice in the past week and argued that the EU must ensure it is never again too dependent on any one country for energy supplies – or supply chains.

“We are entering a new industrial age of manufacturing clean energy technologies,” he said. “Two powers.” [in clean energy manufacturing] are China and the US – relying on one single country is always a bad idea. So if we want diversification, Europe is a good candidate.”

European gas prices were still two to three times higher than before the Russian supply cuts, leaving European industry at a disadvantage. “The European economy is still on its feet – it hasn’t had a major economic recession, although it’s definitely taken a big hit,” Birol said.

“But prices are still seven times higher than in the US; electricity prices are three times higher than in China,” he added. “A permanent solution to energy security should be based on clean energy.”

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