The Russian war in Ukraine and the Green Deal

DISCLAIMER: All opinions in this column reflect the views of the author(s), not of EURACTIV Media network.

File photo. A flag of the Russian multinational energy corporation Gazprom waves outside of Moscow office building of the company in Moscow, Russia, 3 January 2021. The energy sector sanctions remain the most difficult because Russia could restrict gas supplies to Europe. [EPA-EFE/MAXIM SHIPENKOV]

In light of the change of paradigm brought by the Russian war in Ukraine, there is no reason to halt or denounce the Green Deal, but it makes a lot of sense to significantly amend it, writes Radan Kanev.

Radan Kanev is an MEP from the Democratic Bulgaria coalition, affiliated to the European People’s Party (EPP).  

The EU should reconsider and adapt the Green Deal, and especially the Fit For 55 package, to the new geopolitical reality. And this is not about short-term urgency measures, as most climate activists see it, nor a temporary or permanent halt to climate policy, as sceptics aspire.

What we need is a long-term, strategic rethink of existing and future EU policies, because the crisis we face is going to last long, and will have strategic, and most probably permanent consequences.

A long period of instability

We don’t know yet whether Putin will besiege or seize Kiyv, try to divide Ukraine or even attempt a total occupation. In any of these scenarios, a long and bloody conflict will follow.

Any resulting status quo will be internationally illegitimate, requiring harsher Western sanctions on the Russian economy. Even in the case of regime change in Moscow, stability in Russia and Eastern Europe is far from sight.

A Kremlin coup will, on the contrary, produce further instability in Russia and most probably result, at least for a period, in an aggressive military dictatorship. Most probably, the EU will have to impose sanctions on Russian oil and gas imports in the near future. Less likely, but still not impossible, is for the Kremlin to cut supply.

Only one thing is for certain – energy supply will be insecure, oil and gas prices volatile on the high side at best, and energy dependency from Russia will be a bigger risk than ever before.

The priority: energy independence

The EU’s top priority should be energy independence and security of energy supply, on the lowest prices possible (although energy prices and energy poverty will be on the rise at least as medium-term tendency). All possible sources of energy shall be explored and developed:

  • Coal shouldn’t be a dirty word anymore. In fact, every reasonable policymaker knew, that coal will always be an option in times of war. It’s only that we, wishful thinkers as we are, didn’t expect such times to come in any foreseeable future.
  • Nuclear debate is, for the time being, over. And it is not that we will like it more or fear it less – it is that we fear Putin’s nuclear bombs more than our nuclear reactors, and with good reason.
  • A rapid increase of Europe’s own gas and petrol output is on the table. Bearing in mind that the biggest producers – UK and Norway – are not member states, the EU doesn’t have much of a say. Still, it is important to remember that Dutch, British, or Romanian gas won’t be cheap. In fact, a good reason to decrease own production in Europe and start relying more on Gazprom was not only climate policy. It is simply very expensive to extract fossil fuels in Europe – labour and social cost, environmental considerations, compensation for local communities. Extraction industries are expensive and dirty job, and hardly thriving in democracies.
  • Same goes for shale gas. Shale gas extraction might sound as a viable solution to the Kremlin dependency, but it seems that many local communities would rather prefer to host Kadirov’s Chechen squads over winter, than allow fracking in their backyard.

No perfect solution

None of the solutions above is either clean, cheap or beneficial for local communities or for the strategic prospects of Europe’s economy. They should be considered temporary (but not short-term) sacrifices rather than silver bullets.

Most of them will hardly get enthusiastic support on the financial markets and will need significant public support. To ensure that, for a while, we need to reconsider the very definition of sustainability, getting somehow back to the original sense of the word on most European languages – an adjective meaning stable, secure and long-lasting rather than green.

When assessing gas project, the main criteria should be reducing gas dependency on Gazprom – if it replaces, diversifies a Russian source, it is obviously sustainable. But new gas projects, even with Azeri, Libyan or other imported gas must be considered a risk.

Keeping the best from the Green Deal…

Some aspects of the European Green Deal now look even more sustainable than before. These are above all energy efficiency, renewable energy and alternative mobility. Any investment in these priorities does mitigate climate change, improve the environment, reduce energy costs and energy dependencies.

Targets should be maintained or increased and investments promoted. Furthermore, any new technology concept must be supported, at least on R&D level, such as the Bulgarian patents for energy derived from oxidation of marine hydrogen sulfides and others.

… and dropping some elements

On the other hand, ETS expansion (both ETS-1 and the new ETS on buildings and transport) seems highly unsustainable, and not only in the short term:

  • In highly insecure times, the EU needs its steel and aluminum production capacities and generally – competitiveness and viability of heavy industry;
  • CBAM, which is an indispensable element of ETS expansion, seems quite a risk in relations with strategic partners around the world – from US and China, to Turkey and UK.

Increasing the prices of housing and transport in times of record inflation in living memory for half the population and full-blown energy crisis is utter political lunacy. The argument “ETS-2 will only enter into legal force in a few years” is far from serious.

First of all, we can’t make reliable forecasts, either for the war or post-war development. But more importantly – the market reacts instantly, and so does the public. Once adopted, ETS-2 will provoke a public outcry and market panic, as did the ill-advised promotion of the whole Ff55 package in July last year.

Above anything else – there is no logic in expanding the ETS. The whole ratio legis of the ETS is to increase the prices of carbon-intensive production and thus incentivise new technologies when such technologies exist.

Now, prices of fossil fuels and energy produced thereof are skyrocketing thanks to Putin’s aggression. We have the full motivation to get rid of any energy-intensive process or appliance. We only need a viable technology and money to buy it. Neither will be achieved by overcharging our already increased energy and housing bills.

Furthermore, inflation and high energy prices have already increased both our expenses and government incomes significantly, via VAT and excise duties, not to mention astronomic CO2 pricing.

No, we do not need, and the planet does not need, further ETS charges for business or households. On the contrary – this extraordinary situation we live in requires activation of the SMR in order to accommodate the carbon market and prevent further speculation.

Last not least – the Energy market connectivity is as important as is independent supply. No country in Europe has access to the full spectrum of alternatives on the energy market – LNG, own gas resources, coal, nuclear, alternative fuels.

And more importantly – we have different access in different periods to wind and solar energy, which provide for the most affordable and sustainable electric supply possible. Therefore, it is of utmost importance to revive the European Energy Union.

And most importantly – the market forces should lead the process and propose independent technological solutions at affordable prices, the role of the authorities being to incentivise new technologies and support initial investment.

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