There is a perfectly respectable argument to be made that the world should be reducing its greenhouse-gas emissions. There’s also a perfectly respectable argument to be made that the West’s current “race to net zero” is not only reckless, but, given the attitude of major GHG emitters such as China, Russia, and India, largely pointless. The idea that the West is going to inspire these countries to change their ways with the force of its moral example is laughable, an embarrassing display of both naivete and self-importance.
It is also the case that by participating in this “race,” the West is putting itself at a substantial geopolitical disadvantage, both by weakening its own economies and by putting itself in a position where it has to rely on unfriendly or unreliable countries for its energy, something, of course, that is particularly true of those EU countries which have become dangerously dependent on Russian oil and, even more so, natural gas. That’s not a problem that is going to be fixed overnight, and it is also a problem that, in the wake of the Russian war on Ukraine, has become very pressing indeed.
As I noted in the latest Capital Letter:
The oil price has now soared, but thanks to ESG, and ideologically driven notions of corporate social responsibility, there’s a clear danger (reinforced by the political and regulatory climate and perceptions of how it will develop) that the cash will not be there to support the additional production that the West is likely to need for some years to come, particularly if much of Europe is to end its dependence on Putin, or avoid being plunged into crisis if Russia’s dictator turns off the taps.
Renewables alone will not be enough to fill the gap. It would take too long to build enough new capacity, and “enough” will never be enough until there’s an effective answer to the problem of intermittency: The sun doesn’t always shine, and the wind doesn’t always blow. Nuclear power could make a major contribution, but scaling it up or, in some cases, starting or restarting it from scratch will take years.
There are a few signs here and there that the implications of a crunch that was always in the cards are beginning to sink in, even among the West’s more recklessly green governments, such as Britain’s. The Tories are now planning to allow drilling for oil and gas in the North Sea to “the maximum extent.” The U.K., Prime Minister Boris Johnson has said, must “abandon [its] phobia of [its] own hydrocarbons,” words of advice that the Biden administration would do well to follow.
Volodymyr Zelensky has called on energy producing countries to step up their output in order to prevent Russia from using its oil and gas to “blackmail” European nations.
His appeal came a day after EU leaders pledged to buy natural gas jointly and Germany unveiled targets to rapidly cut its dependence on Russian energy.
Speaking to a conference attended by many Gulf officials in Doha, Qatar, by video link, the Ukrainian president called on “responsible states, in particular Qatar” as “reliable and reputable suppliers of energy resources that can contribute to stabilise the situation in Europe”.
“They can do much more to restore justice. Europe’s future depends on your efforts,” he said. “I urge you to increase energy production so that Russia understands that no state can use energy as a weapon and to blackmail the world.”
Speaking at the same conference Saad al-Kaabi, Qatar’s energy minister and chief executive of QatarEnergy, said: “We are clear about trying to support the Europeans and the Americans. We have said the volumes that are divertible away from Europe, even if we can get a higher price for it, we will not divert them.”
However he has previously said that no other country could replace the total volume produced by Russia. Qatar, the world’s largest exporter of liquefied natural gas (LNG), estimates that it could only divert about 10-15 per cent of its volumes to Europe. The Gulf nation sells most of its LNG to Asian clients who are locked into long-term fixed contracts.
The US said on Friday that it would aim to deliver at least 15bn cubic metres (bcm) of additional LNG to the EU this year along with other producers, as western allies step up efforts to reshape global energy markets and punish Moscow.
These are steps in the right direction, but by themselves they are not going to be enough to build Europe a bridge away from dependence on Putin’s oil and gas. To achieve that, the U.S. and, yes, Europe need to increase new production. And for that to take place the growing legal, regulatory, and ESG-related onslaught on the oil and gas sector has to be halted.
If it’s not, the main beneficiary won’t be the climate, but Putin.