The dangerous energy dance between the EU and Russia

Russia relies heavily on the EU as an energy market. About 60 percent of its export revenues is from energy. Around 30 percent of its federal budget comes from energy. These percentages depend on lots of factors, but often average out around these numbers.
Russia’s biggest energy market by far is the EU. Roughly 75 percent of its natural gas exports got to the EU. About 45 percent of its oil exports head to the European bloc.
If the EU were to shut down the gas, oil, coal, and uranium coming from Russia today the Russian economy would be even in worse shape than it has been since the start of its war with Ukraine.
Russia has been trying to move its energy markets to Asia with new pipelines to China and liquefied natural gas and oil exports to China, Japan, and other Asian nations. But these markets are tiny in comparison to its market in the EU.
The Russian economy is about the size of Spain’s. However, It is less diversified than the Spanish economy. The gross domestic product per capita of Spain is close to three times that of the GDP per capita of Russia.
Germany’s gross domestic product is about three times that of Russia’s. Germany’s GDP per capita is close to five times that of Russia. Germany has a very strong industrial base. Russia has a limited industrial base. Germany is an exporting powerhouse of industrial and high-tech goods. Russia relies on energy for exports.
The EU economy is twelve times that of Russia. The EU GDP per capita is three times that of Russia’s. The EU is a powerful exporter and a hugely diversified economy with a strong industrial base.
However, the EU relies massively on Russia for its energy. If one were to look closely at the numbers, the amount of money the EU is sending to Russia for oil, gas, coal, and uranium could be seen as surely helping Russia’s military budget.
The EU gets about 45 percent of its imported coal, 30 percent of its imported oil, and 40 percent of its imported natural gas from Russia. The EU has been shutting down its coal mines and coal generating stations. It has severely limited fracking for oil and gas. The EU has been shutting down nuclear power plants. These last moves have added to its energy insecurity.
The EU has been investing heavily in solar and wind in some parts. This is an energy diversification that could benefit it in the future.
But replacing nuclear, coal, and gas generating plants with renewables takes time and renewables are not baseload fuel sources. An electricity system needs a baseload. Renewables are intermittent. With the further development of energy storage there are ways around this, but not in the short run. Nuclear power needs to be considered in its energy future if the bloc wants greater energy security.
The EU could focus more on geothermal energy and geothermal heat pumps. There is massive potential for both in the region. The EU plans to focus more on renewables, hydrogen, and other future energy resources. This will take time. And these are also good ideas.
One cannot change energy sources and systems overnight. Energy networks are systems within systems, connected with other systems and nested in other systems.
The EU cannot just turn a switch and see imported oil replace gas, as some have said. There is not enough excess oil capacity in the world to make this happen. There is also not enough port, pipeline, storage, tanker, and other space for this to happen anytime soon.
Others want the EU to cut off Russian natural gas. And replace it with what?
Russia exports around 178 billion cubic meters of natural gas to the EU a year. Most LNG carriers hold between 125,000 and 150,000 cubic meters. There are not enough LNG tankers in the world to replace the Russian gas sent to the EU without the EU drying up supplies to other important markets, such as Japan, China, and South Korea.
Gas and oil have very complex value and supply chains. Oil supply chains cannot readily be used for gas supply chains. LNG supply chains are almost completely different from oil supply chains.
Completely shifting the EU from imported Russian oil to oil imported from many other places would be a logistical and economic nightmare. This would pull a lot of oil away from many other places in the world that need it.
Oil and gas markets would be in turmoil if the EU completely shifted its sources and logistics quickly, which it cannot realistically do anyway.
The EU has a very aggressive program to move mostly away from oil and gas by 2050 to reach a net-zero emissions target. The viability of this quick shift is up to question when one considers the logistical, technical, and economic dislocations this could cause.
Turning around almost 200 years of energy use in 30 years is a stretch. The EU will see the differences between ideology and reality on this soon. I am all for battling climate change. However, reasonableness and logic need to prevail.
Would the EU’s move towards net zero help the EU cut the energy umbilical cord with Russia? Yes, but this will take decades. Those who are in a rush and think this can be done in a few years are just plain wrong.
So, for now, and in the immediate future, the EU and Russia will continue this dangerous energy dance that affects so many other aspects of their complex and stressful relations.
The US has been warning the EU about relying too much on Russian energy since John F. Kennedy was president in the early 1960s. They did not heed the warnings from the US and some of their own leaders over many decades. And here we are amid a brutal war, with energy playing a big part of it.

• Dr. Paul Sullivan is a senior research associate at KFCRIS and non-resident fellow, Global Energy Center, Atlantic Council.