The unity of EU member states could be in jeopardy as a dark winter fast approaches set to trigger a ‘continental scramble’ for energy resources. European countries would be in a “wild west scenario” in their attempt to pursue energy security which would result in souring relations with neighbors and cause worsening fuel and power shortages with risks of social unrest, warned Fatih Birol, the head of the International Energy Agency, who was quoted by the Financial Times.
Birol spoke Thursday in an interview at the inaugural Global Clean Energy Action Forum in Pittsburgh, Pennsylvania, when he explained the energy crisis threatens to shatter EU unity as countries could restrict or stop trading energy resources with neighbors to ensure their own energy security.
“The implications will be very bad for energy, very bad for the economy, but extremely bad politically … if Europe fails this test in energy, it can go beyond energy implications,” Birol said
The head of the Paris-based watchdog energy group was very straightforward about the two possible scenarios:
“EU and members will work in solidarity, supporting each other . . . or there is another scenario, if everybody is for himself.”
Meanwhile, earlier this month, the president of the European Commission, Ursula von der Leyen, was firm in her state of the union address that the unity of EU member states will prevail through this energy crisis.
But there has already been a breakdown in unity among some member states, as FT explains:
Norway’s Nordic neighbours last month blasted Oslo for “selfish” behaviour as it considered pausing electricity exports while it refilled its hydroelectric reservoirs.
Andreas Bjelland Eriksen, state secretary in Norway’s petroleum and energy ministry, denied it would halt exports, however, telling the Financial Times that the country was simply “prioritising filling reservoirs for the same reason as Europe is filling its gas (storage)”.
The EU has faced opposition from Hungary and some other member states as it deepened sanctions on Russia in response to its invasion of Ukraine.
Birol also said complacency in Europe is unwarranted at this moment with natural gas storage facilities filled because a colder-than-expected winter can quickly draw down on supplies, resulting in “bruises” for the continent in the coming months.
There was no indication the energy crisis would abate next year, he said, given lack of spare capacity in energy production worldwide would drive market tightness, adding competition for liquefied natural gas would increase with Chinese demand.
“When we look around there are not many new gas [projects] coming . . . And the Norway, Algeria, Azerbaijan pipelines are near their maximum capacity. It will be another challenging period,” he said.
Birol was adamant about Russia losing its top client [Europe] “forever … this client paid the money on time and didn’t create any political problems.”
He dismissed any claims Russia could quickly replace lost European demand with exports to Asia:
“You are not selling onions in the market. You have to build pipelines, infrastructure, logistics. This will take at least 10 years,” he said.
Birol said precisely what we noted earlier Friday about Russian energy exports set to shrink by the end of the year and well into next year. This may indicate energy prices are set for a rebound this winter.
On the social aspect, if one EU member country restricts power or fuel to another and triggers blackouts or rationing to protect its own security, this would certainly create social instability across the bloc.
Europe is on the list of impending social unrest areas in the “next six months” by Verisk Maplecroft, a UK-based risk consulting and intelligence firm.
It seems dark times are ahead for the bloc if EU unity shatters over energy security.