Page 8 - FSUOGM Week 12 2022

FSUOGM COMMENTARY FSUOGM

March 8 that it would raise this figure to 155 bcm Russia’s options
via its REPowerEU programme, with the first Looking ahead, US President Joe Biden’s visit to
100 bcm of this being achieved in 2022. Europe on March 24 could also lead to stronger
However, it is open to question whether the calls from some EU leaders, especially in Eastern
EU would able to meet these aspirations, with Europe, for tougher sanctions on Russian oil and
the IEA saying only 50 bcm of Russian gas can gas, following on from the US ban earlier in March.
be replaced in 2022, rather than the EU’s 100 Meanwhile, Russia has already made noises
bcm. that it could find alternative buyers of its oil and
Part of the EU’s plans are eminently achiev- gas in China and India.
able, while others are more ambitious, accord- However, China has its own green targets to
ing to the Oxford Institute of Energy Studies meet as it aims to reach net zero by 2060. Beijing’s
(OEIS). commitment to reach net zero by 2060 could
The LNG and pipeline to replace 63.5 bcm of reduce the potential for Moscow to redirect its
Russian gas is available, the OIES said, with car- gas and oil exports away from Europe towards
goes redirecting from Asia to Europe, although China. It will be neither quick nor easy for Mos-
European prices would need to remain high to cow to pivot its energy exports from west to east,
attract such cargoes. according to Wood Mackenzie.
However, proposed 38 bcm reductions in gas Although any detailed picture of future emis-
demand, although feasible on paper, would be sions targets has yet to emerge, the continued
challenging. presence of coal in Europe’s generation sector
A long list of policy reforms, good availability weakens Brussels’ rhetoric about reducing Rus-
of wind and hydro, a warm winter and more coal sian gas imports.
nuclear would all be needed for any target to be As such, Europe, which has so far been the
met. best performing continent in terms of emissions
In short, the EU’s proposals will give coal a reductions, faces the prospect of a slowdown in
short-term boost, although it will also promote its progress towards net zero, while at the same
the energy transition in the longer term. time facing the high cost of restructuring energy
Despite these fears, international bodies such systems away from Russian gas and oil.
as the IEA have stressed that the war, as well as Given the pace required to reach net zero by
volatile gas prices, could act as a catalyst to 2050, any delays in emissions reductions caused
quicken the decarbonisation agenda and reduce by the war will have their own ecological and
the world’s exposure to Russian gas and oil. economic impact. ™

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