ANear years of debate in Germany and beyond, Russian state-backed energy giant Gazprom confirmed last month that it had completed construction of Nord Stream 2, a 760-mile pipeline with the potential to send 55 billion cubic meters of gas under the Baltic Sea to Germany. every year.
Russia is already Europe’s largest gas supplier, but once in service, Nord Stream 2 would provide a significant boost to the 170 billion cubic meters annually that keep the lights on across the continent.
Never hesitating to seize an opportunity in the event of a crisis, Russian Deputy Prime Minister Alexander Novak suggested last week that early approval by German regulators for Nord Stream 2, which is currently expected to take months, could be the response to the soaring gas prices that are troubling European governments. .
The move chilled markets and follows intense pressure from Europe and the International Energy Agency, the world’s energy watchdog, to increase supplies.
In reality, Nord Stream 2 cannot be the answer to the crisis in the short term. At best, Gazprom conceded that it would likely only operate at 10% of its capacity in the remaining months of this year. If Gazprom really wanted to cool the markets, it could reserve additional capacity for gas supply via pipelines passing through Poland and Ukraine.
Indeed, there are signs that Russia has increased supply over the past two days, and once Gazprom hits the November deadline to be fully supplied for this winter’s domestic demand, even more. gas should be available to Europeans.
Nord Stream 2’s argument highlights the dilemma Europe faces as it grapples with how to clean up its energy supplies.
Europe is setting itself ambitious goals in the name of the climate emergency, in particular by increasing the share of renewable energies in the EU to 40%. This is where the money is invested.
But as Europe closes its coal mines and readies its wind turbines, there will be a difficult transition period. Germany made this situation even more difficult with its decision to phase out nuclear power after the Fukushima disaster in 2011, leaving it to rely on fossil fuels to help bridge the gap to a fuel-fueled future. renewable energies.
Opponents of Nord Stream 2, including the White House, argue that it is part of the Kremlin’s geopolitical strategy. Although apparently a private sector project, it is clearly under the control of Vladimir Putin. The United States argues that regulatory approval will only strengthen Europe’s dependence on Russia and undermine Ukraine, a key Western ally, by rendering its pipelines redundant.
Maybe Putin will try to play politics with gas. But the Kremlin has been reluctant to do so in the past, seeking instead to be a reliable partner. And Russia has one key interest above all, and that is to sell as much gas as possible as quickly as possible.
Putin’s turnaround last week had this economic reality in mind: if he likes to be a nuisance to his neighbors, it is not in his interest to speed up the switch to renewables in Europe. The countdown to fossil fuels is ticking and Russia would undermine its finances by accelerating the decarbonization of Europe.
As for Ukraine, there is plenty of evidence that transit fees paid by Europeans for gas from its old pipelines have ended up in the pockets of some less than famous figures. And these are old pipelines, prone to leaks and explosions. Nord Stream 2 would be a cheaper and more efficient source of supply. Europe has every interest in helping Ukraine rebuild its economy, but today’s broken model is not necessarily what needs to be preserved.
Some further argue that the growing liquefied natural gas (LNG) market makes pipelines and Nord Stream 2 less relevant. LNG can be shipped all over the world. The developments of the past few days offer a pause for reflection.
Most of the LNG is locked away in long-term contracts, the majority of which is destined for Asia. As China emerged from the global pandemic, it was insatiable to buy the unreserved stock. Brazil worsened the deficit by turning to LNG to generate electricity normally generated by hydroelectric dams.
Putin is not a man with whom Europe wants to do business. But the global energy crisis has given him and his favorite project a powerful negotiating position – a position that could force Europe’s hand.
BA may regret his lack of generosity
Two of the UK’s largest airlines, British Airways and Ryanair, were tried by the Markets and Competition Authority for not breaking the law by refusing to reimburse customers who were prevented by the rules from Covid to take the flights they had booked. But the airlines were far from justified: Only a lack of legal clarity and an uncertain legal battle prompted the CMA to drop its investigation, and it unequivocally stated that the passengers had unfairly lost.
Some may see this as a demonstration of the toothlessness of a CMA, but neither the government nor the airlines come out of the chapter healthy. BA had called the CMA’s investigation – at a time when it was hampered by travel bans and layoffs – “unbelievable”. Ryanair argued more optimistically that it provided the flights and followed the law.
The carriers had offered their most generous terms and conditions to date, reimbursing millions of canceled flights and allowing a free rebooking. Their own schedules were disrupted in the short term by the sudden change in government travel rules. Any fine would have paled next to the billions of airlines lost during the pandemic.
Wider consumer behavior also complicates the picture. Essential international travel was allowed – and those who had to fly accepted the hardships of quarantine. As UK city hotels could attest after a summer of late cancellations, many vacationers viewed flexible Covid policies as a risk-free back-up plan.
Many, however, will have been unfairly stung in situations that have escaped insurance policies. For low cost Ryanair, expectations are low. BA, as aggrieved as he is, should be concerned that customers will perceive that he has failed to meet a fairer standard. In the long run, more generous competitors may reap the rewards.
Dave, there is a little problem to save Christmas
He managed to pull the UK’s biggest supermarket out of a hole, and now the government is hoping Dave Lewis can save Christmas. As supply chain czar, the former Tesco boss has been tasked with solving a crisis caused in large part by staff shortages. It started with truck drivers, but now retailers are struggling to recruit warehouse workers, especially those with special skills like forklifts.
After Brexit, many people who came from Europe for seasonal work can find better and more lucrative jobs elsewhere. Meanwhile, the government’s slow and ill-conceived “action” to solve the problem is pushing the industry to come up with creative solutions.
Tesco last week credited its rail freight investment with helping it weather the worst of the supply chain crisis: it plans to increase the number of containers it transports by train by 65,000 per year to 90,000 at Christmas.
The supermarket isn’t the only one trying out new ideas. Last week, John Lewis was the latest company to open a driving academy, with the goal of getting 90 more people behind the wheel of a truck each year.
On a completely different path, Ikea has announced plans to shift production of some furniture from the Far East to Turkey – reducing the distance at which goods will have to be shipped. And Ocado last week invested £ 10million in autonomous vehicle startup Wayve, and will test four vans in London over the next few months (backed by human operators).
Such ideas are, for now, an alternative to a battle for workers that has led to wage increases and big bonuses for certain groups of once underpaid and underrated employees.
In the longer term, however, truck driving in the UK needs to be made much more attractive. When even simple perks like washing facilities and restrooms fall far short of standards, it’s no surprise that sought-after drivers choose to move elsewhere. Lewis could do worse than look in the bathroom.