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Article Highlights

  • How can US counter Russian natural gas's power in eastern Europe?

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  • MAP: Russian natural gas in European economies

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  • Hassett: US and Eu gas policies may need to change because of Russia

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This article appears in the May 19, 2014 issue of National Review.

Vladimir Putin has an unappreciated ally in his aggression against Ukraine: Western environmentalism. Europe collectively has little will to stand up to him, in part because Europe has given Russia the key to its economy—its energy supply.

Europe has moved toward reliance on greener energy, and substituted natural gas for oil, coal, and even nuclear power. George W. Bush saw the risks of this approach, aggressively criticizing Russia for using energy as a sword and urging Europeans to diversify their energy sources. Last summer, a Congressional Research Service report contrasted Mr. Bush’s approach with President Obama’s presumably more enlightened style: “The Obama Administration has also called for diversification, but has refrained from openly expressing concerns about Russia’s regional energy policy, perhaps in order to avoid jeopardizing relations with Moscow.”

Over the past two decades, EU countries have nonetheless increasingly relied on imports of natural gas. Because of climate-change concerns, their domestic production of coal has more than halved. While domestic production of natural gas in the EU in 2011 was actually below its level in 1990, consumption and imports doubled between 1995 and 2011. EU members in 2012 imported 65 percent of their energy and 64 percent of their natural gas. Since carbon emissions from natural gas are relatively low, and sentiment against fracking within its borders is so high, the EU has plans to increase future reliance, projecting an 80 percent import share of natural gas by 2030.

Russia, with the largest natural-gas reserves on earth, fully 18 percent of the global total, currently accounts for 34 percent of EU gas imports. This number, as can be seen in the nearby chart, understates Russian leverage, because many countries in Eastern Europe find themselves practical wards of a Russian monopolist.

Latvia, Lithuania, Bulgaria, Estonia, and Finland import 100 percent of their gas from Russia. In these countries, about 20 percent of total national energy use on average comes from Russian gas. Farther west, other European countries are less reliant on Russian natural gas, but it still plays a significant role in the energy markets of such countries as Austria, Belgium, Germany, and the Czech Republic. In each of these countries, Russian natural gas accounts for over 10 percent of total energy consumption.

This problem creates an important asymmetry. If Russia stops selling gas, it can always start selling it again tomorrow, perhaps at a higher price. But take away 20 percent of a country’s energy supply overnight, and you are looking at a depression-level economic collapse.

As we look ahead to the endgame of the Ukraine crisis, nations of the West need to aggressively pursue other energy options for Europe. Expanded production of liquefied natural gas, reversal of Germany’s decision to close its nuclear-power plants, and expanded use of domestic coal and natural gas are necessary if Putin’s leverage is to be reduced. The alternative will be a 21st-century game of dominoes, with Putin seeing little European opposition.

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Kevin A.
Hassett

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