Europe’s energy addiction

The Russian invasion of Ukraine marks a watershed moment in world history. With this invasion, we have entered fundamentally new terrain in geopolitics. We are all in the process of assessing the contours of this new terrain, trying to map it to find the potentialities for the working class struggle it might contain. In what follows, I want to provide a brief overview of what I think this new terrain has in store for energy policy and the fight for a sustainable climate, as well as provide some initial leaven to perhaps develop an ecosocialist strategy for this period.

Current State of the Climate

A little over a month after Putin’s troops marched into Ukraine, the UN Intergovernmental Panel on Climate Change (IPCC) released the third part of its report on the state of the climate. While not at all surprising, the findings are very disturbing. The world is currently on track for warming of at least 3°C, which will make large parts of the earth too hot for humane and safe working conditions, crop failure a regular occurrence, and coastal cities submerge beneath the rising oceans.

To keep warming under 1.5°C, a threshold beyond which the consequences of warming dramatically increase, the report concludes that emissions will have to peak by 2025, reduce by 45 percent by 2030, and reach “net zero” by mid-century. Since it takes about seven years to compile these reports, this latest report amounts to something of a “final warning” for humanity.

But despite these dire warnings, not only are world governments failing to move in the right direction, they are digging us deeper into this mess. Greenhouse gas emissions reached their highest annual increase ever in 2021. While the impact of the pandemic on emissions in 2020 cannot be discounted, the increase in 2021 far outstripped 2020’s decrease. The report calculates that investment in a clean energy future is currently six times lower than it needs to be.

And while it’s true that investment in renewables has risen in absolute terms, with the mainstream press hailing this as evidence of the energy transition underway, it has barely made a dent in relative terms, as fossil fuel use continues to rise as well. From 2010 to 2020, renewables expanded as a proportion of the global energy mix from 8.8 percent to 12 percent. A rise of 3.2 percent in 10 years hardly constitutes an energy transition of any significance. At current rates, the world would only produce 20 percent of its energy from renewables by 2050.

Meanwhile, oil companies have been reaping enormous profits even before the invasion, with coal use up globally, and shale output in the U.S. at record highs. U.S. crude oil production is set to top new records under Biden. The Financial Times reports:

Devon Energy was the best performing stock on the S&P 500 last year. Pioneer Natural Resources, the biggest shale operator, made $2bn in profits last year — its best on record. Investors’ appetite for companies such as EOG Resources, ConocoPhillips and Occidental Petroleum have made the energy index the stock market’s best performer over the past 12 months.

Oil and gas companies have been making money hand over fist in the face of the current gas crisis, with the shortage increasing the price at which they can sell without raising the cost of production. Shell raked in $19.3 billion in profits last year, while BP somehow found a way to get by with profits of only $12.8 billion. These companies have avoided being taxed on the grounds that they need to channel profits into the energy transition, but the reality is that their capital expenditure on clean energy stands at only one percent. Meanwhile, these companies are dumping massive quantities of capital into the exploration of new oil fields, which the International Energy Agency reported can never be brought to fruition if we are to stay beneath the 1.5°C threshold.

Coal in particular has been receiving a large bump thanks to the current energy crisis. By January, imports of coal to the European Union had risen 56 percent from the previous year.

The Impact of the War in Ukraine

Central to Putin’s calculus regarding the invasion was the absolute dependence of Europe upon Russian fossil fuels. Europe relies on Russia for one-third of its oil and 40 percent of its natural gas. Germany, the most powerful economy in the EU, gets half of its natural gas, half its coal, and a third of its oil from Putin’s state. On gas alone, Germany hands over $700 million a day to Russia. Given this level of dependence, Putin knew that the U.S. and EU would not be able to impose the most impactful sanctions on Russia without severely damaging European economies as well.

The EU initially had ambitions of weaning itself off of Russian energy, planning to cut out eighty percent of Russian gas by the end of this year and to be completely free of the rest, including coal and oil, by 2027. The U.S., although heavily invested in the outcome of this fight for strategic reasons, is far less dependent on Russian gas, receiving only three percent of its oil from Russia before the invasion. The need to achieve energy independence is often framed in a way that chastises western governments for being excessively trusting of Russia, for hoping that with sufficient generosity in our trade agreements they could build a mutual dependence capable of reigning in those aggressive and expansionist traits inherent to the Russian character. This baseless national metaphysics continues, with the mainstream media pointing to Russia as a climate criminal of a special order. While it is undoubtedly true that the Russian state is a climate criminal who is surely factoring into both their foreign and climate policies their economy’s absolute dependence upon extractive industries, as well as their rather good chances of faring decently as compared to other countries as climate change hits, the idea that Russia is a climate criminal of a special kind is absurd. The United States is responsible for one-fifth of the world’s emissions and has done almost nothing to transition away from fossil fuels. The U.S. government is at least as bad of a climate criminal and probably worse than the Russian state.

It was not long after the invasion started that world leaders and political analysts started declaring that we had to take advantage of this opportunity to rapidly transition away from fossil fuels. Biden said that the war in Ukraine should “motivate us to accelerate a transition to clean energy,” while the EU announced plans to build solar panels and wind turbines faster than ever before, and Germany committed €200 billion ($210 billion USD) to decarbonize its electricity supply by 2035.

But even as Biden was spouting empty words about a clean energy future, he was bragging that more oil was being pumped in the U.S. than at any point during Donald Trump’s time in office. Not only that, but in light of the energy crisis, Biden has reversed his decision banning oil companies from drilling on federal land, and is now going so far as wanting to fine them if they fail to do so.

In general, the gap in energy supply created by the conflict in Ukraine is being filled in the immediate term with fossil fuels. Coal plants that were recently closed are being fired up again across Europe while gas-fired power plants are being converted to burn oil.

The important thing to note is that despite all the rhetoric about using the Russian invasion to pivot to renewables, plans to develop long-term fossil fuel infrastructure dominate the moment. Since these projects take years, sometimes even decades, to come online, they are not about the short-term goal of meeting energy needs but locking us into an energy future that remains dependent upon fossil fuels. The countries and their national energy companies lay out enormous amounts of money for these projects that take years to recoup, and it’s unlikely they will want to abandon their investments for the sake of “resuming” the energy transition. Germany has announced plans in the wake of the invasion to build two major liquified natural gas terminals, while UK Prime Minister Boris Johnson plans to expand drilling in the North Sea. The U.S. is planning to massively expand its natural gas production, which by some estimates will more than double its current export capacity. The U.S. has reached an enormous deal with the EU, guaranteeing supplies of vast amounts of these exports for years to come.

I think there are a few things going on here. First and foremost, this is a classic case of what Naomi Klein has called “disaster capitalism.” The agents of capital are seeing an enormous opportunity for profit in this crisis and are more than willing to bend the truth in order to secure those gains. With the public justifiably concerned about energy security, they are far less likely to question the specific methods by which that is achieved. If the public is told that increased liquefied natural gas (LNG) or coal is an urgent necessity to keep the lights on in the short-term, they are less likely to protest governments and companies building more fossil fuel capacity, and these actors can conveniently fail to mention that it will take years before these efforts start to have any effect.

As Naomi Klein, herself related,

Within hours of the invasion, every planet-torching project that the climate justice movement had managed to block over the past decade was being frantically rushed back onto the table by right-wing politicians and industry-friendly pundits: every canceled oil pipeline, every nixed gas export terminal, every protected fracking field, every Arctic drilling dream. Since Putin’s war machine is funded with petrodollars, the solution we are told, is to drill, frack, and ship more of our own.

Smelling blood, fossil fuel companies immediately shifted to meet the new circumstances. For example, at an annual conference for energy held in Houston called CERAWeek, the conflict in Ukraine caused its focus to shift from climate change as initially intended, to strategies for increasing domestic fossil fuel production.

Fossil fuel companies are currently awash with cash, as limited supply has meant enormous profits for them. They are looking for profitable places to invest that cash, and with governments giving the green light they are more than happy to shovel that capital into doing what they know best, increasing fossil fuel development and extraction. With high prices for energy, and even the prospect of physical shortages, these companies are in a position to leverage this situation into making themselves crucial policymakers for years to come.

Whatever governments may obnoxiously claim about being able to “chew gum and walk at the same time,” the reality is that when confronted with the choice of tackling climate change or securing the best possible position for themselves on the inter-imperialist chessboard, they are funneling resources wholly and rapidly into the latter.

The cost of an energy transition would be enormous. Even if the cost of not transitioning will be much, much higher over time, capitalist states are compelled by inter-imperialist rivalry to think only in the extreme short term. The trillions of dollars that would be spent on an energy transition is considered waste expenditure from their perspective, which could be instead spent to strengthen states’ competitive position. The instability inherent to dramatically overhauling our energy system, however slight, is instability that states are unwilling to risk, especially in the context of increasing economic precariousness. It would mean sacrificing resources desperately needed to wage the increasingly fraught inter-imperialist cold wars with Russia and China.

Energy and Shifting Imperialisms

The precarious balance of imperialist alliances and rivalries is shifting dramatically under the pressure of the war in Ukraine. Fossil fuels are the energy that propels imperialism forward, and especially in a time when they are scarce, they become a powerful lever in forging some alliances and breaking others.

As can probably be guessed, the U.S. is at the center of these machinations. First and foremost, the goal of the U.S. is to solidify its leadership over Europe. The U.S. was undoubtedly overjoyed that the war has postponed, and may very well cancel plans to build the Nord Stream 2 pipeline, a 1,234 km pipeline running from Russia to Germany. This pipeline would have strengthened the dependence of the U.S.’s strongest ally on one of its competitors, a prospect deeply disturbing to the U.S.

To allow the U.S. and Europe to act unilaterally, without the nagging fact of energy dependence constantly in the background, the U.S. is leaving no stone unturned. The U.S. has been attempting to arrange deals with Qatar, Egypt, Azerbaijan, Algeria, Norway, Japan (who the U.S. wants to free up a portion of their LNG imports), Saudi Arabia, the United Arab Emirates, and most interestingly, Iran and Venezuela, in an all-out effort to secure European independence from Russian energy.

The fact that the U.S. has had to consider reversing sanctions on Venezuela, and returning to the possibility of negotiating a new nuclear deal with Iran, reveals the tight position the U.S. has been placed in, and more generally its declining status as the global hegemon. One consequence of this is that the U.S.’s relationship with Saudi Arabia is at a fifty-year low, as the Saudi government, which is in a regional cold war with Iran, is enraged at the prospect of weakening sanctions on Iran, and the reestablishment of a U.S.-Iran nuclear deal.

To some degree, the balancing act the U.S. is forced to play is a lose-lose situation, no matter how the cards fall. There is good reason to think on the other hand, that China will emerge stronger through this conflict relative to the U.S. The impact of the war on China will be relatively marginal, and the damage to U.S. alliances the country is forced to commit in order to maintain a precarious balance provides openings for China to extend its imperial power.

Ultimately though, despite all these efforts, the material reality is that it is unlikely that Europe will be able to separate itself from its dependence on Russian energy in anything like the timeframe it has set up for itself. As this fact has set in, it has complicated the western strategy, with growing concern for what a Ukrainian victory could mean for future diplomatic relations with Russia on whom Europe is dependent. Increasing sections of the ruling class see the best potential outcome being a diplomatic solution, for example, the sacrifice of parts of eastern Ukrainian territory to Russia or a Russian-backed government that would allow Putin an exit strategy. This is particularly true in Europe where the economic impact of the war has been the highest, and where the U.S. is struggling to maintain a united alliance against Russia with weakening support from key allies Germany, France, and Italy.

At the moment the alliance is still being held together, with the EU agreeing to ban all oil transported to Europe by tanker, while still allowing crude arriving by pipeline to continue to flow through continental Europe. This is a ban on roughly two-thirds of Russian oil. The impact of this decision on a continent already on the precipice of economic collapse will be enormous, and it is questionable whether or not the EU can maintain this ban for a protracted stretch. Due to Europe’s dependence, the ban is going to be scaled up over six months to give countries time to acquire new sources of energy. This delay also gives Russia time to adjust and runs the risk of being almost entirely ineffective as a result. The ban could cause a further rise in the cost of oil, so that even if Russia is not able to sell the same quantity as before, they will make up much of what would have been lost in revenue due to the higher price. Oil companies will profit handsomely for the same reason as higher energy prices contribute to yet more western inflation, and consumers are forced to pay still higher prices. China will also be further helped by this ban, since they will be able to secure more Russian oil at a discounted price and pit oil-producing countries against one another who depend upon the large Chinese market.

The aim of the ban was to weaken Russia’s ability to fight the war, but it may end up damaging Europe more. All of this serves as yet another indication of the weakening influence of the U.S. and western Europe in an increasingly multi-polar world.

It of course says everything about the system of capitalism that runs the world that governments are running around brokering power deals like mad hatters while the impact of the war in Ukraine threatens famine for countries like Egypt and Sri Lanka, who depend upon Ukraine for food imports.

One final fact of note for the environment is the increased military spending that’s come out of the war in Ukraine. NATO countries are increasing their military spending, with Germany announcing that it will spend €100 billion on re-armament. Sweden and Finland have both submitted applications to join NATO, which would require them to spend two percent of their GDP each year on “defense” spending. Even before the invasion, escalating imperialist tensions caused global military spending to top $2 trillion for the first time ever. Not only is money spent on the military money that could be going toward an energy transition, but militaries are highly carbon-intensive enterprises. The U.S. military alone emits carbon in higher quantities than 140 countries, including Portugal, Sweden, and Denmark. This global re-armament is totally inimical to governments’ stated emissions targets. We cannot both rearm the world and achieve the short-term emissions reductions we need to.

What role can activists play?

All of this can feel so overwhelming that it may lead us to question what we can do to steer the world in a more sane direction. Yet there is hope! And I think there is a clear strategy that environmental activists can follow here.

Pipeline fights have been keeping alive the connection between immediate struggles and the broader goal of system change. With U.S. LNG extraction and export set to explode dramatically in response to the fallout from the war in Ukraine, there will be no shortage of struggles for environmentalists to engage in. I have no doubt that the environmental movement will respond heroically to these struggles as it has done in the past, from recent examples around the Keystone XL pipeline, Dakota Access pipeline, and Line 3. But environmentalists have generally failed to engage a critical ally in these fights: the working class. The workers who are constructing these pipelines with their own hands have the power to shut them down. It’s up to environmental activists to push the local struggles that emerge as a result of increased fossil fuel extraction toward a worker orientation, to demonstrate how an energy transition with hope for a sustainable future does not threaten their jobs but offers concrete improvements for them, their families, and their communities. The energy transition will not be won by NGOs, but through the self-activity of the working class. It’s with them that we have to place our hope, and center our activity.

Featured Image Credit: Photo by Giorgio Galeotti; modified by Tempest.