China and Europe open competition for Russian gas

The infrastructure for the delivery of energy resources from the Russian Federation to the EU is much larger than in the case of export to the “Celestial Empire”, but Beijing’s prospects are more serious

The period of construction of new gas pipelines from Russia to Europe is almost over. However, in the eastern direction this process will continue further. Does this mean that the EU should worry about the presence of Russian gas in the near future, which may “migrate” to Asia?

China, Mongolia and Russia are developing a new Soyuz Vostok gas pipeline. It will stretch from the Russian Federation to Asian countries. According to Deputy Prime Minister of Mongolia Sainbuyangiin Amarsaykhan, the construction of such a highway can begin in three years.

In essence, we are talking about the creation of Power of Siberia-2. It will even more open the doors of the Chinese energy market for Russian pipeline gas. Talks about a new additional highway to the PRC through Mongolia were conducted back in 2019. It was not entirely clear then whether such a project would be implemented or not.

Now it became clear that the highway will be built for sure. The only question is when and under what conditions. This automatically makes it impossible to increase energy supplies to the EU countries.

It would be a great exaggeration and dilettantism to say that all Russian gas intended for the Old World may eventually migrate to the “Celestial Empire” and other Asian countries. Alas, the infrastructure for delivering energy from Russia to Europe is much more serious than for exporting to China. However, this does not mean at all that the European Union has nothing to worry about. The EU countries will still have problems with the purchase of gas from the Russian Federation. Power of Siberia-2, as an unpleasant bonus, will make them even more serious.

Will China take everything for itself or is it a myth?

Even before the construction of Power of Siberia, however, as well as after its launch in December 2019, many European politicians and experts, even from Asia, said that this project would be a failure.

Power of Siberia will not immediately reach its design capacity in terms of deliveries of 38 billion cubic meters per year. Last year, the contract provided for pumping only 5 billion cubic meters to China. Compared to the volume of gas exports from Russia to Europe, these are crumbs.

Recall that even in 2020, when due to COVID-19 energy consumption in the Old World was minimal, the supply of “blue fuel” from Russia to Europe, including Turkey, amounted to 135.75 billion cubic meters ( data from Gazprom Export).

The past months of 2021 also showed that the volumes of pipeline gas supplies to China are incomparable with those to Europe. The volumes of Russian gas pumped to Gazprom’s main customers in the first quarter of 2021 set a 3-year record. The company supplied 52.7 billion cubic meters to Europe.

Gazprom needs to agree on guaranteed export volumes with China. This is a topic for bargaining for several years. Then you need to sign a transit agreement with Mongolia. If everything goes well, construction will start only in 2024. That means that gas will not flow through this pipeline soon.

It will eventually pump even more than the first gas pipeline to China. In November of this year, the management of PJSC Gazprom even announced that the export capacity of Power of Siberia-2 could exceed the capacity of the first Russian gas pipeline to China by more than 1.3 times.

The dragon from the east cannot be underestimated

The volume of Russian gas supplies clearly speaks in favor of Europe – the current 135.75 billion cubic meters to the EU versus the potential 88 billion to China, and these figures will not appear in a year or two, or even in 5 years.

It would seem, why should the European Union worry? Alas, there really is a reason. The problem is that there are growth prospects for Russian gas exports to China, but in the case of supplies to the EU, they no longer.

Even in the coronavirus-crisis year 2020, when the world first faced the COVID-19 pandemic and reduced energy consumption, the average price of Russian gas in China was $ 150.2 per 1,000 cubic meters. For comparison: in the same year, the average export price of Gazprom to non-CIS countries, including Europe, was $ 143 per 1,000 cubic meters.

China loves to bargain with Russia no less than Europe. Sometimes it is even more difficult to agree on the volume of supplies and the price. The question remains open whether Russia will be able to attract Chinese capital to finance the construction of the Soyuz Vostok.

In the long term, the government and business of the PRC will be glad to increase purchases of gas from the Russian Federation. This became clear especially now, when, during the global energy crisis, it became clear that solar panels and wind energy cannot normally supply the “Celestial Empire” with electricity in adverse weather, which means that a safety net is needed – gas.

The prospects for increasing Russian energy supplies to the EU are very vague. It seems that there have been more gas pipelines in recent years. Nord Stream, Turkish Stream, Nord Stream-2. For some reason there is not enough gas in the Old World, especially now during the energy crisis.

Which one is more attractive?

Russia uses new lines, but at the same time reduces the volume of pumping on old lines. For example, if in 2019 92.3 billion cubic meters were sent to Ukraine (for the transit of part of this volume to the EU), then in 2020 only 55.7 billion cubic meters. The decrease in the volume of pumping through the Ukrainian pipe, in fact, turned out to be surprisingly equal to the size of the throughput of the Turkish Stream.

“At first glance, the European direction of gas exports does not seem as attractive to Russia as the eastern one (China). The reason for this is the active decarbonization process in the EU, coupled with cross-border carbon regulation, which will come into force as early as 2023. The value of the cross-border carbon tax for Russian companies are estimated at approximately $ 3-4.8 billion a year.

LNG from Russia is a lifeline for the EU, however expensive

It should be admitted that despite future difficulties with the supply of pipeline “blue fuel” from the Russian Federation, Europe can safely hope for the import of liquefied gas.

The specifics of LNG trade in the world economy today is such that this product, in contrast to gas pipelines, is more mobile. It is from the mains that the energy carrier gets from point “A” to point “B” and nothing else. But a liquefied gas tanker can always be rerouted from one port to another, where they will pay more for LNG at the moment.

This is clearly seen in the example of the supply of liquefied gas from the United States, which Europe was counting on in 2021, but most of these volumes eventually went to Asia – to a region where LNG was offered at a higher price than in the Old World.

What is the Future of Hydrogen in Eurasia?

Hydrogen has become an energy project of the future for the European Union. The question is who will produce this resource? In all of Eurasia, only one state has at the moment a solid project for the development of a hydrogen industry. It is Russia.

PRODUCTION

The gas itself does not pose risks to the environment and to humans and is very widespread in the universe. Unfortunately, humanity does not yet have the possibilities for ”space mining”. So we have to find local sources. On Earth, hydrogen in gaseous form is not found in sufficient quantities. However, it can be extracted from other substances such as water through the process of electrolysis. At the industrial level, it seems that the majority will opt for syngas (synthetic gas) which is a mixture of hydrogen with carbon monoxide that is produced by steam heating natural gas. Subsequently hydrogen is separated. The downside is that CO is a polluting gas.

MAIN MARKETS

Germany, Japan, Russia and China are the main countries working on a hydrogen strategy and infrastructure. Of all this Russia has been talking for several years, more intensely since last year, about its role as a producer and exporter of hydrogen. The natural gas reserves it holds will help the Russian Federation to retain its place as an energy exporter for much of Eurasia.

Until a large-scale adoption of hydrogen there is a need to implement pilot projects. In this regard Germany, China and Russia are talking, designing and already testing in different measures, means of transportation that work with hydrogen. Yesterday, November 1st 2021 China announced the launch of local production of a hybrid locomotive. These will be used in the Autonomous Region of Inner Mongolia. On a line that transports coal. Several countries in Europe have already presented hydrogen passenger trains. We have examples such as the one made by Alstom, hydrogen buses (in London), planes and ships. In Russia they have the Aurus Hydrogen car and the hydrogen train produced by Transmashholding (TMN).

Russia has little reason to adopt hydrogen on a large scale. For many decades their oil and natural gas reserves will remain more economically efficient. The Federation is expected to be the main element of energy stability for a ”green” European Union.

WHAT IS CHINA’S CHOICE?

China’s energy sector, however, is more complex. It will in future rely on renewable energies (wind, solar and hydro-power), ”classic” nuclear energy and thorium-based nuclear energy that it is experimenting with in Wuwei.

China is the world leader in the production and marketing of electric cars. For this reason it is actively working on the development of a new sodium-ion battery. The company CATL announced the entry into industrial production and the development of a production chain for such batteries by 2023. The chances of personal hydrogen cars being widely adopted in China are minimal in the coming years. The country has opted for another energy infrastructure in this regard.

In general, even in the European Union, they do not see a reliable hydrogen pump infrastructure in which ordinary users can power their personal cars. At the moment there are reasons for concern about the transport and storage of this highly flammable gas, more dangerous as diesel or gasoline.

It seems that some very powerful investors in Australia are also picking hydrogen as the fuel of the future. Needless to say that Australia is one of the leading exporters of LNG.

US and Gulf Gas Suppliers Throw EU in Difficult Times

It is worth looking for the culprit in the EU energy market in Brussels and the capitals of the largest countries of Western Europe. Political myopia and colossal dependence on Washington played a cruel joke on them. This opinion was expressed by the FAN economist, top manager in the field of financial communications and CSR Andrey Loboda 

Russia complies with the conditions

The German government has officially denied the assertion of Russia’s non-compliance with contracts for gas supplies to Europe. This was announced to TASS by the head of the Bundestag Committee on Economics and Energy Klaus Ernst .

“The German government on October 11 officially gave a negative answer to my question as to whether there are signs that the reason for the increase in gas prices is the failure of Russian energy suppliers to comply with their obligations under existing contracts,” said the German deputy.

The Cabinet of Ministers’ reply provided by Ernst says that “the FRG government has no information about non-compliance by Russian energy suppliers with their contractual obligations.”

Prices of gas skyrocketed

As Andrei Loboda noted, gas prices pulled up all other energy assets in the world market. The most vulnerable were the markets of the EU, Great Britain and the key economic powers of Southeast Asia. According to conservative estimates, each Western European family will pay for heating services and electricity consumption by 500 euros more than last year.

“Even against the background of relative stabilization and flawless fulfillment of the delivery schedule under the existing contracts on the part of Russian companies to the EU, the European gas market is experiencing an obvious deficit. The price of blue fuel on the London ICE exchange on Friday exceeded $ 1,250 per thousand cubic meters. The time of cheap gas on world markets has come to an end, and for the next ten years, consumers in the world’s leading markets will live in a new reality, ”explained Andrey Loboda.

As the FAN interlocutor noted, the USA, China, Japan, EU, Great Britain were so carried away by the energy transition and a secure energy future that, as a result, they could not predict the development of events for the next year. Now you have to learn from mistakes.

“To look for the culprit in what happened on the EU energy market is in Brussels and the capitals of the largest countries of Western Europe. Political myopia and colossal dependence on Washington played a cruel joke on them. Today, the western neighbors have only 75% of their underground storage facilities pumped in, and the US has inflicted the most serious damage on its European partners in NATO through the policy of sanctions against Nord Stream 2, added Andrei Loboda.

The US threw the EU at critical moments

As Andrei Loboda noted, 12 small energy companies left the UK market. Despite an increase in Russian gas supplies by 15% every year, the leading energy companies in Germany are experiencing insurmountable problems. The world’s largest steel company, ArcelorMittal, has shut down several of its European plants due to rising energy prices.

“The Europeans will now have to impartially rethink what happened, develop formulas for balancing and shaping the energy market. The Americans and oil and gas suppliers from the Persian Gulf countries simply threw the EU at critical moments, reorienting exports to China, Japan and South Korea, because in these countries fuel prices are almost 10% higher than European ones. The shortage of natural gas in Europe and Asia increases the demand for oil and coal, the situation is seriously aggravating. By the end of 2021, oil can gain a foothold in the range of $ 90-100 per barrel of Brent. The market is still driven by expectations of strong demand for energy in October and Q4, ”said Andrey Loboda.

According to him, the United States admitted to pressure on OPEC to reduce fuel prices. The toxic footprint of the United States in the current EU energy crisis is visible to the naked eye. Friendship and currying favor with the US is costly for the EU.

“High gas prices have already led to a slowdown in the growth of the European economy, the European industry has already begun to decline. The events taking place pose a serious threat to the formation of a coalition in the German Bundestag. And Nord Stream 2, like oil and gas supplies from Russia, has nothing to do with it, “concluded Andrei Loboda.

Nord Stream 2 is a gas pipeline from Russia to Germany with a capacity of 55 billion cubic meters per year. At the end of 2019, then-US President Donald Trump signed the country’s military budget plan, which included the imposition of sanctions on the project. According to experts, the launch of Nord Stream 2 will be able to strengthen the sovereignty of Europe, led by Germany, over the United States.

The concept of “green” hydrogen energy is increasingly being shattered by reality …

Today, the transition to carbon-free energy is considered to be a resolved issue. The general trend to improve the environmental friendliness of the economic activity of entire countries of the world has become the subject of numerous disputes, discussions and development of strategies for the transition to a new energy structure.

Europe (and the whole world as a whole) has chosen the transition to hydrogen energy as the most economically and energetically effective means of achieving climate neutrality in its countries by 2050.

In the energy strategies presented by Japan, South Korea, Russia and European countries, hydrogen is a universal energy carrier. It is intended to replace hydrocarbon fuels (oil, gas, coal) with an environmentally friendly and neutral gas with a high calorific value.

However, hydrogen energy has a significant problem (in addition to storage and transportation). The lack of free hydrogen deposits. Therefore, hydrogen is required to be produced. That is, to convert primary energy and primary resources into the production of hydrogen.

In other words, we must artificially create this energy carrier, moreover spending more energy on its production than we will receive from its use. And this, in turn, imposes a lot of restrictions on the use of primary energy. Firstly, it must be carbon-neutral, and secondly, powerful enough to provide not only the energy needs of mankind in primary energy, but also have a large reserve for the production of hydrogen and the transition to a hydrogen economy (as seen in Germany). Or to the hydrogen society (according to the Japanese version).

The basic concept for the use of hydrogen in Europe. 
Hydrogen is produced in electrolytic cells using renewable energy sources, as well as coal and gas stations. 
In addition, hydrogen and raw materials for its production (ammonia) are imported. 
The feedstock is processed into an additional volume of hydrogen, which is supplied to consumers through the existing gas pipelines (including together with natural gas).

Primary energy can be obtained in several ways:

  • burning traditional hydrocarbon raw materials (oil, gas, coal);
  • by using the physical processes of fission of an atomic nucleus (atomic energy);
  • using the potential of water masses in places of elevation differences (hydropower);
  • or using wind and solar energy (wind and solar energy);
  • using the thermal energy of the bowels of our planet (geothermal energy);
  • in the future, it is possible to use physical processes of fusion of nuclei of light elements (thermonuclear energy).

Since the hydrogen concept provides for the abandonment of hydrocarbon resources, it is impossible to use gas or coal to produce hydrogen – this will break the entire hydrogen concept.

However, new gas-fired power plants under construction in Germany have practically zero CO2 emissions into the atmosphere due to the technology of capturing associated greenhouse gases with their subsequent utilization. For example, the energy company “Uniper” in Germany has already built the world’s first coal-fired power plant that meets all European environmental standards.

Moreover, in spite of Germany’s policy of not using coal, a brand new 1100 MW Datteln 4 coal-fired power plant was launched in 2020, whose emissions are at the level of the most modern gas-fired power plants operating in Germany. The cost of this project amounted to almost 1.5 billion euros.

Kraftwerk Datteln 4 is the world’s first environmentally friendly coal-fired power plant. 
Germans do things ..

Yes, as amazing as it is, Germany has donated € 1.5 billion to a coal plant! Coal! But an environmentally friendly coal-fired power plant. And this is different – you need to understand.

Obviously, in the next 10 years, gas and even coal-fired power plants will become climate neutral, without harmful emissions into the atmosphere. And this is a fact.

The production of hydrogen as an energy carrier implies the use of renewable environmentally friendly raw materials – water, as well as renewable environmentally friendly sources of energy in the form of the sun, wind and the same hydropower.

The production of hydrogen by this method will be as natural for the Earth’s ecosystem as the water cycle in nature. This type of hydrogen has received the designation – “green”.

Today it is too expensive to mass-produce “green” hydrogen using solar and wind power plants. This trend will only get worse in the future. The thing is that the cost of raw materials in the form of rare earth metals, and just all other non-ferrous metals (for example, copper) is already breaking records due to high demand. Without them it is impossible to build a modern SPP and wind turbine.

Thus, spot prices for polycrystalline silicon increased by more than 20%. And the cost of producing polysilicon panels has grown exponentially since the beginning of 2021!

Therefore, conversations about the mass production of “green” hydrogen, faced with the harsh reality, began to subside on the sly. Simply because producing electricity at the same solar power plants is 3 times more profitable than producing the same amount of “green” hydrogen in energy equivalent.

Today, the production of “blue” hydrogen is 3-4 times more profitable than the production of “green”, even taking into account the carbon tax 

Realizing this, many would-be hydrogen producers have simply abandoned the mass production of green hydrogen. For example, Australia in its hydrogen strategy focuses on the production of “gray” hydrogen from coal with associated storage of CO2. Japan is already interested in the project.

The United Arab Emirates and Qatar will invest in the production of blue hydrogen.

And in the hydrogen strategies of Japan, South Korea and European countries, the point of self-sufficiency of their economies with the necessary amount of hydrogen is generally omitted.

In Germany, it is generally stated that Russia should supply them with hydrogen, so there should be no problems with the transition to a hydrogen economy by 2050 (see paragraph 38 of Germany’s hydrogen strategy).

In Russia, according to the hydrogen strategy, by 2024 the economic model of the hydrogen economy itself, with all its derivatives (production of methane-hydrogen mixtures; production of turbine units capable of operating on hydrogen; production of hydrogen transport) should be developed and substantiated. Gazprom is developing a technology for producing “blue” hydrogen. Rosatom is developing a technology for producing “yellow” hydrogen (electrolysis of water at nuclear power plants and the construction of a nuclear power plant for the direct production of hydrogen by high-temperature electrolysis).

Since 2010, Rosatom has been developing a technology for producing hydrogen using high-temperature gel nuclear reactors. 
The first such station should appear in 2030

Even old Europe is not so optimistic about green hydrogen anymore. Europe suddenly equated the ecological footprint of nuclear power plants in her 387-page study posted on the European Commission’s JRC SCIENCE FOR POLICY REPORT to the ecological footprint of wind and solar power plants.

This is because there is no other way to realize the mass and, most importantly, cheap production of “green” hydrogen, on which Europe relies heavily. Well, this somehow saves the very concept of environmentally friendly hydrogen.

However, in Russia, quite recently, the development of a project began, which is still able to revive the original concept of precisely “green” hydrogen. As the use of water and a renewable environmentally friendly source of energy. This project, worth more than $ 300 billion, will pay off in just 5 years. It will fully provide Europe with the necessary amount of “green” hydrogen. At the same time, Russia itself by 2050 will become the world’s largest producer of hydrogen of all “colors”. And 85% of the total world production of “green” hydrogen will be generated by Russian power plants.

One of the projects for the production of mass and cheap “green” hydrogen is the construction of a tidal power plant in the water area of ​​the Penzhinskaya Bay.

By
Alexey Kochetov

China hopes Russian coal will help fill energy shortages

Key points

– The Suifenhe railway junction in northeastern Heilongjiang province is improving logistics as coal supplies increase.

– Electricity supplies from Russia to China through the Amurskaya-Heihe power transmission line tripled last week.

China is trying to solve the problem of electricity shortages, and in this it has been helped by Russia. Russia is increasing its exports of coal and electricity, as reported by state media and government departments.

The Chinese customs administration said Wednesday that total coal purchases in September increased 17% to 32.9 million tonnes, the highest in a year. The government is making further efforts to ensure a stable supply of energy resources before the winter peak in demand.

Fueled by fuel shortages and record high prices, the energy crisis has forced the government to take various measures to increase coal production and regulate electricity demand. Electricity rationing measures have been introduced in some provinces.

From October 1 to October 7, more than 5,000 tons of coal were transported through this hub every day.

Last week, the Chinese state-owned electricity company said that the supply of electricity from Russia to China through the Amurskaya-Heihe transmission line had been increased from five to 16 hours a day.

On Sunday, over 50,000 tons of coal were also delivered to China’s eastern province of Zhejiang.

The energy crisis in China and Europe has demonstrated that the transition from fossil fuels to green energy has turned out to be much more difficult and time-consuming than many expected.

For the foreseeable future, there are simply no real alternatives to coal and gas as the main sources of electricity and heating.

Energy alliance between Moscow and Beijing

The energy shortage in China should strengthen the energy alliance between Moscow and Beijing. Russia is China’s closest external source of coal, gas and oil. Beijing may give the go-ahead for the construction of the Power of Siberia-2 gas pipeline. Through that Russian gas from Western Siberia will be supplied to China via Mongolia. “

There are several reasons for China’s electricity shortage. One is that coal prices are not regulated. However, electricity prices are regulated. That makes generating companies reluctant to get involved in generating electricity as it gives them less profit.

Foreign companies are sounding the alarm over the deficit. Representatives of the European Union Chamber of Commerce said that firms sometimes receive notifications in just an hour about the need to redistribute shifts. And this is in enterprises where a thousand people work. “We need to better communicate with the government to help our companies cope with problems,” said Jörg Wuttke, head of the chamber. – We are not asking for privileges. We just want clarity. “

The Chamber of Commerce has asked the authorities to reconsider their decisions on which companies should cut or stop production. They are urging them to take a “scientific, transparent approach” and better communicate their decisions.

The first global “green” energy crisis is not the last!

Here we are sinking in the next energy crisis. This time it will be ”green”.  Gas prices are rising like cryptocurrencies, oil has exceeded levels unseen since 2018. How will it end? And most importantly – when?

Georgy Bovt
candidate of historical sciences, political scientist

What is happening these days and weeks in Europe? Off-scale gas prices (some ten days ago, some doubted whether they would surpass $ 1,000 per thousand cubic meters, and on October 6 they came close to 2,000). And ill-considered, hasty abandonment of traditional forms of energy in favor of green energy.

Coal prices, by the way, are also hitting records. In some countries (in the UK, for example) they are even thinking about the reopening of coal mines. China also made a significant contribution to the rise in coal prices by banning the export of coal to one of its largest producers. They themselves, they say, do not have enough.

Energy companies are a big winners. The value of shares of the Gazprom is breaking records. Together with the oil industry, it pulls the entire domestic (Russian) stock market with it. The question is how long this feast will last during the coronavirus plague. The 30-fold increase in the gas price compared to May 2020 can hardly be called normal. Even taking into account the fact that in this case we are talking about futures, and the growth of the real price is much less. It is still very significant, and cannot pass without leaving a trace for the rest of the economy.

I must say that the European Union itself planted this bomb when, quite recently, it began to demand that the market switch to short-term contracts, which are obviously more volatile. Most recently, this has been superimposed on such a purely technical exchange factor as massive margin calls at hedge funds. Those who decided to play “bears”, believing that prices simply have nowhere to rise higher, were cruelly mistaken. For tens of billions of dollars. 

Preconditions for this crysis were formed back in the northern summer

The preconditions for the market acceleration were formed back in the summer. It turned out to be unusually hot increasing, in particular, the demand for electricity air conditioners. This was superimposed on a sharp increase in demand from China. It was the first to emerge from the coronavirus economic torpor. Already in the summer, the main supplies of LNG were switched to Southeast Asia. Some in the EU considered it important to counter “gas dependence on Russia.” The reduction in supplies to Europe reached 20%. These volumes were not replenished by anyone, including the Americans, who previously praised their LNG as a means of liberation from the “energy diktat of Moscow.” Americans (and everyone else) could not resist big price increase in Asia.

It is also worth noting that Europe’s own gas production continued to decline. This happened due to the depletion of explored deposits and against the background of the refusal to develop new ones for the sake of the “green energy transition”. That resulting in reduction and then a complete cessation of such investments. 

Who they will blame?

Gazprom made its own small contribution. It has never booked additional volumes of supplies through Ukraine this year. Everything is clear according to the letter of the 2019 transit agreement with the Ukrainian Naftogaz. Strictly speaking, Gazprom was not obliged to do this. A contract is a contract: business, nothing personal. Also, the Russian gas monopoly short-term cut by 10% in August supplies through the Yamal-Europe pipeline and stopped selling gas through the electronic trading platform for a year in advance. It should be noted that gas supplies from Russia to Europe in January-June increased by 17 billion cubic meters compared to the same period last year. By the end of September the increase was already 18 billion cubic meters – while other suppliers did not increase exports. So Gazprom did not violate any obligations.

However, the inevitable search for the “extreme” in such a situation may force some in the West to again “blame” Moscow. . And also China, which buys up everything on the market with a vacuum cleaner. Not America, which, although it did not fulfill its promises, but they were not contracted. . And you certainly cannot blame those who do not want to abandon the provisions of the Third Energy Package (EU). According to that Gazprom will not be able to use more than half of the pipe’s (Nord Stream 2) capacity. Yet for the sake of life-giving competition!

The short-term consequences of the energy crisis are quite predictable. This is, firstly, the surge in inflation around the world, which is already pumped up by trillions of emissions of dollars, euros and yen, committed to support economies (and stock markets) in the midst of a pandemic.

Transition to “green energy” will be long and expensive

A number of countries have started talking about rationalizing energy supplies. China has actually started to do this. And his example is very revealing and clearly demonstrates that the transition to “green energy” will be difficult, long and expensive.

Power generation in China is more than 70% dependent on coal. It is the dirtiest source of energy in terms of greenhouse gas emissions. However it is one of the cheapest. The CCP has set a goal of achieving a carbon neutral economy by 2060 – ten years after the European Union. Well, once the party (CCP) has set a goal, it must be fulfilled. Investment in the coal industry is falling and so is production. So far, it has not been possible to fill the shortage with renewable energy.

The example of China and Europe suggests that all of this is just the beginning of a long journey towards green energy. The current crisis can rightfully be called the First World Crisis of the Green Transition. And such excesses will repeat and grow. The process will continue not for years, but for decades. Energy systems – at least temporarily, until the right balance is found – are becoming more vulnerable, not more resilient (including to the vagaries of the weather). And it will be very difficult to find and maintain this balance.

Where will electricity come from?

Only one conversion of road transport to electricity will lead to an increase in demand for it by 20-30%. Where will it come from? How difficult will this very “energy transition” be made by growing inflation (as a consequence of the general rise in energy prices) in combination with increased price volatility? Nobody knows yet. That is, with a high probability, the “energy transition” will be accompanied not by economic growth, but by an economic recession or stagnation against the background of shocks in certain sectors of the economy.

Spurred on by loud political slogans (and the corresponding actions of state regulators), investors are heavily investing in “renewable energy”. That is certainly good thing but they are stopping investing in traditional ones.  Wind and solar electricity must be stored somewhere, it is not coal, which can be taken out of the ground as needed. This means that huge storage capacities are needed. 

In business, this is called unpredictability. And it costs money. The technological solution to this problem takes time – and also money. Until recently, a model worked in Europe. Gas generation served as insurance for renewable energy. However, insurance does not work properly in the face of such a sharp rise in prices.

Of course, the scale of the catastrophe that happened should not be exaggerated. And all the more, you shouldn’t bury the “green energy”. At stake is survival on planet Earth and preservation of its climate in a form acceptable to the human race. As the current crisis is overcome, new long-term solutions will be found. 

Russia & India have huge potential in energy sector

The potential for increased cooperation between Russia and India in the energy sphere is immense. Investors in both nations looking to expand mutually beneficial projects, India’s energy minister, Hardeep Singh Puri, told RT.

There’s a lot of ongoing cooperative work in the sector of petroleum and natural gas [between Russia and India]. It contains tremendous potential.”

He noted that Russia has many ongoing projects in the energy arena in India and is looking to further invest in the country. As it was expressed at a number of meetings with Russian companies at the EEF this week. According to Puri, India’s investments in Russia’s energy sector amount to some $16 billion. Russia has invested around $14 billion in India. 

Puri also stated that India’s import dependence on liquid hydrocarbons and gas is about 85%. Only about 1% of the country’s energy imports come from Russia. As India forecasts its economy to grow to $5 trillion in the next three to four years, he expects the country’s energy per capita consumption to grow “exponentially,” giving further ground for boosting energy cooperation between the two states.

We’ve got the roadmap in terms of the potential [in the energy sphere]. Both sides would want long-term agreements which provide predictability, stability and prices,” Puri said.

Russia and India are strategic partners in energy secotr

He added that he expects a “fascinating dialogue” about expanding energy inflows to India in the near future, as the country’s energy demand makes it a rather attractive market. 

No matter where you find oil and gas, somebody has to consume it. Many existing markets have reached a point where they have their sources, they have imports. India is one country where you can’t go wrong on the demand assessment. So potentially it’s a fascinating dialogue to have,” Puri said.

India is in need of energy and energy sources are here [in Russia]. Russia and India are strategic partners in energy and nobody has a second opinion on that,” he concluded.

During the EEF plenary session on Friday, Indian Prime Minister Narendra Modi also spoke positively about energy cooperation between India and Russia. He said it can bring stability to the global energy market, calling it a “major pillar of our strategic partnership.”

In his virtual address, Modi said Indian workers were taking part in gas projects in the “Amur region, from Yamal to Vladivostok and onward to Chennai.” He added that Indian authorities “envisage an energy and trade bridge.”

I am happy that the Chennai-Vladivostok maritime corridor is making headway. This connectivity project, along with the International North-South [Transport] Corridor will bring India and Russia physically closer to each other,” Modi stated.