Collapse is inevitable… A view from Russia

The President of the United States in an address to the nation publicly acknowledged the fall of the American economy, blaming Russia for this. Collapse is inevitable…

US President Joe Biden warned his fellow citizens in a recent address to the nation that they would have to suffer for democracy in Ukraine.

At the same time, he deftly linked official inflation, gigantic by the standards of the United States, with the events taking place around Ukraine. Well, as always, only Russia is to blame for this.

A very strange explanation of the situation, given that the liberals assured us that the Russian economy is only a statistical error in the overall world economy. And, in general – since 2018, Apple Corporation alone is worth more than the entire Russian economy! If you are to believe these “evaluations”.

But the US government knows better. Since the average American has to suffer for democracy in Ukraine (through frenzied inflation and rising prices for everything), then let him suffer.

Russia’s actions really affect inflation in the United States regardless. That could lead to the collapse of not only their economy, but also to the collapse of the entire modern financial system. This is due to the fact that Russia has gained sovereignty and no longer sells its natural resources for almost free, especially energy. Something that was happening during the last decade of the last century. Arrival of Putin changed that situation.

In Russia today, too, high inflation, which is 8.7%. In the US, inflation is 7.5%. But there is one big difference: in Russia, inflation is in rubles, while in the US it is in dollars.

What does it mean?

Prices for goods are always rising with us, as there is inflation. But they grow in rubles, while in dollars they, on the contrary, fall.

  • For example, just yesterday the dollar exchange rate was 77 rubles, and today it costs 80 rubles.

That is, goods produced within Russia fell in price against the dollar.

Let’s take gasoline as an example.

In 2014, a liter of 95th gasoline cost 35 rubles, or 1 dollar (the dollar exchange rate was also 35 rubles then).

Today, a liter of AI-95 gasoline costs 53 rubles, that is, $0.69 at a dollar rate of 77 rubles (or $0.66 at a rate of 80 rubles).

By manipulating the ruble exchange rate, it is possible to minimize the damage from dollar inflation within the Russian economy. Another thing is that the real incomes of citizens will decline, but the economy will only develop and grow. That is why, even with high oil prices, the ruble still does not return to its previous values ​​​​of 50 or even 30 rubles per dollar. And this will not happen as long as the US economy (and with it the EU economy) is in crisis.

  • However, the crisis in the United States did not arise because of the situation in Ukraine, as Joe Biden talks about it. Ukraine is just a good excuse to divert the attention of US citizens from the really fundamental economic problems.

The United States, like no one else, knows how to manipulate inflation and dispel any threats and risks to its economy in the global financial system.

Their freshly printed candy wrappers are supplied by market demand and supply

US economists are very smart people. They have built an economic model in which the US economy will grow and develop in almost any circumstances. And if something goes wrong, you can always print more money and pour it into the economy. Like doping.

The worst nightmare for the US economy is the deficit generated by excessive inflation. And this can happen only in one case. It is when there is not enough goods in the world that the United States needs. And it cannot be bought for any money. Under such conditions the more dollars are printed, the more expensive the desired product will be, and the more expensive the product, the more inflation will be. And it goes in spiral.

Look at the US inflation chart:

US inflation chart. 
The modern Bretton Woods financial system based on the US dollar originated in 1945

1. 1951-1954: Anglo-Iranian Oil Company in Abadan (oil crisis)

2. Arab-Jewish war (oil crisis of 1973-1974)

3. Islamic revolution in Iran (oil crisis of 1979-1980)

4. The global financial crisis of 2008 (a lot of oil)

5. Present time (physically there is not enough oil).

The real cause of the inflation

The cause of inflation in the US is the global energy crisis. All statements that US inflation is a temporary event were based on the erroneous hope that demand for hydrocarbons would soon stabilize. Today, however, it has become clear that this will not happen. As a result, the States even had to unpack their strategic oil reserves and enter the world market with it. However, all this was in vain, as the price of oil is already approaching $100 per barrel. Price of oil started rising before Ukrainian crisis. It is true that current crisis is certainly making it even worse.

Such high inflation in the USA has not been seen for more than 42 years!

The world simply no longer has enough energy resources to meet all the needs of the world economy. Russia controls around 23% of energy exports in the entire world economy (oil, gas, coal, electricity). Any provocation of Russia will only raise energy prices.

The United States is well aware of this.. Without long-term access to resources, it is impossible to contain inflation, since energy is the basis for the production of any product and service. It seems that fracking is approaching its maximum. It probably already happened. Not to mention that energy acquired by that methodology is expensive. Only weak Russia would allow plundering of its resources as during Yeltsin era. All sanctions introduced by US and EU against Russia since 2014 simply failed.

US dollar is not only currency but commodity as well

Remember the times when the price of oil reached the mark of more than $140 per barrel? But even then there was no such inflation in the US. Why? It’s simple: oil can be arbitrarily expensive – the United States will always buy it and in any quantity. But what to do if there is no physical oil? Then the price is absolutely not important – it still will not be enough for everyone.

Importance of “petro-dollar”

How is oil (and most other goods) traded on international markets? Saudi Arabia has made agreement with US that all oil trading will be in US dollar. Other oil producers (including USSR) followed. That means that anyone with need to buy oil would have to pay it in US dollar. Many were forced to buy US dollar making it become some sort of a commodity. That is aloso one of the reasons of it being “reserve currency”.

US and the rest of the “west” relied od cheap energy and commodities to support their growth, high living standard and world domination. In their greed they “exported” manufacturing industries to developing countries (China being one of them some 20 years ago). That made American rich class even richer. It also deprived American government revenue from taxes. Accelerated development of the “third world” countries also means higher demand for energy and resources.

V.V. Putin, in a recent address to the people of Russia, during which recognition of the independence of the DPR and LPR was announced, confirmed what has been obvious for a long time – US sanctions are aimed at curbing the development of Russia. Nothing to do with democracy, human rights, ot any other reasons that CNN/BBC would like you to believe.

As long as there is government in Moscow that will not allow pillaging of Russian natural resources, there will be pressure through sanctions and attempts to surreound it with unfriendly regimes in their neighborhood. Prices of natural gas went through the roof not because of Russia using it as a weapon but because someone in EU decided to go “green” overnight. It failed miserably.

Russia and China oil supplies through Kazakhstan

Russia and China signed an agreement on oil supplies through the territory of Kazakhstan for 10 years. This became known as a result of the visit of the Russian delegation headed by President Vladimir Putin to Beijing. Rosneft revealed the details of the new agreement.

Rosneft and the China National Petroleum Corporation (CNPC) have signed an agreement on the supply of oil to Chinese refineries through the territory of Kazakhstan. It will be valid for 10 years. The press service of Rosneft reported on the results of the visit of a Russian delegation led by President Vladimir Putin to Beijing on Friday.

It is specified that 100 million tons of Russian oil will be sent to refineries located in the northwestern part of China. Also during the visit, agreements were signed in the field of low-carbon development, digitalization and technological cooperation.

Rosneft’s total oil supplies to China since 2005 amounted to 442 million tons of oil. The company occupies a leading position among oil exporters to China. It is annually providing 7% of the country’s total demand for raw materials.

Russia and Mongolia moved on to the stage of designing the Soyuz Vostok gas pipeline to China. It is planned that its capacity will be up to 50 billion cubic meters of gas per year. The gas pipeline will pass through the territory of Mongolia. It will become a continuation of the Russian gas pipeline “Power of Siberia – 2”


China and Russia will strengthen integration cooperation in Eurasia

The leaders of Russia and China intend to intensify integration cooperation in Eurasia. According to a joint statement by Russian President Vladimir Putin and Chinese President Xi Jinping, published by the Kremlin press service on February 4. Moscow and Beijing have coordinated their positions on foreign policy issues.

Work on linking the development plans of the Eurasian Economic Union and the One Belt, One Road initiative is planned to be strengthened. It is noted that this is necessary to deepen practical cooperation between the EAEU and China, as well as to increase the level of interconnectedness between the Asia-Pacific and Eurasian regions.

“The parties confirm their focus on the parallel and coordinated formation of the Greater Eurasian Partnership and the construction of the Belt and Road in the interests of developing regional associations, bilateral and multilateral integration processes for the benefit of the peoples of the Eurasian continent,” the text says.

The statement also notes that Beijing  treats with understanding and supports” the proposals put forward by Moscow on the formation of long-term legally binding security guarantees in Europe. 

International Law rather than “certain rules developed in a closed circle”

Russia and China intend to jointly oppose attempts to replace international law with “certain rules developed in a “close circle” by individual countries or blocs of countries. “Putin and Jinping also stressed that countries are unanimous in understanding that “democracy is a universal human value, and not the privilege of individual states”. Therefore, attempts by “individual states to impose their” democratic standards on other countries … in fact, represent an example of trampling on democracy and retreat from its spirit and true values.

On the eve of the visit to Beijing for the opening of the Olympic Games, Putin published an article “Russia and China: A Strategic Partnership for the Future”. In that article he stated that Russian-Chinese relations have reached an unprecedented level of “comprehensive partnership and strategic interaction.” He emphasized that the foreign policy coordination of Russia and China is based on close, coinciding approaches to solving global and regional problems.

How the United States is destroying the industry of Europe?

2022 promises to be a very difficult year for the European economy. The German “greens” under the flag of ecology staged a blackout in the country. According to open data, many European enterprises decide to close production until better times. Who benefits from all this?

Gloomy prospects

At the time of this writing, gas prices at European hubs are around $1100-1200 per thousand m³. This is 12 times more expensive than a year earlier. Many agencies predict that this trend will continue. And the margin of safety of the industry is already at the limit. 

The decline in gas prices in Europe at the end of December was due not only to the warming weather, but also to the fact that many enterprises simply began to stop production. As a result, gas consumption also decreased. 

“The sky-high prices for natural gas provoked massive reductions in industrial production. In the fourth quarter, the UK industry reduced gas consumption by 54%, and Northern Europe in the last week of 2021 by 7%,” Bloomberg reporter Stephen Staprzynski tweeted.

Recall that the producers of nitrogen fertilizers were the first to feel the impact of the energy shortage. They started closing back in October last year.

The actions of gas exporters demonstrate that they do not intend to lower gas prices below $1,000 per thousand m³. This is clearly evidenced by the reduction of supplies to Europe by Gazprom to a 6-year minimum and the turn of American LNG tankers to Asia. We wrote about thishere 

After all, the goal of each manufacturer is to get the maximum profit with the minimum amount of transportation.

With such energy prices, many European enterprises are not competitive, and no one needs their goods. Here and the Bloomberg edition asserts that the tendency to reduce production in Europe will continue. And you have not forgotten that Bloomberg is one of the leading American media, not European ones.

Blackout in Berlin

The imbalance of the EU energy system is not only hitting industrialists and businessmen, but also the population. For example, on January 9, a major blackout was recorded in Berlin. An accident occurred due to overloads in the power system:

“On Sunday, January 9, in the afternoon, part of Berlin experienced a blackout. More than 180,000 residents and four hospitals in the German capital were left without electricity and heat supply. Heat supply was fully restored only by Monday morning.

At about 2 p.m. local time, the Klingenberg combined heat and power plant went out of order. “Due to a fault in the external power grid, the CHP plant went out of service,” a spokesman for Vattenfall told Der Tagesspiegel. “A defect “worked” at one of the substations, which affected only the gas-fired thermal power plant,” Interfax reports.

At the same time, the district office of Lichtenberg County advised residents to keep warm with extra clothes and blankets, and not to use a gas stove to heat the apartment.

Such incidents occur due to the imbalance of the power system. After all, some of its nodes are extremely loaded due to the lack of certain types of energy carriers or the rejection of them due to pressure from the “greens”. 

It would seem that a quick certification of SP-2 can save the EU from this. So what’s stopping you?

American footprint

Russia mainly supplies gas under long-term contracts, which are signed for 10-20 years or more. At the same time, consumers receive fairly cheap gas, which is not strongly dependent on prices in the spot markets. 

Gazprom insists that the long-term contract is a guarantee that the gas it produces will be in demand. And the company produces gas under these guarantees. But European politicians, for some reason, oppose both the certification of SP-2 and long-term contracts. 

And yet the general attack comes from the United States. With enviable regularity, bills are submitted to the Senate imposing sanctions not only against Nord Stream 2, but also against any companies or commercial enterprises that will cooperate with this project. 

That is, a conditional German company that buys gas through this gas pipeline is proposed to be banned from cooperating with American corporations and absolutely any activity in the United States. 

So Washington is directly involved in the energy crisis in the EU, in the de-industrialization of the European economy. Question: What is the likelihood that European politicians who oppose SP2 are covert agents of influence?

On the other hand, the German newspaper Bild recently reported that the new Chancellor of Germany, Olaf Scholz, has been preparing for a meeting with the Russian president for 2 weeks. He plans to do so as early as January 2022. Experts confirm that closed talks with the United States have greatly alarmed the new German prime minister. I wonder why? Apparently, the Germans have something to say in this situation.

Gazprom manipulates European shortsightedness 

On January 14, it became known that the Russian gas monopoly filed a lawsuit against the Polish state-owned company PGNiG for $7.4 billion. According to Gazprom, since 2017 it has been selling gas to Poland at a reduced price. 

Recall that in 2020, Poland won a lawsuit against Gazprom for $1.5 billion. The Polish side appealed to the prevailing gas price on the spot market below $100 per thousand m³. 

In other words, the Poles thus created a dangerous precedent. And therefore, using the same argument about the gas price at the current moment in the region of $1,000, the Russian gas monopolist has the right to sue Warsaw for the lost profit since 2017. Thus, one more short-sightedness of the supporters of progressive ideas in the energy sector was revealed. 

It makes you think. Could the organizers of the ecological transition be aware of the consequences of their decisions? Or did they really mean it? Investigative practice in such cases recommends looking for someone who benefits. Then is it possible to assume that they were sponsored by mining companies, for example, from the USA? Or maybe from Russia? Or maybe USA and Russia collaborated?

These questions will probably remain unanswered. 

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