The EU dooms itself to deindustrialization

Sergey Kondratiev, Deputy Head of the Economic Department of the Institute for Energy and Finance, commented to Vzglyad.ru on the consequences of Europe's refusal of Russian gas.

The European Commission has estimated at 565 billion euros the rejection of Russian gas and the transition to renewable energy sources, Bloomberg reports. According to the plan, by 2027 the EU will install solar panels on all commercial and public buildings, and from 2029 they will begin installation on new residential buildings.

“What we have been seeing in the EU since the beginning of the summer, in my opinion, is already a shock situation for the European energy sector. Apparently, Europe needs to replace Russian gas earlier than it plans, because the flow of gas from Russia has already seriously reduced,” Sergey Kondratiev says.

The problem is that this plan relies entirely on unscheduled generation, the expert adds. “The European economy needs gas primarily in winter for the production of heat and electricity. Leaving this task to solar panels in winter is an exotic idea, because in winter there are often cloudy weather and short daylight hours. This means that it will be necessary to build a lot of such solar panels, which may require significantly more investments than the announced half a trillion euros,” the expert explains. In the summer, he says, the opposite situation will arise, when solar panels will generate too much electricity, and it is very difficult to store it for the winter.

The second problem is the unpredictability due to the weather. In 2020, 2021 and 2022, Europe experienced very long periods (months) of no wind, which creates risks, the analyst adds.

Another problem is the warming climate in Europe, which may affect the efficiency of renewable energy. “At the end of spring and this summer in Europe, there was a record drop in production at many hydroelectric power plants due to drought. In France, in the past few years, a drought has been observed almost every two years. Although 30-40 years ago, a dry summer was once every 10-15 years. As a result, Europe in the short term may need to replace not only Russian gas, but also hydropower,” Kondratiev says. According to him, over the past ten years, Iran had to go through such a path. Previously, hydropower was the backbone of the energy system here, but constant drought has reduced the capacity of hydroelectric power plants. At the same time, more energy was required, including for the normal water supply of the country.

The EC is missing from its assessment of the energy transition one of the most serious consequences of moving away from gas and switching to renewable energy, which the Europeans are unlikely to like. This is the de-industrialization of the European economy and its transformation into an agrarian one, as happened in Ukraine after two Maidans. “Now the European economy is at the very beginning of this process, and it still has the opportunity to change something, that is, for the time being this process is reversible. But if this mechanism is launched, then it will not be easy to stop it,” the deputy head of the Economic department of the Institute for Energy and Finance said.