Thanks for this Dr. Gustafson. In thinking about the impact of de-carbonization of European economies on relations with Russia, I wonder if there really is any necessary reason why conflict should emerge. The change will be so slow that Russia will have ample time to diversify its customer base. On the oil side, you're talking about a commoditized market; they will sell wherever they can, as they are doing now with deeply discounted volumes going to Pakistan and India. On gas, its pretty clear by now that European dependence on Russian pipe gas must be substantially reduced if Europe is to avoid catastrophes of the kind we are all now living through. A commoditized LNG market will take up much of this market share over time. Its also very clear as a matter of science that natural gas in general must be de-prioritized as fast as possible because of the order-of-magnitude extra climate damage that ensues from unavoidable leakage of CH4 at various stages of gas production. "Blue hydrogen" is a chimera invented by the global hydrocarbon industry and a few unimaginative investment banks.
Dear Ian: Thanks for your comment. I agree with all of your points. Wouldn't you agree, though, that the net effect of the Russian invasion will be to hasten decarbonization in Europe? Before the invasion, Russia could expect two more decades of abundant "last hurrah" oil and gas revenues before the energy transition took hold. But the invasion will likely shorten that period of respite, and I'm skeptical that Russia's LNG exports can be scaled up quickly enough to offset the loss . What do you think?
Two more follow-ups: First, I believe we have a good friend in common--Peter Charow.
Second, I agree with your comments. In particular, as I watch Germany, I am becoming more skeptical that energy transition and energy security will reinforce one another, at least in the near term. I also agree with your point that, whatever else the future brings, Russia will remain a commodity exporter.
Actually, IMHO the effect of the Russian invasion will cause a lost decade in the pursuit of decarbonization. The political-economic costs of providing energy security in the midst of an energy price shock will produce intense head winds far exceeding anything experienced since the oil shocks of the 1970's.
Meanwhile, lost in the turbulence on the natural gas price explosion in Europe in 2021 (before the war) was the truly awful performance of wind. Intermittency has been demonstrated to be a disturbingly serious issue. Renewables scale but only to a point. Then they become destabilizing...with their true cost finally emerging (necessary excess capacity, storage issues, cost maintaining backup generation infrastructure). Batteries & green hydrogen a mix of limited scale & magical thinking. The hard reality is that renewables alone are a partial solution that will leave modern societies/civilization stranded in a quagmire only part way through the long journey to decarbonization. Decarbonization will be a massive, multi-generational challenge to resolve.
Regards Russian LNG: until Russia is able to build cryogenic liquefaction units on their own, Russia's LNG industry is stuck - big time. Furthermore, due to sanctions, Novatek is unable to access original cryogenic equipment providers in Europe & Japan to provide maintenance to their existing Yamal LNG and Arctic LNG-2 (unit 1) facilities. Shell's departure from Sakhalin-2 causes a different problem as Shell was the technological operator. Not clear if the Japanese participants in the consortium can/will step forward to be technological operators. Gazprom is incapable of doing so at this time.
I certainly hope so. It’s easy to see how re-contextualizing climate policy as security policy for Europe should definitely impart extra impetus to the transition.
Thank you so much for this wonderful effort. I look forward to your analysis with great interest.
Thanks for this Dr. Gustafson. In thinking about the impact of de-carbonization of European economies on relations with Russia, I wonder if there really is any necessary reason why conflict should emerge. The change will be so slow that Russia will have ample time to diversify its customer base. On the oil side, you're talking about a commoditized market; they will sell wherever they can, as they are doing now with deeply discounted volumes going to Pakistan and India. On gas, its pretty clear by now that European dependence on Russian pipe gas must be substantially reduced if Europe is to avoid catastrophes of the kind we are all now living through. A commoditized LNG market will take up much of this market share over time. Its also very clear as a matter of science that natural gas in general must be de-prioritized as fast as possible because of the order-of-magnitude extra climate damage that ensues from unavoidable leakage of CH4 at various stages of gas production. "Blue hydrogen" is a chimera invented by the global hydrocarbon industry and a few unimaginative investment banks.
Dear Ian: Thanks for your comment. I agree with all of your points. Wouldn't you agree, though, that the net effect of the Russian invasion will be to hasten decarbonization in Europe? Before the invasion, Russia could expect two more decades of abundant "last hurrah" oil and gas revenues before the energy transition took hold. But the invasion will likely shorten that period of respite, and I'm skeptical that Russia's LNG exports can be scaled up quickly enough to offset the loss . What do you think?
Dear Ian:
Two more follow-ups: First, I believe we have a good friend in common--Peter Charow.
Second, I agree with your comments. In particular, as I watch Germany, I am becoming more skeptical that energy transition and energy security will reinforce one another, at least in the near term. I also agree with your point that, whatever else the future brings, Russia will remain a commodity exporter.
Actually, IMHO the effect of the Russian invasion will cause a lost decade in the pursuit of decarbonization. The political-economic costs of providing energy security in the midst of an energy price shock will produce intense head winds far exceeding anything experienced since the oil shocks of the 1970's.
Meanwhile, lost in the turbulence on the natural gas price explosion in Europe in 2021 (before the war) was the truly awful performance of wind. Intermittency has been demonstrated to be a disturbingly serious issue. Renewables scale but only to a point. Then they become destabilizing...with their true cost finally emerging (necessary excess capacity, storage issues, cost maintaining backup generation infrastructure). Batteries & green hydrogen a mix of limited scale & magical thinking. The hard reality is that renewables alone are a partial solution that will leave modern societies/civilization stranded in a quagmire only part way through the long journey to decarbonization. Decarbonization will be a massive, multi-generational challenge to resolve.
Regards Russian LNG: until Russia is able to build cryogenic liquefaction units on their own, Russia's LNG industry is stuck - big time. Furthermore, due to sanctions, Novatek is unable to access original cryogenic equipment providers in Europe & Japan to provide maintenance to their existing Yamal LNG and Arctic LNG-2 (unit 1) facilities. Shell's departure from Sakhalin-2 causes a different problem as Shell was the technological operator. Not clear if the Japanese participants in the consortium can/will step forward to be technological operators. Gazprom is incapable of doing so at this time.
I certainly hope so. It’s easy to see how re-contextualizing climate policy as security policy for Europe should definitely impart extra impetus to the transition.