Frank Hoermann/SVEN SIMON/picture-alliance/dpa/AP Images
The Haidach gas storage facility near Salzburg, Austria
Throughout the 2010s, natural gas was portrayed as a near-miraculous energy source that could fight climate change, lower energy costs, and clean up the environment. It would be a “bridge fuel” that would help eradicate coal and provide the on-demand power that renewable sources like solar and wind could not.
“The natural gas boom has led to cleaner power, and greater energy independence,” President Obama boasted in a 2012 debate with Mitt Romney. “We’re encouraging it and working with the industry.” Much of the rest of the world took the same approach. Europe bet heavily on natural gas—especially Germany, which regeared its whole energy system around gas from Russia, thanks in part to years of effort from former German Chancellor Gerhard Schröder, who has long worked as a lobbyist for the Russian energy companies and is close friends with Vladimir Putin.
A decade later, the supposed dream of natural gas has become a nightmare. Making energy cheaper? Utility and heating bills are skyrocketing. Providing abundant clean fuel? Shortages are causing a stampede back to coal. It’s a disaster.
Energy costs are soaring across the world, led by the gas shortage caused by Vladimir Putin’s invasion of Ukraine. Dutch gas futures contracts, which are widely used as a benchmark for Europe, have soared from about 20 euros per megawatt-hour’s worth of gas in mid-2021 to about 280 euros today, with the most recent spike caused by Russia’s announcement that it would shut down its main gas pipeline for a few days.
That in turn is fueling inflation: In July, the eurozone posted an 8.9 percent annual figure, the highest in its history, fueled mainly by gas prices. It might even get worse—Citigroup analysts predict that the U.K. might hit 18.6 percent inflation next year, again thanks mostly to gas.
Meanwhile, these soaring European prices are placing gas supply beyond the reach of the rest of the world. Pakistan, Bangladesh, and Sri Lanka have seen rolling blackouts thanks to expensive gas. Even in North America, where gas has traditionally been very cheap because it’s hard to transport to other continents, prices are surging thanks to the high price our exports now demand as they move through our recently constructed liquefied natural gas terminals to the EU market. The price of gas has compelled a turn back to coal power in countries like India, China, and Germany—and in Germany, the government is frantically restarting dirty, old plants that had been mothballed.
Now, to give natural gas its due, it does in fact burn much more cleanly than coal, and produces much less carbon dioxide for the same amount of power—though this effect is mitigated if any methane leaks in the production or combustion process, as methane is a much more powerful greenhouse gas than carbon dioxide. (Some studies have found that when you account for leaks, gas power plants are actually worse than coal for the climate.) And up until the last few months, gas has been a lot cheaper than other traditional sources of power.
Putin’s wars have typically come during times of high energy costs, trusting that Russia’s control of energy would dampen any pushback.
But as we’re learning today, those modest benefits come with a risk of extreme price volatility. The supply of gas depends on wells that routinely run out and must be replaced, particularly in fracking operations. Gas supplies and futures are traded in global financial markets, which can cause more price gyrations thanks to speculation or panic. Most importantly, the second-largest producer of natural gas is run by a neo-czarist with a habit of imperialist wars of aggression.
All these problems have been obvious for years. Putin’s wars have typically come during times of high energy costs, trusting that Russia’s control of energy would dampen any pushback. He invaded Georgia during the 2008 oil and gas price spike; he annexed Crimea and started a brushfire war in eastern Ukraine right before the 2014 collapse in oil prices; and in February, he took advantage of high prices once more to launch his full-scale invasion of Ukraine. Putting yourself at the mercy of this guy to provide your energy is simply idiotic.
What’s more, other options were available at the time. Most European countries have built up significant amounts of solar and wind power, but not nearly as much as they could have—particularly when German-inflicted austerity starved the continent of investment during the post-2008 decade of stagnation. Sunny Spain and Italy had virtually no renewable investment from 2010 to 2018, at a time when both countries were suffering Great Depression levels of unemployment.
Alternatively, Europe could have preserved its fleet of nuclear reactors. In 2011, Germany announced plans to shut down all its nuclear plants in a panic after the Fukushima disaster (though now, reportedly, it will keep the last three, which still provide some 6 percent of German electricity). Even in France, which did keep most of its nuclear capacity, the government has skimped on maintenance and training for so long that it has been caught flat-footed by a corrosion problem and is scrambling to find technicians able to carry out repairs. Roughly half of its nuclear plants are offline at a time when they couldn’t be needed more.
A large and underrated benefit of switching away from fossil fuel energy is that it will disempower authoritarian petrostates like Russia, Qatar, and Saudi Arabia. It’s a lesson that should have been obvious a decade ago, but better to realize it late than never.
