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03.05.2022

Charles Ellinas: The current energy crisis delays the green transition

Dr Charles Ellinas is one of the most distinguished experts in the Energy field. He’s a Senior Fellow at the Global Energy Centre and former Head of Cyprus’ Energy program. Dr. Ellinas has a profound knowledge of all Energy matters, especially natural gas. He always speaks his mind without beating around the bush, and our latest discussion with him was no exception.

Do you reckon that it is possible for the EU to stop relying on Russian gas in the foreseeable future?

No, it’d be really difficult. Europe would be able to find alternative quantities of natural gas (NG) and liquified natural gas (LNG), but not enough in order to stop relying on Russian NG in the coming decade. Since the intermittency issue isn’t resolved and green hydrogen needs more than ten years before it can contribute in large quantities, Europe will need NG for more than 15 years from now.

Subsequently, would it be possible for Russian energy funds from the EU market to be channelled to the Chinese or the Indian market?

By 2030, Russia will export to China approximately 100 bcm/yr of NG through pipes and even more in the form of LNG. Chinese companies have already invested in the energy industry in Russia and will replace the Western oil companies that have left. There are also several Chinese companies that are already buying oil at good rates. India has announced that it intends to do the same.

Do you think that the current energy crisis will lead to postponing the deadlines for the green transition?

Most definitely. The use of coal has already increased significantly in Europe, China and India due to the increase in NG rates. Chinese President Xi recently said that the country’s low carbon emissions goal shouldn’t be at the expense of energy security or of the citizens’ “normal life”. For all the major economies, energy security is currently more important than climate change goals.

For example, in the UK the government is planning to change the legal commitments for climate change in order to accelerate the issuing of permits for the exploitation of new oil and NG reserves in the North Sea based on “national security reasons”.

During the last few days, there have been talks of exploitation of the Eastern Mediterranean energy reserves as well as of potential energy synergies between Greece-Cyprus and Turkey. Are such scenarios realistic?

They are, but we’d have to factor politics in. We have to examine Europe’s message closely. The goal is to find alternative NG sources in order to decrease its dependence on Russian gas by two thirds this year and to stop relying on it altogether by 2027.

Also, the EU insists that the use of NG in Europe will decrease by 30% by 2030 and will stop altogether by 2050 thanks to a rapid switch towards renewable energy sources.

There’s also resistance by activists claiming that investments in new fossil fuel works point to their long-term use and will delay the transition to clean energy. It doesn’t matter if it’ll be successful or not. For investors it is important to have a clear message and clear policies.

This uncertainty in terms of NG’s future in Europe discourages investors. Who will invest billions of dollars in long-term works only to secure 5 years of extraction?

In your opinion, can Greece do anything to lower the energy costs in the local market?

It does have some options. It could follow some other countries’ example and lower its energy goals, return to lignite electricity production, speed-up the renewable energy sources’ production, promote electric linkages. Also it could make use of the EU Emissions Trading System funds that are available for assisting vulnerable energy consumers and renewable energy sources investments.