Opinion – Helio Beltrão: Europe without gas shows that Trump was right

Europe is suffering an unprecedented energy crisis. The price of natural gas — a crucial component for the energy matrix and for heating — is ten times higher than the average for the last decade. Electricity is also often more expensive.

History demonstrates that every time there was a shock to the energy supply, a severe recession followed. The scenery is not pretty. Germany’s 2023 economic growth estimates have been revised down from around 3.5% to zero in the past two months.

This is the story of a complacent continent, which for two decades became addicted to Russian gas, its only supplier. It’s the story of a youthful addiction that could have been avoided if Brussels hadn’t gotten too carried away by the frenzy of conferences packed with people who don’t have to deliver. It is history that repeats itself: of naive appeasement, of geopolitical immaturity, of idealized peace-and-love. But Putin plays chess, and Brussels, marbles.

The European idea in 2010 was that natural gas would be the ideal fuel for the energy transition: less polluting than coal (which emits twice as much), less “dangerous” than nuclear energy (controversial concept). Germany has scheduled the closure of all its nuclear plants. Europe built a colossal industrial infrastructure based on the import of Russian gas.

Additionally, important storage terminals were decommissioned with the arrival of gas pipelines from Gazprom, the Kremlin-controlled energy giant. That is, Europeans retired “hard drives” when they connected in the “streaming” of the Russian “cloud”. Even in 2022, after the war, power generation based on Russian gas has been increasing month by month, due to the shutdown of nuclear reactors and lower production of other components of the matrix.

Has nothing been learned since 2004? That year, the Ukrainian people voted for a leader more aligned with Europe, replacing the Kremlin puppet. A few months later, Gazprom, which controlled 1/3 of the world’s gas supply, demanded prices five times higher, Ukraine refused to pay, and the Kremlin cut off supplies on the coldest day in January. This event ushered in the “weaponization” of Russian energy, the creation of a powerful little button on Putin’s desk to exert geopolitical pressure.

In 2014, Russia invaded and took over Crimea. Europe already imported more than 25% of its gas demand from Russia. Putin concluded that he had already built up enough leverage over Europe. He figured the sanctions wouldn’t be that severe. A possible conviction by the court of public opinion did not bother the Kremlin. He paid to see it and took it. Putin again cut off supplies to Ukraine. Brussels shrugged, as if it were none of his business.

In 2018, in a speech at the UN, Trump warned of the risk of Germany becoming totally dependent if it did not immediately diversify its matrix and said that the West should not be vulnerable to expansionary foreign policies. The German foreign minister smirked at his delegation. Trump was correct, however.

Europe, enchanted by the SDGs (Sustainable Development Goals), invested in green technologies and increased its dependence on Russian gas to 40%. The invasion inflated Gazprom’s revenue, and now Russia has turned off the faucets again, which shouldn’t have come as a surprise to anyone connoisseur of history, but shocked many Europeans.

Diversification belatedly became an urgent agenda. A delay with exorbitant costs, skyrocketing prices, rationing, and a return to coal, at least temporarily. It’s the ESG era: Europe without gas.