Europe’s energy crisis has ‘very little to do with Putin’: CEO | Popgen Tech
This image, from September 2022, shows a liquefied natural gas tanker arriving at a port in the Netherlands.
Siese Veenstra | AFP | Getty Images
The energy crisis gripping Europe has little to do with Vladimir Putin and it could be argued that the Russian leader’s actions have helped improve the situation, according to Per Lekander, managing partner at Clean Energy Transition LLP.
During a wide-ranging interview with CNBC’s “Squawk Box Europe” last week, Lekander — formerly a fund manager at Lansdowne Partners — talked about how the situation facing energy markets has evolved in recent months.
“This summer, after Russia cut off gas … I thought the winter would be extremely bad,” he said.
“I really thought it…could be a big part of German industry being shut down…widespread cuts…and it’s worked out much, much better so far.”
Citing additions in solar capacity and liquefied natural gas terminals, Lekander continued to emphasize the importance of reducing demand.
“I would say power demand is down 10%, gas demand is down about 20, a little bit higher on the industry, a little bit less on … personal, a little bit more in the north, a little bit less in the south, but … that’s about it,” he said.
“So I would say, on the gas side, the worst is over from a security of supply situation.”
It was then put to him that while many experts feel the worst is over for now, worse is to come next year.
“That’s wrong,” Lekander replied. “And … assuming these gas savings remain — because we can see it now, we have really, really cold weather, we’re still drawing less than typical seasonality.”
“The key is that we stick to the demand saving,” he said. “If we do that, and as long as we have access to LNG, which I would say looks very credible … we’ll see high prices for another one, two years, but I wouldn’t say on the gas side it’s a issue of security of supply.”
However, the situation with power was “a little different”, he said. “The reason why we have a power crisis in Europe has very little to do with Putin,” he said. “I would almost say that Putin actually made the situation better,” he added.
Lekander expanded on his point and explained that in his opinion the current situation depends on a number of factors.
“It’s the result of long-term underinvestment in conventional, long-term red tape in renewables and then these political shutdowns of nuclear, coal, lignite, and so on,” he said.
“You could already see it in 2018 and it started to materialize,” he added. “What I say, that [it] is better now, is because… some of those closures have been reversed… [in] Germany, for example. Second, you have this 10% reduction in demand.”
Lekander’s comments come at a time of major disruption within global energy markets following Russia’s invasion of Ukraine in February.
The Kremlin was the largest supplier of both natural gas and petroleum oil to the EU in 2021, according to Eurostat, but gas exports from Russia to the European Union fell this year.
Major European economies have also sought to reduce their own consumption and boost supplies from alternative sources for the colder months ahead – and beyond.
At the same time, major industrial players such as Germany have decided to restart a number of coal-fired power plants to compensate for a lack of Russian gas.
In terms of usage, the European Council announced at the end of September that EU energy ministers had reached an agreement on “emergency measures to reduce energy prices.”
“Council has agreed to a voluntary overall reduction target of 10% of gross electricity consumption and a mandatory reduction target of 5% of peak electricity consumption,” he added.
Security of supply is a hot topic at the moment, and on Wednesday it was announced that the UK and US are forming a new energy partnership focused on promoting energy security and reducing prices.
The UK-US Energy Security and Affordability Partnership, as it is known, will be directed by a UK-US Joint Action Group led by officials from both the White House and the UK government.
Among other things, the group will undertake efforts to ensure that the market increases supplies of liquefied natural gas from the US to the UK.