Europe’s Unsolved Energy Puzzle

Russian President Vladimir Putin’s war against Ukraine has laid bare some uncomfortable truths about Europe’s energy future. For one thing, it has demolished the presumption in Germany that Russia would be a reliable fossil fuel partner. The war has also blown apart Europe’s claim to moral leadership on climate change. At the UN Climate Change Conference in Glasgow in the fall of 2021, the European Union unsuccessfully demanded that China and India commit to a timetable for phasing out coal. Now that demand appears almost hypocritical, because countries such as Germany are keeping open coal-fired power stations that were due to close to deal with their present energy woes. In doing so, these leaders have demonstrated that coal is still the primary energy source of last resort for generating electricity.

The fact is, Europe’s energy consumption is misaligned with the resources to which European countries have secure access. This problem has been a persistent source of strife in European history and seems likely to shape Europe’s future, as well. At the World Economic Forum gathering in Davos in 2020, German Chancellor Angela Merkel proclaimed that “Europe intends to be the first continent to be CO2 free.” Even if that is a plausible aim, it won’t make Europe free from foreign resource dependence.

Liquid Gold

The return to coal reflects Europe’s history of scrambling for sources of energy. Coal was pivotal to the rise of western European power. Without coal-fueled industrialization, the United Kingdom would never have become the world’s economic powerhouse during the nineteenth century. But once oil emerged as a commercially viable energy source in the second half of the nineteenth century, western Europe faced a rather different long-term geopolitical future. No one found much oil in nineteenth-century Europe outside Romania, where drilling began in the 1850s, and Galicia in Austria-Hungary, now part of Ukraine, where production accelerated in the first decade of the twentieth century.

By contrast, Russia and the United States both enjoyed an abundance of oil. Unwilling to defer to what geopolitically followed from this geological reality, the principal European governments invested their hopes in the Middle East. In the 1890s, Germany under Kaiser Wilhelm courted an alliance with the Ottomans with an eye toward acquiring exploration rights in Mesopotamia. The United Kingdom’s initial priority was Persia, the south of which was a British sphere of influence. In 1908, oil was discovered in southern Persia by a British businessman who had secured a concession to drill from the Persian shah. Against this backdrop, the Middle East was central to the geopolitical contest between the European powers during World War I.

Nonetheless, after the Allied victory in that conflict, the post-1918 British and French imperial presence in the Middle East did little to address these countries’ medium- to long-term energy vulnerability. At no time during the interwar years did the United Kingdom and France secure sufficient supply from the Middle East to escape the need to import oil from the Western Hemisphere and—from the late 1920s until the mid-1930s—the Soviet Union. When World War II began, the United Kingdom and France were again largely dependent on oil imports from the United States.

The presence of the United Kingdom and France in the Middle East also deepened Germany’s panic over securing access to petroleum during the interwar period. German exclusion from the Middle East and acute dependence on U.S. and Soviet production haunted Berlin. Having turned first to a technological solution—producing synthetic oil from coal—Germany, under Nazi leadership, made a catastrophic attempt to conquer the Soviet Union, a decision driven in no small part by Germany’s thirst for Russian oil.

Coal was pivotal to the rise of western European power.

After World War II ended, the geopolitics of oil became even tougher for Western European countries. Given their concerns about long-term domestic supply, postwar U.S. presidents did not want Western Europe importing oil from the Western Hemisphere while they pushed a de facto embargo on importing Soviet energy through the Coordinating Committee for Multilateral Export Controls, which was established five years after the end of World War II. This left Western European countries dependent on supply from the Middle East. Although the United Kingdom could still exercise some imperial power in that oil-rich region, American companies were in a prime position in Saudi Arabia, the country where the deepest oil reserves lay. A pervasive anxiety that Western Europe was disadvantaged economically by its continued reliance on external supply took hold, compounded by the knowledge that rising electricity demand was accelerating fossil fuel energy consumption. The 1956 Suez crisis heightened these fears: in forcing the British, French, and Israelis to abandon their attempt to wrest control of the Suez Canal from Egypt, U.S. President Dwight Eisenhower demonstrated that Washington could, and would, set parameters for how any Western European state could act to protect its oil interests.

Scrounging for Supply

It is hard to underestimate what a blow Suez was for all the Western European governments. They made two principal moves in response: a turn back to the Soviet Union and a turn toward nuclear power. The long-term consequences of each shape the whole continent’s present energy predicaments.

Soviet oil offered the opportunity to diversify supply at the same time as natural gas was becoming a third crucial fossil fuel energy source. Nowhere did this change become more important than in West Germany. By the end of that decade, three north European countries—the Netherlands, Norway, and the United Kingdom—enjoyed the prospect of a substantial domestic gas supply. West Germany did not. To compensate, Chancellor Willy Brandt committed in the late 1960s to purchase Soviet gas transported to Europe using German-constructed steel pipes. A new West German–Soviet relationship was born.

This energy trade continued beyond the Soviet Union’s dissolution. The post-1991 geopolitical situation appeared to offer an opportunity to fortify Europe’s energy security. In an apparently capitalist Russia, European energy firms could pursue production partnerships. During the first decade of the twenty-first century, after the debacle of the Iraq war, reliance on Russia became more attractive than deeper dependence on the Middle East.

Nonetheless, since the pipelines that delivered Russian gas ran through the independent states on Russia’s western borders, most consequentially Ukraine, the dissolution of the Soviet Union also created new energy vulnerabilities for Europe. The reliability of supply became subject to Moscow’s whims. With the European Union’s eastern enlargement in 2004, transit through Ukraine also became a source of internal geopolitical conflict within Europe. These tensions first came to a head after Ukraine’s so-called Orange Revolution in 2005, which saw the arrival of a government in Kyiv committed to asserting Ukraine’s autonomy from Moscow. In response, Putin recommitted Russia to the approach that his predecessor Boris Yeltsin had begun to craft, which was to build maritime pipelines to bypass Ukraine. Confronted with a choice between acting to protect Ukraine’s independence and tending to Germany’s energy needs, the German government prioritized its own interests and backed the first Nord Stream pipeline under the Baltic Sea from Vyborg, Russia, to an industrial port close to Greifswald, Germany. Once operational from 2011, Nord Stream 1 would deprive Ukraine of revenue and reduce the incentive for European governments to support Ukraine in energy disputes with Russia.

Putin’s war has exposed the depth of Europe’s gas vulnerability.

In the 2010s, Europe’s energy position deteriorated again. In contrast to the United States, there was little political appetite in western Europe to experiment with fracking. Although Poland pursued shale gas projects, the high hopes that the American boom could be replicated in north and east Poland were dashed. Consequently, as the United States’ dependence on foreign energy fell through the course of the last decade, European dependence rose. Although several eastern European governments saw the U.S. ability to export liquid natural gas as a lifeline to end energy subordination to Russia, Merkel’s governments saw no reason why German companies should forsake the cheap pipelined gas available from Russia. With Europe divided, European energy markets became a battleground between Gazprom and American gas companies.

Now that Putin’s war has exposed the depth of Europe’s gas vulnerability, European governments can escape Russian gas dependence only by revisiting problems that recall the quandaries they faced during the first half of the twentieth century. They can look for more supply from the United States or from the Middle East—specifically Qatar and, if they could persuade Washington to remove sanctions, Iran. Alternatively, they can engage with a new version of the old Ottoman question to cultivate the gas that lies underneath Cypriot and Greek waters but to which Turkey claims rights. Most likely, they will have to do all three in a world in which foreign energy dependence is now an Asian problem, too, meaning European countries must compete with China for all natural gas supply.

The Nuclear Quandary

The idea that nuclear power could radically diminish Europe’s energy predicament has been an attractive proposition ever since Eisenhower opened a pathway in 1953 in his Atoms for Peace speech to using nuclear reactors as a heat source. Although talks to establish a common Western European approach to nuclear power had floundered before the Suez crisis, the Anglo-French humiliation pushed the French government to conclude them positively.

The result was the European Atomic Energy Community (EURATOM), part of the Treaty of Rome in 1957, which created the institutions making up the European Economic Community that eventually became the European Union. Although the French government conceived EURATOM as a long-term bid for Western European energy autonomy, that did not come to pass. Instead of EURATOM serving as a supranational European association, nuclear power developed on a national basis. These national nuclear projects also entailed new American dependence, with France importing U.S. technology and West Germany importing almost all of its enriched uranium from across the Atlantic.

The external resource dependence problem was further exacerbated by the power imbalance in the Atlantic relationship. Until the early 1950s, almost all of the world’s uranium outside of the Soviet Union was located in Congo. That country was a Belgium-controlled colony, but thanks to an agreement made by the wartime exiled Belgium government, it was the United States that largely controlled the distribution of its uranium. Then, by the mid-1950s, the United States experienced its own uranium mining boom.

Soon, a serious policy divergence materialized between France and West Germany. After the first oil price shock in 1973, France massively committed to nuclear power, an undertaking helped by the fact that it had already procured privileged access to resources in its former colony of Niger, where uranium was discovered in 1965. Today, nuclear power usually provides 75 percent of France’s electricity and constitutes a greater share of France’s primary energy consumption than oil, an energy mix unparalleled anywhere else in the world. Although French President François Hollande aimed to replace some of France’s nuclear power capacity with solar and wind during the years 2012 to 2017, the current president, Emmanuel Macron, has increasingly become more pro-nuclear, promising in early 2022 to usher in the “rebirth of the French nuclear industry.”

By the end of the 1970s, Germany was on a different energy course. While the Social Democratic–led government in Bonn also committed to a big expansion of nuclear power during the 1973 oil price shock, atomic energy met considerable grassroots resistance in West Germany. Out of the civil discontent, the German Green Party emerged. Faced with environmentally oriented electoral competition, the West German Social Democrats became more cautious about equating growth with rising energy consumption. Then, the Chernobyl disaster strengthened antinuclear opinion. After the Greens entered government for the first time in 1998 in a coalition with the Social Democrats, Germany became committed to a transition away from nuclear power and fossil fuels toward solar and wind. Although initially Merkel sought to rescue nuclear power, she reversed course after the Fukushima accident in 2011, pledging to eliminate all German nuclear stations by the end of 2022.

Sun and Wind

Before the war, Germany’s priorities appeared to have won in the conflict over how the European Union can reach a carbon-neutral future. In 2019, when the EU moved to launch the European Green Deal—what Commission President Ursula von der Leyen called “Europe’s man on the moon moment”—the European Commission’s initial green taxonomy did not include nuclear power. But entrenching Germany’s trajectory—the large European country that has historically struggled the most with energy since the age of oil began—could only mean accepting another version of foreign dependence. Since virtually all the rare-earth metals that the EU needs for solar and wind power are imported from China, Beijing has to be a strategic partner in low-carbon energy manufacturing for the EU. Merkel thus spent considerable geopolitical capital in her last year in office pushing a formal link between the EU’s emissions trading system and China’s.

By forcing governments into an immediate reckoning with the present difficulties of replacing carbon energy in the electricity sector without nuclear power, the European gas price shock last fall and Russia’s war have upended these countries’ energy priorities. Just weeks before the war began, the European Commission announced that under certain conditions it would include nuclear power in its green energy plans. With Putin demonstrating his willingness to switch off Europe’s Russian gas supply and Asian demand for natural gas rising, the medium-term choice for European governments is becoming whether to build new micronuclear reactors or keep burning coal beyond the present emergency. Even on their own terms, however, these options are no panacea. Before the war began, around 50 percent of Germany’s coal imports came from Russia. Meanwhile, France’s aging nuclear industry is struggling with corrosion problems. This past spring and early summer, half of the country’s reactors were offline. In July, soaring temperatures meant nuclear output had to be curtailed because there was insufficient river water available for cooling.

European states have only hard choices ahead. The illusion that on the other side of energy transition lies a new geopolitical future is over. Even if it must be seen to act, Europe can’t in practice renounce all Russian energy imports because the supply of liquid natural gas and oil are constrained. If China can be a low-carbon partner, it is also a foreign energy-importing rival. As in the beginning of the twentieth century, European countries will search for a way out of their domestic resource limitations, not least by looking for metals in Africa. This time there can be no empires, only a reckoning with the gap between Europe’s energy consumption and the geographical distribution of the means necessary to produce it.