You can safely call it the end of an era. After decades of intimate energy trade with Russia – despite numerous warnings not to become dependent on a capricious partner such as Moscow – the Netherlands has now officially rid itself of its addiction to Russian energy. The Netherlands no longer buys Russian coal, Russian petroleum and diesel, and Russian gas is almost gone. Only liquefied gas (LNG) is coming in. But the Netherlands also wants to stop this, although it is still uncertain when exactly.
The Ministry of Economic Affairs reported reaching this milestone on Friday, almost a year after the start of the Russian war against Ukraine. It is the logical consequence of the sanctions that EU countries have imposed against Russia. But when it comes to phasing out gas imports, the Netherlands is faster than the European targets. They prescribe that EU countries will no longer buy Russian gas by 2027 at the latest. Also Germany reported recently that it is no longer dependent on Russian energy. Russia is not expected to return to favor as a supplier should the war end at any point. European countries seem to have largely turned to other sellers on a permanent basis.
In an interview, responsible minister Rob Jetten (Energy, D66) looks back on the price paid by the Netherlands. Because the sanctions also hurt the Netherlands itself. Like other countries, it was caught in a disruptive energy crisis and the minister had to rely on polluting coal to secure energy supplies. Jetten also spent billions to ease the pain of high energy costs for citizens and businesses. He also looks ahead and warns: the crisis is not over yet and a lot will be asked of society. “We have to continue to save energy and prices can rise sharply again.”
What did all the emergency measures cost?
“We had to pull out a lot of money. The price cap is estimated to cost around 14 billion euros. That could have been less, we hurt ourselves unnecessarily in Europe. Last summer, because EU countries competed against each other to build up winter stocks of alternative gas, energy prices have risen to extreme levels. I am a bit frustrated that we have not purchased in an EU context, hopefully that will happen next year. Some countries thought they could do better themselves. And there was a legal problem: companies buy gas, not governments. If they start working together, you have to be careful not to violate antitrust laws.
“The state has also issued guarantees to facilitate the import of liquefied gas (LNG). We have allocated 1 billion euros to fill the storage facility in Bergermeer. Hopefully we will get that money back through an increase in energy rates for large consumers. And we have set aside 160 million euros for the construction of the new LNG terminal in Eemshaven.”
For years there have been warnings about dependence on Russia. Why couldn’t this be done sooner?
“You can write dissertations about that. There have been times when we could have broken with Russian gas. After the annexation of Crimea in 2014. After MH17 in the same year. Looking back, you may wonder whether we responded adequately to that. It would also have been better from a climate perspective to stop using this fossil energy source earlier. The harsh reality is that we only take action if we ourselves are hit in the wallet, if the security of supply is threatened. Apparently a price incentive is needed.”
The harsh reality is that we only take action when we ourselves are hit in the wallet
Are our sanctions hurting Russia enough? The Kremlin’s warmongering does not seem to have diminished.
“I have sometimes asked myself that question, because you did not immediately see an impact, as some had expected. And in the meantime we are here with an energy crisis. But now the Kremlin is running 160 million euros per day loss of revenue just from the ban on the import of crude oil and the price cap on that oil for buyers outside the EU, and that will increase even further. The ban on the export of technology used in the petrochemical industry is also slowly eroding Russia’s energy infrastructure. Parts for maintenance of installations are slowly running out. The impact of this will be significant in the long term.”
What if Russia decides to halt its oil and gas production? Then the global scarcity will become even greater.
“Then we will again pull the wallet to keep the security of supply at a minimum level. Prices will then rise sharply again. The need to continue to save energy and to become more sustainable remains great, but will then become even greater. Such a scenario will also have major consequences for the less developed part of the world. Those countries will then be completely cut off from the energy market, just like last year.
“We have the luxury of being able to take care of ourselves, but poorer countries don’t have it. An African minister said that an LNG tanker that was almost in a port of his country sailed away again to supply Europe.”
Shell and BP expect less of this accelerated sustainability and will stick to fossil fuels for the time being. BP will win even more.
“It is of course very disappointing that those companies are going to delay their sustainability plans when they earn so much. You hope they feel a moral responsibility to use part of their substantial profits to produce more renewable energy. A Dutch court has obliged Shell to accelerate sustainability. And our system for CO2pricing emissions also forces companies to go to net zero.”
Read also: The risk of the latest sanction against Russia is that diesel prices will skyrocket
Are we not trading one dependency for another? Europe relies heavily on Qatar for alternative gas.
“We need a more diverse import for liquefied gas in the coming years. And in the longer term, the same applies to the import of hydrogen. We must ensure that we do not become dependent on one or a few countries again. I will come up with a plan in March on how to do that.”
What do you expect for next year? We ‘saved’ this winter by purchasing a lot of LNG. But for next winter (2023-2024) that is also necessary and there is a hijacker on the coast. China has let go of its zero-Covid policy and is likely to need a lot more gas.
“You can build a lot of LNG capacity, but that is no guarantee that you will also get LNG. That is a matter of competition. We are prepared to pay well above the world price to secure our energy supply, but that means higher prices.
“That is why it is important that we continue to save energy. We really hit it off last year. Dutch companies and households consumed a quarter less gas than normal. That is roughly equivalent to the amount of Russian gas that we used to import through pipelines. The difficulty now is that prices have fallen slightly again, although they are still higher than normal. That lowers the incentive to save. But we have to keep going, otherwise we will find ourselves again in the course of the year.”
A version of this article also appeared in the newspaper of February 10, 2023