Daily column – 26th March 2022

Countries in Europe are racing to find new sources of energy to replace the Russian supplies they’ve said they won’t use anymore. They’re going on a “Amazing Race”-style search.

In the last few days, they’ve found a willing partner: The US said it would work with other countries to send more liquefied natural gas to Europe this year, and more in the future.

There isn’t a lot of money, and the details of the deal aren’t clear. But Europe will still welcome it because of the huge task at hand.

That’s what Europe has to do. Europe relies on Russia for 40% of its gas, so going cold turkey like the US and other countries have done is not an option.

On Wednesday, the German Chancellor, Olaf Scholz, said that cutting off all imports from Russia right away would “put our country and the whole of Europe into recession,” and that “hundreds of thousands of jobs” could be at risk.

Plus, putting together new natural gas infrastructure is a little more complicated than building a simple Ikea book shelf. It will need new terminals and “floating storage regasification units.” This is a real term.

So, all in all, it will take years to get that 40% to 0%.

But Vladimir Putin’s war chest gets money from every purchase of Russian energy, so Europe wants to make that transition as quickly as possible. It’s going about it on two different fronts:

Countries like France are trying to cut down on the use of natural gas by ending subsidies for new gas heaters and encouraging people to buy electric heat pumps, which use electricity to heat homes. Governing bodies could also raise the amount of coal they make, which would hurt their goals for cutting greenhouse gas emissions.

International: European leaders are driving a lot to find new gas sources. There have been calls from “everyone in Europe” to Qatar, its energy minister told CNN. Qatar is one of the world’s top gas suppliers.

Bottom line: The war in Ukraine has caused a lot of big changes in the economy. Energy markets might be at the top of the list.

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