Monday, 23 August 2021

Who do you think you are kidding, Mrs Merkel?

From the BBC:

Mr Zelensky [Ukraine's president] opposes the pipeline, which he says threatens Ukraine's security. It will run under the Baltic Sea and double Russian gas exports to Germany...

Mrs Merkel, who is standing down as Germany's chancellor this autumn after 16 years in office, said Berlin agreed with Washington that Nord Stream 2 should not be used against Ukraine. She said sanctions could be used against Moscow under an agreement between Germany and the US, if gas was "used as a weapon".

Mr Zelensky said he was concerned about what would happen in three years when the contract to deliver Russian gas through Ukrainian pipelines runs out. The loss of billions of dollars in transit fees would hit Ukraine's economy hard. Mrs Merkel, who held talks with Russian President Vladimir Putin on Friday, promised to provide more than a billion dollars to help expand Ukraine's renewable energy sector.

Russia already supplies about 40% of the EU's gas - just ahead of Norway, which is not in the EU but takes part in its single market. The new pipeline will increase the amount of gas going under the Baltic to 55 billion cubic metres per year.

Mrs Merkel has tried to assure Central and Eastern European states that the pipeline would not make Germany reliant on Russia for energy.


Where do you start? A few facts which must be patently obvious to everybody else:

1. Russia IS using its oil and gas as economic 'weapons', always has done, always will. Same as the Saudis.

2. Russia has every incentive to build its own pipeline under the Baltic. They won't have to pay Ukraine 'billons of dollars' and Ukraine won't be able to (threaten to} just turn off the taps.

3. Putin is quite happy for Ukraine to go bankrupt, that's a bonus as far as he's concerned.

4. The money which Germany is offering to pay Ukraine to help it 'expand its renewable energy sector' will have zero effect on anything.

5. Germany IS completely reliant on Russian gas for energy. They shut down their coal fired plants (having been bamboozled by the wrong explanation for the Greenhouse Effect) and started phasing out their nuclear plants after the Fukushima disaster (even though Germany isn't an earthquake zone).

6. IIRC, Germany has been reliant on Russian gas for decades. The Russians even gave former the previous Chancellor a (no doubt very well-paid) psuedo-job with Nord Stream, the organisation running the new pipeline.

7. Germany is not going to impose proper harsh sanctions on Russia, as Putin could simply cut off the gas supplies. He can hold out longer than Germany can. The impact of sanctions is slow, drip-drip. The impact of having your electricity sector shut down is immediate.

12 comments:

Bayard said...

"The loss of billions of dollars in transit fees would hit Ukraine's economy hard."

The loss of billions of dollars of unearned rent would hit Ukraine's economy hard. Rent seekers always squeal very loudly when their rent-seeking is stopped.

Mark Wadsworth said...

B, I'm sure the economic and social cost of being a neighbour state of Russia far outweighs the few dollars which Ukraine can chisel out of them.

mombers said...

Regardless of what you think about climate science, coal is a dirty, expensive and inefficient energy source and has no place in a modern energy system. Scrubbing the non-CO2 junk that comes out of the smoke stack is prohibitively expensive, and taking care of the ash is a huge problem as well. Coal mining also has significant externalities, an end to end relic that needs to stop pronto

Nuclear I'm not sure how you get the NPV of hundreds of thousands of years of expenditure managing waste but it's likely a LOT

Natural Gas is a lot better in terms of externalities but the geopolitical risk is terrible

I avoid all of these by using Blue Whale blubber to heat my home

benj said...

And Biden has just given this the OK.

A fair quid pro quo would have been to insist Ukraine is admitted into the EU and NATO before the pipeline is turned on. That would be more valuable to Ukraine than the transit fees.

DCBain said...

"coal is a dirty, expensive and inefficient energy source and has no place in a modern energy system"

I'm soooo glad that here in the enviroconscious UK we've replaced it with environmetally sound wood chips . . . which we ship from overseas using oil-powered ships and drag from one end of the country to the other in diesel-fuelled trucks.

Saint Greta must be smiling on us . . .

Mark Wadsworth said...

M, coal is dirty, agreed.

But it is not expensive (hence and why poorer countries use it, it just comes out of the ground) and I'm not sure what you mean by "efficient", it economically efficient because it's cheap, and using it to generate electricity in out-of-town power stations is a better use than using it to heat urban homes (which was quite rightly banned half a century ago).

Would I want to live next to a coal fired power station, no of course not, that's why they are mainly in the countryside.

Would I want to near a windmill or solar farm? To be honest, they wouldn't bother me in the slightest. But I don't think power station NIMBYism is really relevant.

B, good call. But who is going to 'insist' on it? Not the Germans, who will do Russia's bidding and Russia says 'no'.

DCB, it's all very tricky.

mombers said...

@MW coal is inefficient because it requires huge mining operations to extract, transport and then dispose of the ash, which is toxic. It's 'cheap' if you exclude the externalities. Extracting natural gas has its problems too but is much easier to transport and less invasive to mine. Waste products are much more benign and easier to scrub

Mark Wadsworth said...

M, the cost of mining is included in the cost of coal, which is still "cheap". Dunno what they do with the ash, to be honest.

Anyway, that has little to do with the post, I was just asking whether anybody believes that Mrs M believes a single word she was saying?

Bayard said...

"Dunno what they do with the ash, to be honest."

I think it's made into insulating concrete blocks.

Bayard said...

"I was just asking whether anybody believes that Mrs M believes a single word she was saying?"

She's been doing it so long, she probably does.

Graeme said...

Merkel has been around so damned long, she probably doesn't believe a word she says. Are there any time limits on being the German Chancellor? They all seem to hang around for an eternity. I can only remember Brandt, Schmidt, Kohl and Merkel and that takes you back to 1969. At least in the UK the boss changes a bit more frequently

Mark Wadsworth said...

G, between Kohl and Merkel was Schroeder - I linked to him in the article!