European Energy Security and Sustainability: The Russian Perspective

European Energy Security and Sustainability: The Russian Perspective

Anatoly Zhuplev (Loyola Marymount University, USA) and Dmitry A. Shtykhno (Plekhanov Russian University of Economics, Russia)
DOI: 10.4018/978-1-61350-344-7.ch003

Abstract

Europe’s economic wellbeing and growth are highly energy dependent and heavily reliant on Russian imports of oil and gas. European energy security, its alternatives, and implications are examined in this chapter with the view of sustainability and the EU-Russian energy dialog. With an asymmetric mutual political-economic interdependency with Russia, Europe’s exposure in oil and gas calls for sustainable energy solutions. Meantime, Russia, the key energy supplier in the European region, is also a major energy consumer whose economy is characterized by high energy intensity. Russian energy sector needs serious improvements in technology, investment, and management: failure to address these priorities erodes Russia’s reliability as major regional energy supplier. The chapter explores the dynamics of Russian energy sector and implications for European energy security and sustainability.
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Introduction

Globalization and growing political-economic interdependence among nations after WWII have changed an easy access to energy. There is an increasing realization of finite mineral resources and environmental capacity to absorb the consequences of human economic activity. Economic pressures, environmental concerns, and development goals set energy access as key priority and subject of acute competition. Emerging global players like China and India have dramatically boosted their energy demand over the past few decades adding urgency to sustainable energy development worldwide.

Many countries in the EU critically depend on imported fossil energy. The region’s energy dependency is fraught with complex relationships between energy suppliers, transit countries, and recipients; this complexity is often amplified by political-economic relationships on cross-national and regional level. Ensuring European energy security and sustainable growth by simply switching from importing oil and gas to nuclear energy or local coal is problematic due to environmental, nuclear security, capital constrains, and public concerns.

The objective of this chapter is to explore trends in the energy sector and sustainability implications in Europe in the Russian perspective. First trend emerges as the renewing global post-recession economic growth1 requires energy supply at the time when global competition for access to traditional fossil sources intensifies.2 Additionally, under continuing economic weaknesses there is a worldwide shortage of much needed investments in the energy sector. The problem of insufficient investment in energy development is especially acute in Russia, Europe’s primary energy supplier.

Second, Russia consumes vast amounts of energy in its own domestic economy. Russia has been experiencing a robust economic growth over the past decade but its energy production and consumption remain inefficient with a very low share of renewable energies and environmentally sustainable technologies. With its rapidly growing but energy inefficient domestic economy Russia may be compelled to reduce oil and gas exports to Europe in meeting domestic demand and thus exposing European energy security.

Third, high level of energy consumption in European countries coupled with limited access to their own energy supply make the issue of European energy security more acute. European energy vulnerability has been politically exploited by re-invigorated Russia that is widely perceived as using energy as a heavy weapon in a pursuit of its geo-regional political-economic aspirations.

Finally, the global energy sector is undergoing profound change: beyond the economics, social and environmental priorities in sustainable development are increasingly permeating regional, national and global politics, legislative agendas, and regulations, along with technological innovations in energy saving and renewable/sustainable approaches. New environmental initiatives and technological innovations in Europe are beginning to break traditional fossil fuel dependency. Someday that may reach a point where oil and gas as energy sources will be deemed irrelevant similar to the salt that has lost its eminence as strategic commodity in food preservation being replaced by the refrigerator.

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Energy And Sustainability: General Issues

Energy sector has been dominated by non-renewable fossil fuels - petroleum, natural gas, and coal. Energy production across subsectors is characterized by high level of concentration, automation, and capital intensity. Energy demand is primarily driven by economic activity and population growth (globalEDGE, Energy, 2010).

The current rates of energy usage and latest estimates of recoverable world reserves give the following time horizons by which non-renewable energy sources of energy worldwide are exhausted. Natural gas (cubic meters): total world reserves: 171,514,266,542,404; world usage per second: 92,653; estimated year of exhaustion: 2068. Oil (barrels): total world reserves: 1,175,686,472,626; world usage per second: 986; estimated year of exhaustion: 2047. Coal (metric tons): total world reserves: 834,684,384,000; world usage per second: 203; estimated year of exhaustion: 2140 (Europe’s Energy Portal, 2010). Other estimates of the reserves-to production ratio worldwide give 60 years for natural gas and 129 years for coal (International Energy Outlook, 2010, 58, 71).

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