The war between Russia and Ukraine has caused a looming European energy crisis. Many countries that are highly dependent on Russian energy have seen factories forced to close. For example, in Italy, where about 40% of electricity comes from Russian natural gas, due to soaring electricity prices, some paper mills producing everything from pizza boxes to furniture packaging have been shut down, several steel mills have been forced to close, even drivers have gone on strike because of soaring oil prices, and fishermen have stopped going to sea.
Italy's dependence on Russian gas has soared from 27% to 43% over the past decade. There was a time when natural gas consumption fell off between 2010 and 2014 due to increased subsidies for wind and solar power but in recent years the reliance on natural gas has risen again due to the closure of polluting coal-fired power plants.
The Italian government said it would take at least two years to diversify its energy sources away from dependence on Russia. Even before the war, Europe was facing a severe energy crunch, driving up the cost of electricity, food, and supplies, so with a sanctioned Russia, the resultant energy blackout crisis will affect Europe much more than the United States.
Companies such as Italian paper and packaging manufacturers were able to hold out and continue to operate when the price of natural gas rose during the energy crisis at the end of last year but the Russian-Ukrainian war made them unbearable. 90 euros per watt hour, now soaring to 300 euros, in order to make money, product pricing has to be nearly doubled from 680 euros per ton to 1,200 euros. Since this is simply not feasible, six factories have suspended operation, affecting a total of one-third of Italy’s packaging needs. Steel mills have also closed and industry players say it has never had to shut down electric furnaces.
Rising energy prices are causing ripple effects in Italy. Italian truck drivers cannot afford soaring gasoline prices and have threatened to strike. The fishermen also decided not to go out fishing. Not only is Italy being hit, but a stainless steel manufacturer in Spain has also stopped production and furloughed all 1,800 employees. The steelmaker's net profit soared to a record 572 million euros the previous year as global demand surged.
The head of AEGE, which represents energy-intensive companies in Spain, said that Spain's energy-intensive industries are suffering from rising electricity supply costs, which have reached levels unprecedented in the market, warned businesses face serious risks, and urged the Spanish government to take emergency measures.
High electricity prices are almost unbearable for manufacturers. Finland has started a nuclear power plant that had been delayed for 12 years. Originally, the nuclear power plant was to be opened in 2009 but, because of a technical problem that turned into a legal dispute, the plan was suspended. After the dispute was resolved in 2018, it is now being put into operation at a critical moment in the Russian-Ukrainian war. It is the first new nuclear power plant in Finland in more than 40 years and the first new nuclear power plant in Europe in the past 15 years. It is expected to meet 14% of Finland's electricity. By then, about 90% of Finland's power generation will come from clean and low-carbon power sources, with half being from nuclear.
The Ukrainian conflict has led many Europeans to believe that reducing Europe's reliance on Russia for fuel imports is also a relief, given the uncertainty and economic consequences. The European Commission has proposed plans to diversify Europe's fossil fuel supply away from Russia and move more quickly to renewable energy.
(Image：Flickr/Greenpeace Italia CC BY 2.0)