On the first day of 2025, the Russia-Ukraine gas transit agreement will expire, marking the “end of the era of Russia transporting natural gas to Europe via Ukraine.” By then, only two out of the six major pipelines carrying Russian gas to Europe will still be operational. European reactions to this have been mixed: the European Commission states that most countries can handle the change, while countries like Slovakia, Hungary, and non-EU Moldova have criticized Ukraine’s refusal to renew the Russian gas transit agreement. Meanwhile, the United States is seen as a “winner” from this shift, while concerns about Europe’s over-reliance on the U.S. have surfaced. Renewable energy is the EU’s main solution to the energy crisis, but recent sharp fluctuations in electricity prices have raised public concerns about the instability of renewable energy.
Six Major Pipelines, Only Two Remaining
According to European gas pipeline authorities, before the Russia-Ukraine conflict, Russia transported gas to European countries through six major pipelines from north to south, including the Baltic Sea “Nord Stream” pipelines, the “Yamal” pipeline through Belarus and Poland, the “Brotherhood” and “Soyuz” pipelines that pass through Ukraine, and the “TurkStream” and “Blue Stream” pipelines that supply gas to Turkey and southern Europe. After the outbreak of the Russia-Ukraine conflict, three of the four Nord Stream pipelines exploded and leaked in September 2022, and the Yamal pipeline was also shut down in late August 2022. Russia attributed the shutdown to sanctions from Western countries and technical issues. With the cessation of gas flows through the Ukrainian pipelines, only the “TurkStream” and “Blue Stream” pipelines remain operational, supplying the Turkish domestic market as well as Central European customers such as Hungary and Serbia.
According to Le Figaro, before the agreement expires, Russian gas giant Gazprom exported more than 14 billion cubic meters of natural gas to Europe through Ukraine each year. While this has significantly decreased from the 117 billion cubic meters transported in 2008, it still met the needs of many Europeans. Data from German statistics company Statista shows that Austria’s total natural gas consumption in 2023 was 6.9 billion cubic meters. The biggest impact of the gas cutoff will be on Central and Eastern European countries, including Austria, Slovakia, and Moldova. Additionally, according to Deutsche Welle, countries like Belgium, Spain, and France still import Russian liquefied natural gas (LNG) via LNG ships and have long-term contracts with Russia.
According to a report from RT (Russia Today) on January 4, EU countries are increasingly concerned about the potential consequences of the disruption of Russian gas supplies. Slovakia’s Interior Minister, Roman Mikulec, stated that Kyiv’s decision to halt Russian gas transit through Ukraine could undermine Europe’s stability and cooperation, with Slovakia set to lose hundreds of millions of euros. Greek media reported that former Greek Energy Minister, Panayiotis Lafazanis, called Ukraine’s move “a crime and betrayal,” and fears of rising gas prices in Greece are escalating.
For EU countries with alternative options, the replacement solutions are still not sufficient to fully compensate for the loss of gas transit through Ukraine. A report from the Brussels-based think tank Bruegel stated that Hungary and Slovakia will particularly feel the impact, as the Ukrainian transit routes meet 65% of their gas needs in 2023. Although Hungary can import gas from Russia through the “TurkStream,” the impact of the cutoff is not enormous, but Hungarian Prime Minister Viktor Orbán has emphasized that he does not want to “give up” even the smaller Ukrainian transit routes in order to keep the price of Russian gas at a “reasonable” level.
Meanwhile, German MP Klaus-Dieter Döring has called for the activation of the “Nord Stream 2” gas pipeline. He stated that Ukraine’s decision to stop Russian gas transit will lead to higher energy prices and that Germany and the EU are “witnessing the collapse of parts of Europe.” He argued that Russian gas must be delivered through the remaining branches of “Nord Stream.”
Non-EU country Moldova is already facing a severe energy crisis. According to CNN, following the gas cutoff between Russia and Ukraine, more than 1,500 apartment buildings in the Dniester River region of Moldova’s breakaway Transnistria have no heating or hot water, nearly 72,000 households lack natural gas, and around 150 boiler stations have shut down. Local governments have implemented rolling blackouts. According to Reuters on December 28, 2024, Russia supplies about 2 billion cubic meters of natural gas annually to Moldova, which is delivered via Ukraine to Moldova’s left bank of the Dniester River, where it is used to generate electricity and then sold to regions controlled by the Moldovan government. Before the gas cutoff, Moldova had long been in arrears on payments.
For most other EU countries, the impact of the Russia-Ukraine gas cutoff does not seem to be “fatal.” According to data published on the EU’s official website, the proportion of Russian pipeline gas imported by EU member states has dropped from 40% in 2021 to around 8% in 2023. The European Commission has also stated that the EU is prepared for this change and that most countries can handle it, with minimal impact on EU gas prices.
However, European gas prices have already risen. On January 3, Euronews reported that after Russia stopped gas transit to Europe through Ukraine, the European gas benchmark price at the Dutch TTF increased by more than 4% on the first trading day, reaching 51 euros per megawatt-hour, the highest level since October 2023. Regarding gas storage, the BBC Russian Service reported that although EU countries reached a 95% filling rate of gas storage facilities two months before the start of the 2024 heating season in November, the cold weather in November caused the gas withdrawal to hit a 15-year record. By early December 2024, the filling rate of storage facilities was only 86%, compared to 96% last year. Moreover, the cost of refilling storage facilities after the winter may be higher than expected.
“U.S. Natural Gas Is Unlikely to Become the EU’s Sole Energy Source”
An analysis published by Germany’s Daily Report on January 4th noted that Europe’s reliance on Russian natural gas has become a thing of the past. In recent years, the EU has increased imports of U.S. liquefied natural gas (LNG). However, this shift has not been entirely voluntary, and to some extent, it stems from concerns that the next U.S. administration might impose tariffs on countries that do not purchase enough U.S. LNG.
The EU’s increased reliance on U.S. LNG also brings new risks. Bloomberg reported that U.S. LNG prices are highly volatile, and its supply stability is uncertain. Ella Joseph, a senior researcher at Columbia University’s Center on Global Energy Policy, stated, “Europe’s benefit is having a diverse range of U.S. suppliers, but the risk is that U.S. policies could change significantly in the future.”
The U.S. “Replacing Russia as Europe’s New Energy Risk.” This theme was highlighted by Politico news outlet, which reported, “After the outbreak of the Russia-Ukraine conflict, the EU has replaced Russian energy with U.S. energy, and now people are wondering: is Europe becoming too dependent on the U.S.?” In 2023, LNG imports from the U.S. accounted for 46% of the EU’s total imports, nearly double the 2021 level. Markarevich, an analyst at the U.S. Energy Economics and Financial Analysis Institute, commented: “After experiencing the security risks of over-reliance on a single energy source, Europe must learn from its mistakes and avoid excessive dependence on the U.S.”
However, experts stated that the EU is unlikely to become overly dependent on U.S. energy, and in fact, this dependence is expected to decrease over time. On one hand, U.S. natural gas is expensive, making it only a supplementary source for the EU, unlikely to become its sole energy provider. On the other hand, the EU’s future direction is to aggressively develop new energy sources, while most of the energy provided by the U.S. remains traditional energy.
“Central Asian Countries Can Ensure the Growth of Russian Pipeline Gas Exports”
After Russia halted its gas transit through Ukraine, Ukrainian Energy Minister Galushchenko called the termination of Russian gas transit through Ukraine a “historic event,” adding that “Russia is losing its market and will suffer economic losses.” However, according to Russia’s Viewpoint on January 3, Ukraine will urgently need new sources of natural gas and is currently discussing whether it can make up for the loss by using the “TurkStream” pipeline. Additionally, Turkey is also preparing to increase its purchases of Russian gas and resell it to the EU.
Regarding Russia’s future gas export markets, Russia’s Sputnik News cited industry experts saying, “In the next decade, neighboring countries, especially Central Asian countries, can ensure an increase in Russian pipeline gas exports by 20 to 25 billion cubic meters.” Russia’s gas supply to Central Asia can technically reach 10 to 15 billion cubic meters, so to increase supply, the “Central Asia” pipeline needs to be rebuilt, and the gas transport pipelines of transit countries need to be expanded. Experts also predict that in the coming years, Russia’s gas exports to China will grow, and by 2025, the gas supply could set a new record for Russian gas exports to Asia.
“Negative Electricity Prices Indicate Continued Serious Imbalance in Germany’s Power Supply and Demand in the New Year”
Renewable energy is the EU’s main strategy for solving the energy crisis. In the past two years, the EU has accelerated its energy transition, investing more than 500 billion euros in renewable energy, storage, grid upgrades, and hydrogen energy development. In the first half of 2024, wind and solar power generation reached new highs, accounting for 30% of the EU’s total power generation, surpassing fossil fuels for the first time. According to data from Germany’s Federal Statistical Office, in 2023, about 25% of the EU’s final energy consumption came from renewable sources, compared to 14% in 2010. The EU’s goal is for renewable energy to account for 45% of total energy consumption by 2030.
However, the green transition has not been without challenges. On January 2, 2025, Germany, Europe’s largest electricity market, saw negative electricity prices for 4 hours, meaning that the market settlement price turned negative due to an oversupply of electricity. “Negative prices indicate that the supply-demand balance in Germany’s power market will continue to be severely disrupted in the new year,” reported Business Insider.
Last month, Europe experienced several days of windless weather, leading to a halt in wind power generation. At the same time, cold weather in winter increased electricity demand, causing power prices to soar to their highest level in 18 years. However, strong winds soon boosted electricity production, causing prices to drop sharply. This volatility puts more pressure on grid management and highlights the challenges in Europe’s energy transition.
For the public, rising energy costs have exacerbated “winter anxiety.” A November 2024 poll by clean energy technology company Aira revealed that energy costs are now a key challenge for households, causing anxiety as winter approaches. Seventy-seven percent of homeowners said they were affected by rising energy costs, and nearly half (44%) had to use savings to pay high energy bills.
The instability of power supply is also deepening divisions within Europe. In December 2024, in response to rising domestic electricity prices and supply pressures, Norway’s ruling party and the leading opposition party in public opinion polls planned to cut power interconnections with Denmark and renegotiate interconnections with Germany and the UK, raising concerns within the EU. Sweden’s Deputy Prime Minister and Minister for Energy and Business, Ebba Busch, said Germany’s policy of phasing out nuclear power is the main cause of rising EU electricity prices, and she expressed “deep anger” at the German government.
Deutsche Welle published a rebuttal, stating that weather is the direct cause of the price fluctuations. The article argued that renewable energy has made Europe’s power supply system more vulnerable to disruptions, and the higher the proportion of renewable energy, the more Europe’s electricity depends on the unpredictable sun and fluctuating winds. Therefore, to address energy shortages, building cross-border energy infrastructure should be the EU’s top priority.
Experts stated that the current situation in the EU offers some lessons and insights for other energy-importing countries around the world. First, in the context of international turmoil and geopolitical changes, large economies must recognize the importance of energy independence early on and firmly control their own “energy bowl.” Second, they must steadfastly promote industrial transformation and the development of new energy. The EU only began its energy transition rapidly and comprehensively after the Russia-Ukraine conflict broke out and pushed for greater internal energy integration, which is the fundamental approach to improving its industrial and energy structures. In this regard, Europe shares common interests with China and will continue to deepen cooperation. Third, in addition to developing new energy, traditional energy sources should also be further “greened” and the energy structure optimized.
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