Could Europe’s energy crisis lead to a winter of unrest?

Fears have been rising that Europe might be heading towards a winter of discontent over its energy crisis. 

In July, Russia shut down the key natural gas pipeline Nord Stream 1. The European Union fears the Kremlin could indefinitely extend the planned shutdown, which usually lasts for ten days and is due to end on July 21.

Earlier, European Commission vice president Frans Timmermans had warned that the EU was in danger of facing “very strong conflict and strife” over energy prices this winter. 

Europe has been trying to wean itself off fossil fuels and has set a target to become climate neutral by 2050. But Timmermans said a temporary “return” to fossil fuels might be necessary if the continent is to avoid energy shortages that could lead to civil unrest.

French finance minister Bruno Le Maire said a total shutdown of Russian gas looked like “the most likely scenario today.”

Why is Russia shutting down the pipeline?

Europe fears that Moscow might extend the shutdown in a bid to put pressure on the EU to ease off the crippling sanctions the block has imposed on Russia over the Ukraine conflict. The Kremlin, however, has denied using gas as leverage against European countries.

The fear is that all gas supplies from the Nord Stream 1 pipeline might come to a halt, pushing Europe into a full-blown energy crisis that could result in the rationing of gas this coming winter. The pipeline supplies about 55 billion cubic metres of natural gas to Europe each year.

Russia had already reduced gas supply to Europe by 40 percent last month, citing the delayed return of a turbine that was undergoing repair work in Canada.

Which EU countries are most reliant on Russian gas?

Overall, the European Union has been relying on Russia for around 45 percent of its gas needs. 

Among the EU’s largest economies, Germany gets one-third of its supply from Russia, while Italy gets around 40 percent. France depends on Russia for roughly a fifth of its gas supply.

Russia cut gas supplies to several countries that, earlier this year, refused to comply with the Kremlin’s demand that they should pay in roubles. They include Finland, Poland and Bulgaria.

The crisis has driven up energy costs and pushed up inflation. New forecasts this week have once again revised 2022 inflation projections for the European Union upwards to 6.1 percent. The European Central Bank is expected to further raise interest rates in September.

In mid-July, the Euro reached parity with the US dollar for the first time in twenty years.

What could be the economic and social consequences?

Spiralling inflation has been eating into the salaries of lower-income Europeans, triggering protests and strikes across the continent over the rising cost of living.

French railway workers went on strike in early July asking for wage increases to match the country’s official inflation rate, which is expected to reach 8 percent at the end of the year.

Earlier, French energy sector workers also went on strike over the cost of living, while airport workers ground flights at France’s main international airport, Roissy-Charles de Gaulle.

Brussels was hit by the cost of living protests in June, as were London and cities across Ireland. In Italy, mayors turned off the lights of major monuments earlier this year to protest the high cost of energy.

A European Commission report published this week shows that young people have been the least able to recover from the pandemic-induced economic crisis, making them more vulnerable to new economic shocks.