Valdai Club

In December 2019, the US Congress approved the European Energy Security and Diversification Act of 2019; the first paragraph of the bill states that this proposed legislation will help the United States reach its global energy security goals, and encourages countries in Central and Eastern Europe to diversify their energy sources and supply routes in order to increase Europe’s energy security.

According to the bill, the United States is interested in safeguarding the interests of its own economic and national security and in helping European countries achieve energy security. There is a very high probability President Trump will sign the bill into law, since it is in full compliance with his administration’s US National Security Strategy (December 2017), which identifies four national interests: the protection of the country, the promotion of America’s prosperity, the preservation of peace in the world by force, and strengthening the global influence of the United States; it also names the main opponents of the United States: Russia and China.

Washington considers the expansion of cooperation and trade between Russia and Western Europe and Russian influence on its neighbouring countries to be hostile Russian measures taken against Europe, which should be counteracted via economic and military-political means (see “Russian Hostile Measures in Europe. Understanding the Threat”).

Therefore, the law also aims to reduce Europe’s dependence on energy supplies from Russia, and Russia itself is called a country “that used natural gas to coerce, intimidate, and influence other countries”. Earlier, US Secretary of Energy Rick Perry called the partnership with the allies for the supply of non-Russian energy to Eastern Europe an important priority for the Trump administration and a powerful signal that the US can send to Russia.

The goals stated in the law are supposed to be achieved by exporting energy resources, technology and expertise from the United States to world markets, so as to encourage the development of energy markets that diversify sources, types and routes of energy supplies, and also to contribute to the energy security of the European countries. In essence, the main goal is to deploy an American “energy umbrella” over Europe, which will protects it against the frenzied Russian oil and gas Aquilon , similar to the NATO “military umbrella” deployed by the United States in the 20^th century to protect Western Europe from the USSR. 

To promote the “energy” policy with material incentives, it is proposed in the 2020-2024 financial years to expand the financing of the “Countering Russian Influence Fund” to 1 billion dollars. The Fund was created on the basis of the 2017 Countering America’s Adversaries Through Sanctions Act (CAATSA), which also provides for sanctions against the Russian energy sector, oil and gas pipelines.

The Countering Russian Influence Fund will be used to improve the regulatory framework of European countries in the field of energy, provide political and technical influence, and support European energy projects to build or improve energy infrastructure in the early and late stages. Projects in Central and Eastern Europe related to natural gas infrastructure, such as pipelines, storage facilities, liquefied natural gas terminals, as well as reverse flow capacities, power grid infrastructure projects, and renewable energy projects can count on the United States’ assistance.

Will the stated sum of $1 billion over the course of four years be enough to cover such purposes? The answer is obvious. Of course, this is a drop in the ocean. There will certainly be other methods of coercion, as in the case of American demands for European countries to increase funding for the NATO budget. Moreover, economic sanctions, including secondary sanctions, have become a familiar tool of American foreign policy, as well as the extraterritorial application of US laws.

It’s true that the potential for unintended consequences for the US and its allies has grown. Since secondary sanctions are directed against companies from third countries, they often meet strong political opposition from the governments and authorities of these countries, which consider such sanctions illegal interference and develop tools to circumvent US sanctions.

Russian-European energy cooperation will not disappear. Europe imports about 90% of the oil it needs and 70% of its gas; now about 34% of its energy supplies come from Russia and their cost exceeds 100 billion euros per year. According to energy forecasts and given the European policy of replacing coal-fired TPPs with gas-fired power generation, the EU’s demand for natural gas could double in the next decade.

Energy issues are a very sensitive topic for Germany, as nuclear plants are decommissioned, and for other industrialised countries of the European Union. There is no doubt that the European Energy Security and Diversification Act, if signed by Trump, will have long-term negative economic and diplomatic consequences.

Despite the fact that the United States is the world’s largest producer of natural gas, most of it is consumed domestically, and America’s export potential is still limited if compared, for example, to Qatar, which is the world leader in the LNG market.

Given the distance between the shores of the Atlantic and the cost of transportation, storage and regasification, US LNG will not be able to compete in the EU market with Russian pipeline gas. Russia has a modern gas industry, the world’s second largest proven natural gas reserves and low production costs. In addition, there are simply no natural gas pipelines to Central and Eastern Europe aside from Russian ones.

But whatever the fate of this law is, it is important for Russia to realize that a new “Great Game” began in the world under the slogan of the struggle against global warming and for the reduction of CO₂ emissions. This process, with the proper concentration of political effort and financial capital, is capable of re-structuring the entire geo-economic framework of the planet beyond recognition. Russia, as an energy and hydrocarbon power, is seriously integrated into the global economy, therefore it is impossible to ignore the “climate games”. One way or another, all buyers of Russian energy in Europe and Asia, as well as all of Russia’s competitors in the oil and gas market, will be drawn into these processes. There are no rules besides “might makes right” (the Paris Agreement is too declarative), but for now there is time to start working on the rules and on the task of protecting Russia’s national interests.