Russia may cut off gas to Europe entirely as it seeks to bolster its political leverage amid the Ukraine crisis, the head of the International Energy Agency (IEA) says, adding Europe must prepare for it now.
“I wouldn’t rule out Russia continuing to find different issues here and there and continuing to find excuses to further reduce gas deliveries to Europe and maybe even cut it off completely,” IEA executive director Fatih Birol said in a statement to Reuters.
“This is the reason Europe needs contingency plans”, Mr Birol added, saying a recent reduction in flows may be an attempt to gain political leverage ahead of higher-demand winter months.
The IEA did not see a full cut-off as the most likely scenario, he added.
Today’s high energy prices are driving oil & gas producers’ income to an unprecedented $4 trillion in 2022
But clean energy investment is set to make up only around 5% of oil & gas companies’ capital expenditure. This is up from 1% in 2019 but needs to go much higher. pic.twitter.com/AbxbUlx7HD
— Fatih Birol (@fbirol) June 22, 2022
The European Union has sanctioned Russian oil and coal, but has held off from banning gas imports due in part to its heavy reliance on supplies from Moscow.
In terms of total energy investment for 2022, the IEA said in a report that $US2.4 trillion ($3.5 trillion) was set to be invested in the sector this year, including record spending on renewables.
But it added that fell short of plugging a supply gap and tackling climate change.
Rising 8 per cent from the previous year, when the pandemic was more severe, the investment includes big increases in the electricity sector and efforts to bolster energy efficiency, it said in its annual investment report published on Wednesday.
Investment in oil and gas, on top of setting back efforts to reach climate goals, could not meet rising demand if energy systems were not retooled towards cleaner technology, it said.
“Today’s oil and gas spending is caught between two visions of the future: it is too high for a pathway aligned with limiting global warming to 1.5C but not enough to satisfy rising demand in a scenario where governments stick with today’s policy settings and fail to deliver on their climate pledges,” the agency said.