Russia's Novak warns Europe's bet on energy transition risks bigger energy crisis

Abandoning traditional energy resources in favor of renewable energy as seen in several regions, including Europe, will cause the current energy crisis to "inevitably" worsen, Russia's deputy prime minister Alexander Novak said Feb. 16.

Russian officials have repeatedly highlighted risks of forcing energy transition at the expense of traditional energy markets, which could lead to underinvestment and shortages of crude and gas in the future.

"Artificial rejection of traditional energy resources, which a number of countries are trying to impose today, will inevitably lead to even greater energy crises than the current one, and then economic and, possibly, political crises," Novak wrote in his column for Energy Policy magazine.

In his opinion, the prospects of Europe's bet on alternative energy remain shaky, as wind speed is forecast to drop by 10% by 2100 by some experts.

Russia's own bid to become carbon neutral by 2060 is expected to require major shifts in its energy strategy from oil and gas to increases in nuclear and hydrogen production.

Russia sees the decision of the European Commission to classify nuclear energy and gas as clean energy sources as "important" and expects it to come into force in the next six months, Novak said.

"Only the balance of energy sources can guarantee the stability of energy markets in the future," Novak added.

Nord Stream 2 push

He also called for greater use of long-term supply contracts to mitigate market volatility.

Although European gas prices have cooled since record levels seen in December, they remain high on low storage levels and concerns over Russian supplies.

S&P Global Platts assessed the benchmark Dutch TTF day-ahead price at Eur68.08/MWh Feb. 15, up more than fourfold on the year.

The early launch of the Nord Stream 2 pipeline, which is yet to obtain certification from the German regulator, "can help stabilize the gas market in Europe," Novak said.

"Using gas from Nord Stream 2 for electricity generation instead of coal will allow the EU to reduce total CO2 emissions by 14%, which corresponds to the annual emissions of about 30 million average cars," the Russian official said.

The start of flows through Nord Stream 2 is expected in October 2022, according to Platts Analytics.