Winter is coming
Wrath of the Tsar, the Nord Stream saga and the European energy crisis
Hey everyone! Thanks for supporting us at Ctrl + Z. It’s been a busy busy week! We were at IFAT (Trade Fair for Water, Sewage, Waste and Raw Materials Management) in Mumbai, India and saw many products centred around zero liquid discharge and circular economy really making their way into the market.
The ones that we liked are Jellyfish bot, a bot for the collection of waste and hydrocarbons on the surface of water bodies and Italmatch’s recovery of phosphorus from urban wastewater.
And now, let’s get to it…
Putin took to power in December 1999, the same month in which I was born. I’ve always seen Russia as Putin’s Russia. And I've seen time and time again how the western media and world leaders misinterpret Russia - whether it be the annexation of Crimea, the Syrian situation, most recently, the Ukrainian war and weaponizing its energy exports to threaten Europe ahead of winters. We have constantly underestimated the price it is willing to pay to protect its interests.
But Winston Churchill got it right
I cannot forecast to you the actions of Russia. It is a riddle wrapped in a mystery inside an enigma; but perhaps there is a key. That key is Russian national interest.
This remains true, even today.
Putin is not North Korea’s Kim Jong-un but more like China’s Xi. He’s strategic in his approach, measured in his methods. He wasn't going to remain still as NATO moved closer to the eastern frontiers of Russia. Historically speaking, Russia has been attacked from the European Plains (flat land running up to Moscow) multiple times in the past. The French did it. The Germans did it. Twice. Thus, being insecure about having NATO at its doorstep and the rising influence of the US in Baltics is not ‘unreasonable’. Putin has been pretty vocal about it.
What just happened?
Now as the situation stands, Russia is leveraging its dominance in the energy markets to get what it wants in Ukraine. In 2021, Russian exports covered 40% of the EU’s natural gas demand, 30% of the EU’s crude oil demand, and 30% of EU’s hard coal demand. The EU has since been trying to move away from its reliance on Russia, but it’s not so easy.
Early this week, the Nord Stream twin pipeline system suffered damages in what has since been dubbed a "sabotage." The timing coincides with Norway and Poland announcing the opening of the Trans Baltic Pipeline.
While it’s easy to point fingers at Russia for the Nord Stream debacle, it defies common sense. Why will they damage their own pipelines? Why will they do it on the extreme other end? How could they execute this in the highly-surveilled Blatic region? But if not Russia, then who? The question remains unanswered. As for us, we will reserve any premature conclusions while the investigations are ongoing. Both the pipelines were not in use, so bigger damages have been avoided.
Europe’s got bigger fish to fry
With the decrease in the energy flow from Russia, Europe is under pressure to secure it’s energy needs from elsewhere. Since the Ukrainian war started, Russian gas imports have dropped from two-fifths to just 9%, wholesale prices for electricity and gas have risen five to fifteen fold. It has created severe liquidity problems for households and businesses, and not to forget the systematic risks in the energy and financial markets.
Adding to the woes, the European Weather Forecasting Agency has forecasted cold winters with less wind and rain than usual. It means lesser output from renewables.
With Russian supplies off the table, what options does Europe have?
On the supply side some spare import capacity is available but reaching the scale required to entirely replace Russian volumes would be at best very expensive, and at worst physically impossible. Limiting factors include global liquefaction capacity constraints, existing obligations in the current LNG market and commercial opportunity considerations in producing countries in relation to diverting shipments away from Asia. There would also be pricing implications and second-round effects on the poorest countries. The EU would thus need to resort to demand-side measures, which would prove painful for different countries/constituencies. Difficult and costly decisions would have to be taken to manage the situation in an orderly way.
A September 2022 European Commission proposal involving electricity demand reduction, a revenue cap on inframarginal generation, solidarity payments from fossil-fuel companies and consumer support measures, is broadly positive, notably because it emphasises demand reduction. However, it is not sufficient. A more comprehensive plan needs to ensure that all countries bring forward every available supply-side flexibility, make real efforts to reduce gas and electricity demand, keep their energy markets open and pool demand to get a better deal from external gas suppliers.
This Week: World Circular Textiles Day
The textile industry consumes millions of barrels of oil a year, tons of water, land and pesticides. More than 50% of clothing produced is disposed of in under one year. 73% used clothing ends up in landfill or incineration and less than 1% end-of-use textiles go back into new textiles.
World Circular Textiles Day, which takes place on 8th October every year, is about exploring circularity progress from around the world, reflect and celebrate on the progress that circularity is making, and to create a roadmap to get to full textiles circularity by 2050.
What we’re reading
Great Salt Lake on path to hyper-salinity, mirroring Iranian lake (Phys Org)
China’s solar exports to Europe shine bright amid dimming trade outlook, global recession fears (South China Morning Post)
Toucan Grants recipients, Season 1: Carbon project origination infrastructure & carbon marketplaces, NFT utility, GameFi, and a regenerative metaverse (Toucan)
Media lying about climate and hurricanes (Michael Shellenberger)
The case for a FOAK fund for climate-tech (Etech Monkey)