No ‘Green Deal’ without pain

To European audiences who follow developments in the EU’s Council of Ministers and the European Parliament, the regional bloc’s Green Deal may often feel like a positive and a beneficial phenomenon that priorities green energy.

In Malta, we might experience it through initiatives that hasten the transition towards cleaner energy: in the form of solar or wind power, and electric cars.

But it is impossible to divorce this process towards carbon neutrality, from the underlying geopolitics of oil and gas – which will have to fuel the transition – as well the war in Ukraine, which is now the greatest driver of geopolitical risk.

Plans like REpowerEU want to accelerate the deployment of clean energy and green hydrogen; but the proposed timeframes are not helpful, in the context of an immediate energy crisis of the kind the world faces right now.

In terms of its effect on food-supply alone, the war in Ukraine now dwarfs the concerns previously experienced during the COVID-19 pandemic. Malta sources most of its wheat, corn and barley from Ukraine – and Russia, to a lesser extent – and importers are already struggling to keep up with price hikes.

In some instances, a one-litre bottle of edible oil has risen by as much as €1 over a matter of weeks; as exports from Ukraine, the world’s largest producer of sunflower oil, ground to a halt.

This has pushed prices of sunflower oil and alternatives up; and it is but one reflection out of many, of the food inflation that is currently biting hard into people’s pockets.

But there is also the energy crisis that Europe has to deal with. The green transition is not just about substituting one form of energy for another, overnight. It also involves readjusting a global energy system, that includes generating that energy, storing and transporting it – a process that will be inherently disruptive.

Europe was already paying high prices for its Russian gas. With its climate ambitions to keep planetary warming low, and reach net zero by 2050, the bloc cannot forgo the use of oil, gas and even coal during any recession.

This demand for hydrocarbons must be accompanied by a very necessary, intensive investment in clean energy – a very hard process, that gives Russia leverage - but it is also necessary that OPEC states, who have the supply of oil readily on hand, patch up the mismatches that Europe will encounter in the pace of transition.

Europe has answered the call strongly to disentangle itself from the Russian energy relationship, because of a moral imperative not to fund the war. But this does not mean that Europe is also in favour of worsening the energy crisis at a time of ‘stagflation’ – slow growth and high inflation. For in that scenario, Russia only retains its high leverage.

Meanwhile, different viewpoints on the pain Europe can endure are already evident, by recent sanctions which separate pipeline oil imports from seaborne imports.

Even European Union energy commissioner Kadri Simson has suggested that a possible goal of sanctions would ultimately be to force Russia to offer its energy at a discount, therefore reducing revenues for the aggressor, and minimising pain for Europe.

Perhaps that is also why even the United States, whose president previously pledged to make Saudi Arabia a pariah for the murder of Jamal Khashoggi, is now visiting the country: demonstrating, in the process, how the U.S.-Saudi relationship remains crucial within the overarching debate on the energy crisis.

These ‘realpolitik’ concerns are not just matters for the political establishment to deal with. Perhaps, at its lowest level, it is for this reason that the Maltese – according to the latest Eurobarometer survey – are amongst the highest category (55%), fourth highest after Cyprus, Portugal and Bulgaria, to say they felt the consequences of the war in Ukraine; and that it had reduced their standard of living, much higher than the 40% European average.

Well over 71% of Maltese say they were not ready for increases in food and energy prices from the war on Ukraine, as opposed to the EU average of 40%.

And the Maltese (63%) preferred maintaining price stability “even if it affects the defence of our common European values” (EU 39%); but were less likely to favour defending freedom and democracy (32%) if it impacted cost of living (EU 59%).

In this, the Maltese were again the third highest in prioritising price stability, after Hungary and Bulgaria.

But findings like these should not be met only by the hackneyed phrase that the Maltese are ‘amoral’, when it comes to international relations. Surely, the distant events in Ukraine are manifesting themselves in a more financially impactful manner: while keeping the horror of war itself distant enough from the Maltese.

But it is perhaps this ‘distant’ view of the effect of the invasion that also chimes in with the realpolitik fears and concerns about the effects of sanctions, and how it impacts domestic politics.

For ultimately, it is not just the Maltese – or the Hungarians, or Bulgarians - who have to prioritise ‘price stability’, in the delicate balancing-act of war. All of Europe is now finding that it has to do the same thing.