Russian exports of natural gas and petroleum had a huge role in the European energy market, and large amounts of Europe’s energy was sourced from Russia. However following Russia’s invasion of Ukraine economic sanctions were placed on the country, ending all Russian energy exports to the EU. A majority of European countries were not able to buy Russian sourced energy creating a major hole in the energy market. With this large energy gap forming it was unclear how the energy would respond. What would be the immediate effects of these sanctions for the people of the EU. How would the EU create or find new energy to fill the gap, would domestic production and other international exports fill this hole and why?
Research Question
How has the European energy market been impacted by the end of Russian energy exports due to the Russian-Ukraine war? How has the market responded in both domestic production and international exports?
Data Sources
#Eurostat
Eurostat is the statistics office of the EU and provides data on Europe through an official Eurostat website. They provide a large amount of data ranging across the EU, and contain a large amount of energy data. This data is being updated regularly, providing up to date data as recent as the current month. Eurostat is a reputable source and primary source, as this data is collected by and presented by the official EU. The data of Eurostat is reliable because the EU uses the data to make informed decisions. The data needs to be accurate in order to properly make decisions, so therefore it makes more sense for this data to be objective. Eurostat provided us with data based around the immediate impact, how household prices changed across the EU.
Bruegel, which is an independent think tank focused around economics with a focus on and association with the EU. The group is openly independent and transparent, with a number of independent reviews. They are transparent about their funding and influences from outside interests. For these reasons we believe that they are a trustworthy and reliable source of information, as they clearly show they are interested in open research not political agendas. Their director Jeromin Zettelmeyer has a very impressive resume, with experience including the IMF and the German Federal Ministry. The rest of the team have similar experience working with major european banks and other reputable organisations. Brugel provided data for the EUs natural gas imports, breaking down how and from which nations the EU imports its natural gas.
Ember is a global energy non-profit think tank with a focus on green renewable energy. The group is open about its mission to increase support for sustainable energy. They are open about their sponsors, and provide information about their employees. Ember is another reputable source, they are open about their goals and funding and offer ways to contact those who collected and presented the data. Green energy and renewable non-profits organizations do tend to have a bias towards supporting green energy, however they still provide accurate data as their goal is to accurately assess the state of the energy market. Ember was the source for domestic electricity production in the EU, both total and broken down by source. This data not only provides information on how much electricity is being produced domestically but also how the market is changing with the different sources of energy.
The European energy market was heavily dependent on Russian gas pipelines. On February 24 2022, Russia-Ukraine war began. Because of the war, gas transits through the major gas pipelines, Nord Stream, Turk stream, Ukraine and Yamal, were decreased or ended for different reasons. Before the war, generally gas transit was more than 2000 million cubic meters but after the war, it decreased to less than 1000 million cubic meters.
Code
route_combined %>%ggplot() +geom_area(aes(x = Week_Continuous, y = Gas_transit, fill = Route), size =1) +scale_x_continuous(breaks =seq(0, 3*53, by =53),labels =c("2021", "2022", "2023", "2024")) +theme_minimal() +labs(title ="European Gas Transit from Russian Gas Pipelines",subtitle ="Gas Transit from 2021 to 2024",x ="Year",y ="Gas Transit (million cubic meters)",caption ="source : https://www.bruegel.org/dataset/european-natural-gas-imports")+geom_vline(xintercept =53+25, col ='grey60', size =0.7) +scale_fill_manual(values =c('lightblue', 'skyblue', 'royalblue', 'royalblue3'))+annotate('text', x =53+33, y =1000, hjust =0,label ='Week 30 in 2022',color ='grey30')
##Immediate Impact
Code
data_path <-here("data_raw", "nrg_pc_202_page_linear.csv")energy_prices <-read_csv(data_path) %>% janitor::clean_names()euro_area <- energy_prices %>%filter(geo =="EA")euro_area$color <-ifelse(euro_area$time_period =="2022-S1", "highlight", "normal")ggplot(euro_area) +geom_bar(aes(x = time_period, y = obs_value), stat ="identity", width =0.8, show.legend =FALSE) +labs(title ="Gas Cost Per Household in Euro Area",subtitle ="Exluding Taxes and Levies",x ="Time Period",y ="Gas Cost kWh per Euro",caption ="Source: Eurostat - https://ec.europa.eu/eurostat/databrowser/view/nrg_pc_202/default/line?lang=en&category=nrg.nrg_price.nrg_pc") +theme_void()+theme(plot.title =element_text(size =20),plot.subtitle =element_text(size =12), axis.text.x =element_text(angle =45, hjust =1, size =8, vjust =1), axis.title.y =element_text(angle =90, hjust =0.5, size =12, vjust =1), axis.title.x =element_text(size =12), axis.text.y =element_text(size =8),plot.margin =margin(1, 1, 3, 1),plot.caption =element_text(size =6) ) +geom_vline(xintercept =5.8, linetype ="solid", color ="red", size =1) +annotate("text", x =4.6, y = .08,label ="Start of War", angle =0, vjust =-0.5, size =4)
Russia played a major role in the European energy market as a major exporter of natural gas. Energy sources from Russia was found throughout Europe, helping provide cheap energy. However with this cheap energy being removed there was huge jump in the price of gas, which is show on the graph. The cost per household nearly doubled after the war and maintained those levels for years afterwards.
For international energy trade, the EU shows major increase after its import of foreign natural gas following the conflict. A majority of this increase in international gas comes from America. Not only did the increased imports cover that lost by Russia, but it overall increased the amount of gas being imported. The Eu went from importing around 2500 cubic metres in late 2021 to around over 5000 by early 2022, and maintained these levels into 2023 and 2024. The reason for this increase in international imports makes sense, as the EU needed to be able to have a surplus of power. Around this same time there was a major decrease in domestic production which will be shown in later graphs. In order to continue to provide power the EU needed to import more energy as it slowed its domestic production, therefore increasing imports mainly from America.
#> # A tibble: 118 × 18
#> area country_code date area_type continent ember_region eu oecd
#> <chr> <chr> <date> <chr> <chr> <chr> <dbl> <dbl>
#> 1 EU <NA> 2015-01-01 Region <NA> <NA> NA NA
#> 2 EU <NA> 2015-02-01 Region <NA> <NA> NA NA
#> 3 EU <NA> 2015-03-01 Region <NA> <NA> NA NA
#> 4 EU <NA> 2015-04-01 Region <NA> <NA> NA NA
#> 5 EU <NA> 2015-05-01 Region <NA> <NA> NA NA
#> 6 EU <NA> 2015-06-01 Region <NA> <NA> NA NA
#> 7 EU <NA> 2015-07-01 Region <NA> <NA> NA NA
#> 8 EU <NA> 2015-08-01 Region <NA> <NA> NA NA
#> 9 EU <NA> 2015-09-01 Region <NA> <NA> NA NA
#> 10 EU <NA> 2015-10-01 Region <NA> <NA> NA NA
#> # ℹ 108 more rows
#> # ℹ 10 more variables: g20 <dbl>, g7 <dbl>, asean <dbl>, category <chr>,
#> # subcategory <chr>, variable <chr>, unit <chr>, value <dbl>,
#> # yo_y_absolute_change <dbl>, yo_y_percent_change <dbl>
Code
total_prodution <- eu_total %>%ggplot(aes(x = date, y = value, color = variable))+geom_line() +theme_minimal() +labs(title ="Total EU Domestic Electriciy Generation By Type", x ="Date", y ="Terrawatt Hours (TWh)",caption ="Source: Ember") +scale_color_viridis(discrete =TRUE, option ="plasma") +theme(legend.position ="none")
This graph breaks down domestic electricity production by each source, and charts the amount produced each year. The graph shows how over the last 9 years green energy production has been increasing while fossil fuels have been decreasing. However 2022 represents a major increase in green energy production and a major decrease in fossil fuel production. At the end of 2021 coal was at 40 THw and gas at 54 Thw, but by the end of 2023 coal had fallen to 28 THw and gas at 33 THw. At the same time renewable energy was hitting peaks with Wind at 50 Thw and Hydro at 33 THw. These significant shifts in energy suggest that the EU was very focused on developing renewable energy infrastructure. The gap in the energy market presented a unique opportunity to create a large amount of renewable energy infrastructure. The EU seized the opportunity and scaled its slowly increasing green energy production in order to use this opportunity to fill this gap with more cleaner and long-lasting energy production. This can be seen in the fact that during 2024 wind electricity generated more energy than both gas and coal.
Code
ani_plot <- eu_energy_source %>%ggplot(aes(x = date, y = value, color = variable)) +geom_line() +geom_point() +geom_text_repel( aes(label = variable),hjust =0, nudge_x =1, direction ="y",size =3, max.overlaps =20,segment.color =NA) +theme_minimal() +labs(title ="EU Domestic Electricity Generation By Type",subtitle ="Yellow represents Wind",x ="Date", y ="Terawatt Hours (TWh)",caption ="Source: Ember") +scale_color_viridis(discrete =TRUE, option ="plasma") +theme(legend.position ="none")animated_plot <- ani_plot +transition_reveal(date) +# Animate by the 'date' variableease_aes('linear')animate(animated_plot,end_pause =15,duration =10,renderer =magick_renderer())
