The Russian Roulette? A truly global energy crisis and its implications for our future.

Exactly two months ago, Russia was kicking off its invasion plans in Ukraine triggering an humanitarian, an economic and a global energy crisis.

Sixty days from then the dimension of the impact is getting clear:?

• ?Global and regional economic outlook have been cut down significantly?
• Inflation beats record after record, as energy prices remain too high and food supply disruption add further fuel to the fire of skyrocketing cost of life?
• The aggression has turned into a conflict with millions of refugees, too high number of casualties and inestimable damages to Ukraine?

Although it has not yet entirely emerged, the impact of Russia aggression in the energy world is starting to materialise. The first one to be hit is the same Russia. Its oil production is starting to decline in a marked way - estimated around 1.5 mb/d of loss compared to pre-invasion level - amidst muted market conditions, some technology shortages on production sites and difficulties to find customers due to sanctions. On the gas side, it is early to say and a lot will depend on potential decision of EU - the main Russia customer - to consider a ban of its imports from Russia or not.?

Here the situation is quite clear. most of gas that Russia exports to EU would not have the way to reach other markets. But similarly, EU would need massive measures to stop taking the more than 150 bcm that imports from its aggressive neighbour every year.

The impact of Russia aggression has also reaching the other side of Atlantic. With LNG exports rising - higher domestic demand also for limited switch to coal - gas prices in US have reached a 13-years record high - to levels not seen since the pre-shale era. If domestic politics will not surrender to the argument of keeping shale gas in US hoping that it would keep price down, it has to be seen, but looking at the past it is difficult not imaging that such debate will not erupt in Washington and beyond.

In Europe, an evident effect of the aggression is on the energy policies of several countries. A first phase focused on looking for securing source of supplies alternative to Russia, not only in US but also domestically, in Africa and other places.

Rightly, the attention has started shifting to the demand side of the story. Replacing supplies from the world largest oil and gas exporter only through supply is simply impossible. Countries have started introduction of measures to boost energy efficiency, accelerating renewables deployment; reconsider nuclear phase out positions etc.?

Another help will sadly come from a reduction of demand as a result of economic impact and reduced activities. The IEA forecast that globally demand of gas for 2022 will end up declining (after an important +4.5% in 2021) with Europe plunging by 6%.?

Overall Europe finds itself at a crossroads. The most important one is realizing that nothing can be like before 24 February 2022 and the energy sector represents the key part of the story. After decades of discussion, at least a reduction of the region dependence on Russia supplies cannot be postponed further. The economic (and social) implications should not underestimated tough. A lot of European industrial system has flourished with cheap and abundant supplies from Russia??- the transition cannot be easy and un painful.?

The second dimension is taking stock that the continent ambition of leading the climate discussion requires a more solid and structured integration with the concept of energy security, something that culturally has been traditionally much stronger in US or in China.?

The green deal and Fit for 55 have the potential to conjugate the triplex objective: energy security, climate and industrial transformation.

However, it is a narrow pathway - to be optimistic - and importantly requires people on board and make them fully and finally aware that the idea of energy abundance is not for free and not for granted?