Hello. It looks like you’re using an ad blocker that may prevent our website from working properly. To receive the best Tortoise experience possible, please make sure any blockers are switched off and refresh the page.

If you have any questions or need help, let us know at memberhelp@tortoisemedia.com

Sensemaker: EU energy hunt

Sensemaker: EU energy hunt

What just happened

Long stories short

  • Russian troops stormed Mariupol’s Azovstal steelworks before a planned ceasefire to allow civilians still there to escape.
  • Bolivia launched a scheme to cut crowding in its prisons by reducing sentences for inmates who read books.
  • Rocket Lab, a New Zealand-based space start-up, caught a rocket booster with a helicopter as it returned to earth.

EU energy hunt

The taps are being turned off. Russia has been Europe’s most important supplier of crude oil and natural gas for decades, but the continent is now scrambling to find alternatives. Where they will come from is not clear but they will have to be found fast.

On Wednesday, Ursula von der Leyen, president of the European Commission, announced a ban on crude oil and refined products from Russia.

This will be phased and is subject to approval from member states – both Hungary and Slovakia have said they will seek exemptions. But the move marks the latest attempt to reduce the EU’s vulnerability to Moscow, and staunch the flow of funds to Putin’s war chest.

As Fatih Birol, executive director of the International Energy Agency, notes: “Nobody is under any illusions anymore. Russia’s use of its natural gas resources as an economic and political weapon show Europe needs to act quickly to be ready to face considerable uncertainty over Russian gas supplies next winter.”

  • Europe is currently paying Russia up to $850 million a day for oil and gas, depending on fluctuating prices.
  • The Kremlin is on course to earn $180 billion in oil tax revenues this year, according to one estimate cited by the FT – equivalent to 60 per cent of its federal budget.

Russia cut off gas supplies to Poland and Bulgaria last week, though both countries have had time to prepare as their long-term contracts with Gazprom were due to expire this year. Bulgaria, a modest importer of gas in any case, is seeking increased supplies from Azerbaijan, while Poland is importing liquefied natural gas through a terminal on the Baltic.

“The big consequences would be if the big importers – Germany, Italy and France – were to disconnect from Russian gas,” said Jonathan Stern, chairman of the Oxford Institute for Energy Studies. “The German chancellor has spoken about 400,000 redundancies from having to close German factories. Maybe there would also need to be a switch back to coal in Germany. For Russia, this would mean a loss of tens of billions of euros.”

Oil is easier to replace than gas, but…

  • The proposed embargo has still prompted warnings of shortages and price rises for consumers, partly because Opec and the US have not yet signalled they will increase output as fast as Europe needs.
  • For now, Russia is still finding buyers for its oil outside Europe by offering steep discounts. Its benchmark Urals blend is trading at $70 a barrel compared with $110 for Brent crude, but the Russian federal budget breaks even at $44 a barrel. 

There’s a silver lining for Big Oil, too: the volatility creates opportunities for commodity trading divisions, helping boost BP’s profits this quarter.

“We brought 55 cargoes of LNG into Europe over the last five months, ten of those into the UK,” BP chief executive Bernard Looney told Bloomberg this week. A million barrels of Russian crude a day are off the market, he added, and that may double this month.


Half a point
The Fed announced its biggest rate rise in 22 years and started a programme of “quantitative tightening” (QT – the opposite of printing money) in a carefully judged effort to tame US inflation without starting a recession. Jerome Powell, the Fed chairman, said he wasn’t considering even bigger interest rate increases later this year, but that at least a couple more half-point hikes were likely at the next two meetings of the Federal Open Market Committee. Powell is fighting a rearguard action against US inflation having misidentified it as a temporary blip last year. Consumers living with inflation at a 40-year high of 8.5 per cent as of last month will hope he’s gauged it right this time. First-time buyers will be watching carefully to see if the QT starts taking the air out of the asset price bubble known as the US property market. Either way the age of cheap money, prolonged by Covid largesse, seems to be over. Stocks rallied.

Separately, Italian police and NYT reporters looked on, mesmerised, as fuel and supplies were loaded onto the $700 million Scheherezade superyacht thought to be owned by Putin, or at least for him. It’s been refurbished in the Tuscan port of Marina di Carrara. Why it hasn’t been impounded is an infuriating mystery. 


Hillbilly elected
JD Vance, the writer who once called Donald Trump “cultural heroin”, has won a Republican Senate primary in Ohio thanks almost entirely to Trump’s endorsement. Vance produced the bestselling Hillbilly Elegy in June 2016 and later that year campaigned against Trump in the presidential election. He’s since rethought the merits of taking on the former president and demonstrated in the process just how firm Trump’s grip on the Republican nomination process remains. Vance is an investor and Yale Law School grad who also won the backing of Peter Thiel, the libertarian Silicon Valley billionaire, for his expensive campaign. His book about left-behind white working-class people in Appalachia sold at least as well with liberals seeking to understand Trumpism as with Trump supporters looking in the mirror. 


EV power
Porsche has invested $100 million in a new battery technology that could increase battery energy density by an order of magnitude. It’s based on using silicon instead of graphite for the anodes of lithium-ion cells, but the silicon is in gaseous form and carbon is still used in the anode, engineered at a nano-scale to form a scaffold that holds the gas. The detail is interesting because a) Techcrunch reports that the silicon in this form could carry ten times as many lithium ions per unit of volume as a traditional graphite anode, and b) carbon nanostructures were always heralded as the key to dense energy storage to rival petrol. They disappointed as a hydrogen storage medium and still aren’t competing on equal terms with fossil fuels, but it sounds as if Group 14 Technologies, Porsche’s new battery partner, is making progress. Even without a great leap forward in energy density – and thus range, the holy grail of EVs – Porsche’s electric cars are already outselling its iconic petrol-powered 911s.

The 100-year life health, education AND GOVERNMENT

Up the nose
Some good news for sufferers of trypanophobia (a fear of needles): progress is being made in nasal vaccine development. Scientific American says nasal sprays could be more effective than intramuscular injections, especially for the current Covid variants, because the virus first lands in your mouth, throat and nose. This means nasal vaccines can aim for mucosal immunity, not just whole system immunity, which could be more effective at preventing infection. Akiko Iwasaki, an immunologist at Yale, describes it as putting a guard on the door, rather than waiting for an invader to get inside before attacking. Other benefits include being less distressing as a delivery method for children and those with autism, and the potential to self-administer at home, reducing strain on healthcare staff. To note: although there are eight nasal vaccines in clinical development and three in phase three clinical trials, there are big hurdles to surmount before they are rolled out. Being close to the brain adds neurological considerations and there is a chance not all the vaccine will be absorbed if you happen to sneeze afterwards. 

Our planet CLIMATE AND geopolitics

NZW funding
Two closely-linked groups that reject UK government climate policy and much of the science it’s based on receive funding from American donors heavily invested in fossil fuels, according to the Open Democracy website. The Global Warming Policy Foundation (GWPF), founded by the former Conservative chancellor Nigel Lawson, has received hundreds of thousands of dollars from its US arm, the American Friends of the GWPF, which in turn has received more than $620,000 from the Donors Trust, which in turn has been given millions by the Koch brothers – the billionaire heirs to their father’s oil fortune. Open Democracy says the GWPF has also been given more than $200,000 by the Sarah Scaife Foundation, which has stakes worth $30 million in 22 energy companies including Exxon and Chevron. The GWPF, whose new campaigning arm, Net Zero Watch, exists to undermine the UK’s net zero targets, claims not to take money from energy companies or investors in them. This appears to be untrue.

Thanks for reading. Please share this around and tell us what we’ve missed. News tips and story ideas are welcome. Email them to sensemaker@tortoisemedia.com.

Jeevan Vasagar

With additional reporting by Giles Whittell and Phoebe Davis. Graphic by Katie Riley.

Photographs Getty Images, Porsche

in the tortoise app today