America desires to chop its dependence on Russian fuels. However Switzerland and Europe can not utterly do with out Russian fuel, says René Bautz, the CEO of Gaznat, which provides high-pressure fuel to western Switzerland, and president of the International Gasoline Centre platform for the pure fuel sector.
This content material was revealed on March 19, 2022 – 10:00
Olivier Grivat
SWI swissinfo.ch: In Switzerland, the worth of fuel is now 12 instances what it was final summer season. Have you ever ever seen such a worth improve?
René Bautz: No, its an absolute report. The charges have climbed to €345 (CHF356) per megawatt hour (MWh). They used to common €30. Nonetheless, Europe nonetheless has sufficient fuel, with shares at 30%. Russia nonetheless provides 250 million cubic metres a day. The value improve is generally simply an emotional response. It isn’t very chilly now, and the temperatures will heat up with the beginning of spring. Our forecasts say that costs will improve significantly this summer season and go down once more subsequent winter.
SWI: How can we address worth spikes within the markets?
R.B.: As soon as spring comes, fuel firms might be filling up their underground reserves in France, Italy, Belgium, Germany, and so forth. The most important reserves in Europe are held in these underground storage tanks. The reserves that Gaznat has acquired in France imply we might be kind of unbiased for a number of weeks subsequent winter. Consumption in winter is 5 – 6 instances greater than in summer season, so we must make investments extra in storage. In Switzerland, initiatives are going to be beginning up once more, comparable to within the underground chambers of higher Valais area and the rocky massif of the Grimsel, which is a CHF400 million ($425 million) venture. However it’s not simply fuel. Electrical energy manufacturing in the primary European international locations additionally is dependent upon Russian coal. All of the vitality sources coming from Russia are at stake.
SWI: Washington has determined to do with out oil and fuel from Russia. The European Union additionally says it desires to scale back its dependence. However can Europe get by with out Russian fuel?
R.B.: The US are literally exporters of fuel, whereas the proportion of Russian fuel imported by the Europeans is as excessive as 40%. For 2021, within the Gaznat zone which incorporates western Switzerland, we expect it is about 25%. The Russian contribution is even larger in German-speaking Switzerland. To close down all Russian fuel would imply an enormous problem for replenishing our shares this summer season. There must be new long-term contracts, and main investments in liquid fuel in Europe, which might take three to 4 years. Bern has requested the Swiss Gasoline Trade Affiliation to look at the safety of provide. We’re coping with a significant coverage shift right here. It should be a watershed.
SWI: What provide alternate options are there?
R.B.: There’s North Africa, the Caspian Sea, and the North Sea with the “Baltic Pipe” below development to hyperlink Norway to Poland through Denmark. There’s one other venture in Egypt with deposits found within the Mediterranean. It might even be possible to extend imports of liquid pure fuel, however there would have to be ports capable of liquify that fuel (at -163° C) to compress its quantity, then heat it up at vacation spot. Germany, which imports 49% of its fuel from Russia, hasn’t a single one.
SWI: How a lot of a rise ought to the Swiss client count on?
R.B.: It actually is dependent upon the distributors and their coverage on managing worth will increase. The value of fuel consists of the worth per molecule, transportation, taxes (mineral oils and CO2, which have elevated steeply), and never forgetting VAT, after all. These taxes quantity to some 30%. One resolution could be to scale back VAT (7.7%) briefly and convey down a few of the different taxes. One among our major fears is seeing a rising variety of shoppers who’ve bother paying their payments. Even when there’s not but an issue in Switzerland, 100 million European shoppers are on this state of affairs. Petroleum, fuel and electrical energy, all the pieces going up directly. What would be the state of affairs subsequent autumn? We simply do not know.
SWI: Will fuel distributors make a revenue from rising costs?
R.B: They principally belong to public utility firms. Each has its personal pricing coverage. If fuel is dearer, the upper prices must be handed on to the purchasers to a sure extent. If it goes above a sure degree, that will scale back demand. Individuals might begin to use much less vitality, insulate their properties, and even undertake different alternate options. However there are dangers, comparable to electrical energy black-outs.
SWI: Gasoline is now extra of a problem for the federal authorities, is not it?
R.B.: Bern is finding out the thought of constructing three new high-performance energy stations utilizing fuel, with eight of the potential websites in French-speaking Switzerland. Ultimately, two or three of the proposed websites might be accredited and shared between French and German-speaking areas of Switzerland – if attainable close to a fuel pipeline and {an electrical} switching station within the current industrial areas [editor’s note: the thermal power plant at Chavalon in Chablais, Valais, might be reactivated]. The executive procedures and timeframes must be fast-tracked.
SWI: Is it nonetheless going to be possible to desert fossil fuels by 2050, as the federal government has deliberate?
R.B.: Gasoline shouldn’t be out of the image but, though it has been referred to as into query. In the long run, we must decarbonise our fossil vitality little by little and develop renewable energies in addition to vegetable-based biomass, which is a possible Switzerland has hardly checked out but. Electrifying all the pieces would not work and would price an excessive amount of. It might be higher to depend on a variety of vitality sources. It’s going to take time, sources, and putting in a pro-active coverage to encourage home manufacturing: hydro, photo voltaic, wind, but in addition artificial fuel and biogas.
Translated from French by Terence MacNamee
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Extra: SWI swissinfo.ch licensed by the Journalism Belief Initiative