♪ >> time for a quick check of the headlines. russia has capital of the u.n. secretary general visits. ukraine's president volodymyr zelenskyy accused the coming of trying to humiliate you and and one of his advisors called it a postcard from moscow. at least one person was killed. and took guterres met ukrainian president volodymyr zelenskyy but before the meeting, he toward regions near kyiv where russians have been accused of committing war crimes.

during a press conference, guterres called for accountability. >> ukraine is an epicenter of comparable heartache and pain. i witnessed that vividly today around kyiv. the senseless loss of life, the messy distraction. the unacceptable violations of human rights, and the laws of war. it is vital that international criminal court and other human mechanisms conduct their work so that there can be real accountability. >> it is important that the secretary-general has had a chance to witness the crimes committed against the ukrainian people in the suburbs of kyiv. he has seen with the occupying forces have done against our citizens. this is true genocide, and it is important to facilitate the establishment of special international tribunal on crimes. >> satellite imagery has revealed damage done by a

russian shelling on a steel plant in mariupol where soldiers are holed up along with civilians, despite russia agreed evacuations to take place. one person has been killed in kharkiv, and another two injured, after russian shelling on the residential area on wednesday. emergency crews went to the scene to treat the wounded and pennetta fire. ukraine's second largest city has faced shelling nearly every day since the war began. turkey's president is in saudi arabia for a visit aimed at restarting a new period of bishops. president oregon met king solomon and the crown prince, mohammad bin salman. relations were strained after the 2018 killing of journalist jamal khashoggi at a saudi consulate in istanbul. those are the headlines. the news continues here on al jazeera after "inside story." stay tuned. ♪

>> russia has halted gas supplies to poland and bulgaria. the e.u. because it blackmail, and says it has contingency plans. but can europeans survive without russian gas? this is "inside story." hello there and welcome to the program. ♪ i'm laura kyle. the crisis between russia and europe sparked by the war in ukraine has taken yet another turn. this time moscow has delivered

, on its promise to halt gas supplies to bulgaria and poland for not paying in rubles, russia's currency. for though the action had been feared by some in the european union, many had already predicted. bulgaria says it's made alternative arrangements and poland insists its energy supplies are secure. at the start of the conflict, the u.s. agreed to provide liquefied natural gas to the e.u. in the coming years, and member states are working on find alternative long-term supplies as well. european leaders are calling russia's move blackmail and are promising to respond. >> gazprom's announcement that it is unilaterally stopping gas deliveries to certain e.u.-member states is another provocation from the kremlin but it comes as no surprise that the kremlin uses fossil fuels to try to blackmail us. this is something the european commission has been preparing for in close coordination and solidarity with member states

and international partners. our response will be immediate, united, and coordinated. laura: the european council president echoed a similar message on twitter, saying gazprom's decision to cut gas supplies to some e.u. member states is another aggressive unilateral move by russia. we will remain united and support each other while phasing out russian energy imports. some in the e.u.'s this as an opportunity to revisit the issue of renewable energy sources. achieve that, the would need to raise the share of its green energy to 40% of total consumption by 2030. another step would be to collectively reduce net greenhouse gas emissions by 55 from 1990 levels by 2030 and the e.u. may have to divert its attention to alternatives like liquefied natural gas and even

more controversially, resort to reactivating its coal powered plants. in its reliance on russian gas will not be an easy task for europe. the e.u. received more than 40% of its supplies from russia before the war about a third of that mental ukraine. germany is the biggest single consumer, accounting for 55% of its total imports. it has now promised to phase out russian imports. gary, which has just been cut off by gazprom, receives more than 70 of its natural gas from russia while poland gets more than 45%. ♪ let's bring in our guest. during his cumberland, andreas goldthau, professor at the willy brandt school of public policy. in moscow, chris weafer, chief executive officer at the consultancy, macro-advisory. and in oslo, ole hvalbye, a commodities analyst at seb financial services group. a warm welcome to all of you. let's start this discussion by addressing this issue of actually paying for russia's gas

in rubles. why poland and bulgaria have refused to do it, who else might be doing it, and why russia wants it in the first place. first ole, why have poland and bulgaria defied russia's demands? >> what we're seeing is that poland and bulgaria are both now going over from russia as a supply source of natural gas. and just going back four weeks, we saw that poland actually promoted the most radical plan in the e.u. to diversify its energy imports. basically, what they stated wish that there will be no russian oil in two months time, no russian oil by the end of 2022, and the extension on the russian natural gas contract, which is about to expire at the end of 2022. so this has been an important politics in poland. and also bulgaria, of now we see

that this is an opportunity to go away from russia as a supply source, and now they have alternatives. laura: and bulgaria does as well because it gets its vast majority of natural gas from russia. >> exactly. that's a good point. bulgaria can get their gas from azerbaijan. they are signing more long-term contracts with the azerbaijani gas. prof. glauber: ok. chris, let's look at russia and what it is insisting on these rubles payments in the first place, i mean, i understand that gazprom already has to sell 80 of its foreign currency earnings for russian currency anyway so why is it insisting on more of these ruble payments? >> just very quickly on what previous speakers said, the reason why russia targeted poland and bulgaria is exactly what he said, these countries have been more proactive in looking for alternative sources and making specific arrangements

for alternative gas supplies. both countries were in any case, going to drop russian gas supplies at the end of the year. so it allows russia opportunistically to make a point, to basically say to the other countries, we can do the same. , even though the volumes would be a lot more significant and the impact would be a lot bigger because other countries like germany, italy, etcetera, have not made these arrangements because they are not possible. as to why right now? this is something is important and the government have talked about for a very long time, more than 10 years, the fact that they have wanted to break dependency on the dollar as the main currency for russia's external trade. they have wanted more bilateral currency deals. there are some in place with china in rubles and chinese one won. so this is an opportunity to

advance that. but actually the reason why they are doing it specifically now, is related to sanctions. because the mechanism that they have proposed, to put in place, which requires a customer in europe to still be able to pay in dollars and euros, but now into a bank account in gazprom bank, and gazprom bank then converts to rubles and transmits the rubles to to gas gazprom. so the customer can still pay in dollars or euros. the e.u. commission are is saying that this mechanism is sanctions-violating, because it involves a russian central bank and they are opposed to it. so, russia is pushing it now in order to make these sanctions against the central bank very uncomfortable for europe, and raising the stakes about future sanctions. laura: it certainly has succeeded in raising the stakes.

andreas, given the number of countries still receiving russian gas at this time, can we assume that some or many are actually doing in rubles? guest: there are reports that this is already happening. a european countries are paying in rubles precisely along the lines of what chris just outlined. we don't precisely know whom. we have fair certainty on hungary and probably austria. i would rule out german companies doing the same thing, given the rather difficult situation. i am not ruling out that this is going to go -- that the number will go even higher up. i guess the key issue here really is, what kind of pressure is higher? the political pressure from the european side to stay in line, or essentially to keep up the gas supply flow think? that is where companies find -- countries find themselves, between a rock and a hard place at the moment. laura: absolutely. sanctions are only as strong as

their weakest link. is this russian move to insist on payment in rubles thereby violating sanctions, according to the e.u. commission president, isn't working -- is it working? guest: i think it is. back to what the second speaker mentioned, we saw that he used ursula von der leyen, mentioned that the paying in rubles will be viewed as a sanction violation. it is what is driving the price up. it is more like a psychological effect on the market. this is the power play that putin and gazprom have been driving in the last six-plus minutes, going back. and i think it works in some way, because now you see that the countries which are really reliant on russian natural gas, they will now pay in rubles.

the market now realizes the seriousness of the actions. we see that even though the price didn't like it -- of course, it jumped up a bit, but not really huge extent. but what we saw happening was that the price is further out on the curve going forward, they went down. i think the market is realizing that this will not be an easy or quick fix. so going forward, we will have higher prices for longer. i think that is exactly what putin wants. a quick comment as well, putin has been delivering on his long-term obligations. his long-term contracts, all the time. he has been playing with the sp start volume is much. his goal is to make sure that his large customers of natural gas in europe are going into new contracts, which are about to

expire. natural gas is like a marriage, a 20, 30, 30-year handshake. and this is exactly what he wants. so i think it is sort of working. yes. laura: would you agree with that, chris? if you can perhaps look into putin's mind simply because you are there in moscow, do you think that is his outlook? guest: first of all, at russia views these relationships over the very long term. and it is important to note that the russian government always made a point that it will always honor contracts. so in this situation, it is about making life difficult for the european customers rather than perhaps risking the contracts, because german or other european customers can still pay in dollars or euros, but now they have to pay into gazprom bank rather than that just gazprom and hence convert

into rubles there. russia is saying that technically, the contract is not disruptive. it is only the payment mechanism that is changed. they are trying to put the onus on europe and european customers, to break sanctions, as the e.u. commission president said. but russia said we are not doing much. we are changing how you pay, not where you pay. so in that sense, of course, russia is in a strong position. although, you really have to always reflect on the fact that russia and europe mutually difficult position europe needs gas, but russia needs money. so in that sense, you will not get into a situation where russia will just arbitrarily turn the gas off, because it needs a financial lifeline in order to sustain the economy and provide employment subsidies, social subsidies, et cetera. the situation in russia will be very difficult and very

different tomorrow if those gas flows were cut off and the money stream was disrupted. so in that sense, there is a lot of bluffing. there is a game of brinksmanship, there's a game of chicken. it will play out over the summer when the energy market requires less volumes. it's a good time to play it. the hope here in moscow is that, as far as i can hear, that they hope all of this will be resolved and dusted and finalized before we get to the autumn delivery season. laura: that will be interesting. andreas, do you think the russia might lose this bluff? the e.u. is standing resolute, saying it's response is immediate and coordinated. is it going to be enough to wean themselves of precious fossil fuels? guest: i think there's two things. i think the jury is out on whether the front is standing. at the moment a couple of

countries are breaking out of that. what is really needed is a coordinated response. people working on this, whether it holds, the jury is out. but the longer term question is, does europe need russia's gas going forward? two months ago or three months ago, i would have said yes. it is a reality to live with for a couple of years or a decade. now, not so sure anymore. if you connect the dots, the germans are ramping up solar -- 20 gigawatts. the dutch are doubling their offshore wind capacity until 2030. we have seen similar moves in italy. across europe, companies and governments are pouring billions into climate measures and the energy transition. so i guess what this really means is that we will see a fuel

switch to the extent that you can replace molecules in in heating and in power generation. and that will destroy demand for gas. that is the reality that russia has to live with going forward, and all of that has massively accelerated at this point. laura: so, curse, if this does backfire does russia risk becoming a economic pariah, and does it risk putin's very future? guest: i think when you say backfire, i think it is inevitable that europe will purchase less russian energy, regardless of what happens next, regardless of the sanctions, et cetera. that game has now changed for good. but in russia, it is also a case that russia doesn't want to be as dependent on europe as its major energy customer. either. for example, since 2014, when europe started talking about

russia and russian energy risk, in moscow, the conversation was about also russia's exposure to european -- to europe as an energy customer. since 2014, we have seen major projects being built, focusing on china and gas and oil and lng. the discussion in moscow right now is acknowledging that europe will become steadily and less important customer, but asia and china and india in particular are all going to become bigger customers and compensate. so the view in moscow is that this is about rebalancing. it is inevitable that europe will go down as a customer, but there will be compensations with new customer growth elsewhere, that's the radio looking at it right now. so the view in moscow is that this rebalancing is not going to destroy the economy. it all depends on scale and time and the urgency that this will all be rolled out.

laura: ole, what are your thoughts on that? guest: that is an interesting point. we work on trying to understand the rerouting capabilities for natural gas from russia. and what we have seen, just speaking of how it looks like right now, we see that we have around the export capacity going east into china. that is around at maximum, 400 terawatts hours per year. if you compare what is flowing into the western european market through the yamal pipeline, the nordstream 1 pipeline and other pipelines going through ukraine, that is around 1700. you get the idea of the scale of the european market. that is a really interesting topic. i totally agree that russians are really reliant on us as well. but we also see that there is expansion plans. . for example, in siberia, a huge pipeline going into china.

that is scheduled to come online at around 2030. more than eight years. so i think it is important to have that in mind. as of now, europe is just too large of a customer. laura: all plants seem to be hinging on 2030. it will be interesting to see how many of them can be and will be sped up to deal with this particular crisis. andreas, if there was ever a time to invest in renewable energy, it is now, with supplies of fossil fuels uncertain. are we seeing enough effort down that road? guest: i think it is the best time ever to do that, particularly in europe. this is where government support is being ramped up, and where you literally only have an economic case, but also a strong national security case, as some politicians would make it. but i think the one bottleneck here obviously is the slow

supply chains. we have seen some of the material, and some of the parts needed to really ramp up our renewable capacity are not available, because of various bottlenecks across the globe, and because of the knock-on effects of the covert crisis still. so on the one side we have aspiration and good business cases, and great opportunity, particularly in europe and the oecd world. but on the other hand, we face serious constraints when it comes to delivering. that is something many european markets have to grapple with going forward. laura: ole, there is talk of filling in a short-term gap as we shift from gas to coal. speaking of the climate crisis for a moment, this will ensure a massive rise in greenhouse gas emissions? guest: definitely. really bad for the environment.

you know, if you go back a few years time, at least to the last 45 years, esg and the environment has been everything on the agenda. it has been all about the environment. now, we see that suddenly it is all about the security of supply. whatever the cost, you can burn whatever you find, you can burn all the car tires, whatever you have, it doesn't matter. now it is a lot about surviving and making sure the industry keeps on delivering. so environmental crisis aside. and then you have the security of supply which is at the top of the agenda as of now. that is the question, is that, if you look into renewables, if you look back, the historical average price in the european union has been 40 euros per megawatt hour. coming out of kovit and coming out of the crisis, the average power price with somewhere

between 70 euros and 100 euros per megawatt. this is huge. because at the time of covid we have had an increase in price for carbon cost. so definitely, going back to the question regarding renewables, this is really big business. there will be a massive cash machine in building renewables and generating power from renewables at these levels. laura: interesting. kris, is there much drive for renewables in russia? guest: it has been a really interesting debate in russia up to now. where on the one side, you have the very powerful hydrocarbon sector and big oil and big gas companies essentially saying that russia should take its time about moving into renewables, that the world will still need oil and gas right into the middle of the next decade, and russia needs to invest more in oil and gas supplies.

then you have the emerging forces talking about renewables and the inevitability of reduction. it has been a big battle in in russia. one of the consequences of this conflict will be an acceleration of investment in renewables, that's absolutely clear. we have no idea how that will play out in russia as a theme. also, when the crisis ends. but for sure, it is something that will have to be stressed. before the crisis, it was a debate. but without any clear conclusion. laura: they say that one of the problems with renewables is the cost, that the government must protect the very poorest from energy price rises. we are going to see energy price rises anyway, with the russian invasion of ukraine and stopping the flow of gas to european nations. but what can government do to protect consumers? guest: there's a couple of

things. i think the first thing that government should be doing is incentivizing savings. they are not doing enough at the moment. governments across europe rely on the price to deliver savings, but savings will not necessarily always come through, simply because the price is high. to some extent it is because the signal is not direct. there is no necessity on the demand side, responding to price hikes. so the government can do a lot of things. i would start with industry, to make sure we don't end up in a situation where rationing becomes the name of the game. european governments can do a lot more to shield consumers. . but on the other hand, we have a whole policy toolbox to do that. we tested it during kovit. just think about the checks that were sent to poorer families, or lower income households to buffer some of the consequences. you can do this in a very targeted way.

you could lower taxes on electricity, for instance. that is a direct subsidy, if you will, to lower-income households, simply because they spend an overproportional share of their income on energy services. there's lots of things you can do. what you shouldn't be doing is essentially just regulating the price across the board and just make sure that price hikes are no longer felt by consumers. because in the end you neither trigger savings, nor shield the right people. laura: ok. such an interesting discussion today. thank you very much to all of you for joining us. andreas goldthau, chris weafer, and ole hvalby. and thank you, too, for watching. you can see the program again anytime by visiting our website, aljazeera.com. and for further discussion do go to our facebook page. that's fcebook.com/ajinsidestoory. you can also join the conversation on twitter. our handle is @ajinsidestory. from me laura kyle, and the entire team here in doha, it's

goodbye for now. ♪ o7ñ;ñ;?kñ? ♪

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