Lukas Trakimavičius
Subject Matter Expert
Research and Lessons Learned Division, NATO Energy Security Centre of Excellence
Lithuania
Right now the Baltic States, like the rest of Europe, are experiencing the worst energy crisis in a generation. Russia’s invasion of Ukraine has created an unprecedented natural gas crunch across the continent, which has pushed millions into energy poverty and brought Europe to the brink of a recession.
All the while, the Baltic governments have spent billions of euros to cushion consumers from massive price spikes.
These financial interventions — in addition to gas supply diversification efforts — undoubtedly helped to mitigate some of the negative consequences of the energy crisis. However, there is much more that can be done to make the Baltics more resilient to supply shocks.
While there is no magic bullet that could solve the energy crisis, there are at least three things that could help Lithuania, Latvia and Estonia to simultaneously meet their supply security and climate goals.
First, go all out on renewables. In the grander scheme of things, it matters fairly little if countries opt for solar, onshore or offshore wind, hydro or even biogas. All these technologies have their strengths and weaknesses, either from a cost, scalability or intermittency perspective. However, the most important thing for the Baltics is that the more renewable energy they produce at home, the less energy they will have to import from abroad.
At first glance, nuclear energy, and especially small modular nuclear reactors (SMRs), might also seem like a good fit for the Baltics. However, the greatest drawback with nuclear is that large reactors may take decades to come online and virtually all of them suffer from massive cost overruns. Meanwhile, the first commercially feasible SMRs are unlikely to hit the market before the late 2020s or, even more realistically, the early 2030s.
Second, electrify everything. Direct electrification provides the cheapest and most efficient way of reducing carbon emissions in the Baltics. It also goes hand in hand with the initiative to double down on renewables. Much of it can be accomplished by shifting towards electric vehicles for transportation and installing heat pumps for buildings. Meanwhile, in the industrial sector the greatest potential for electrification is in low or medium-temperature heat processes, such as drying or food production.
Despite the hype, because of higher costs and lower efficiency, indirect electrification through fuels like green hydrogen makes most sense in sectors where very high temperatures are required. In the Baltics these might include, but are not limited to, fertilizers, cement and other heavy industries. Similarly, high density power-to-x fuels such as e-kerosene or e-ammonia would have the greatest positive impact in hard-to-abate sectors such as aviation and shipping.
Third, go big on energy efficiency. Energy efficiency is the unsung hero of the clean energy transition. After all, the cheapest energy the Baltics will ever get is the one they do not use. According to the International Energy Agency, the reduction in running costs between the most efficient and least efficient homes or cars can be commonly as much as 40 percent and up to 75 percent. This means that it can cost certain consumers much more to heat the same area or travel the same distance.
There are plenty of ways on how to save energy, but smart meters and insulation provide some of the quickest returns. Smart meters, which are essentially small, networked computers, can provide more detailed information about electricity consumption habits. By some estimates, greater awareness can help to reduce electricity use by some 10 percent. Meanwhile, depending on the type and age of housing, the insulation of buildings can slash heating costs by up to 50 percent.
Granted, few of these ideas are inherently new or original. The Baltics are already busy improving their energy systems and many of those initiatives have long proceeded the Russian invasion of Ukraine. In fact, Estonia is already one of the leading European Union countries for smart meter deployment.
Some of these proposals also overlook other important issues that are closely related to the clean energy transition — the challenge of integrating renewables and balancing the grids, the fragility of supply chains, and the future availability of critical materials. Yet, despite all of that, these three pathways still provide the Baltics with the clearest path of meeting their energy and climate goals.
It is hard to overstate the negative effects of the energy crisis for the public and private sectors alike. Equally, it is difficult to predict how and when exactly it will end. Yet, if there is one thing that is clear, it is that the current crisis provides the Baltics with the window of opportunity to fast-track their energy transition and become better prepared for what the future might bring.
All the while, the Baltic governments have spent billions of euros to cushion consumers from massive price spikes.
These financial interventions — in addition to gas supply diversification efforts — undoubtedly helped to mitigate some of the negative consequences of the energy crisis. However, there is much more that can be done to make the Baltics more resilient to supply shocks.
While there is no magic bullet that could solve the energy crisis, there are at least three things that could help Lithuania, Latvia and Estonia to simultaneously meet their supply security and climate goals.
First, go all out on renewables. In the grander scheme of things, it matters fairly little if countries opt for solar, onshore or offshore wind, hydro or even biogas. All these technologies have their strengths and weaknesses, either from a cost, scalability or intermittency perspective. However, the most important thing for the Baltics is that the more renewable energy they produce at home, the less energy they will have to import from abroad.
At first glance, nuclear energy, and especially small modular nuclear reactors (SMRs), might also seem like a good fit for the Baltics. However, the greatest drawback with nuclear is that large reactors may take decades to come online and virtually all of them suffer from massive cost overruns. Meanwhile, the first commercially feasible SMRs are unlikely to hit the market before the late 2020s or, even more realistically, the early 2030s.
Second, electrify everything. Direct electrification provides the cheapest and most efficient way of reducing carbon emissions in the Baltics. It also goes hand in hand with the initiative to double down on renewables. Much of it can be accomplished by shifting towards electric vehicles for transportation and installing heat pumps for buildings. Meanwhile, in the industrial sector the greatest potential for electrification is in low or medium-temperature heat processes, such as drying or food production.
Despite the hype, because of higher costs and lower efficiency, indirect electrification through fuels like green hydrogen makes most sense in sectors where very high temperatures are required. In the Baltics these might include, but are not limited to, fertilizers, cement and other heavy industries. Similarly, high density power-to-x fuels such as e-kerosene or e-ammonia would have the greatest positive impact in hard-to-abate sectors such as aviation and shipping.
Third, go big on energy efficiency. Energy efficiency is the unsung hero of the clean energy transition. After all, the cheapest energy the Baltics will ever get is the one they do not use. According to the International Energy Agency, the reduction in running costs between the most efficient and least efficient homes or cars can be commonly as much as 40 percent and up to 75 percent. This means that it can cost certain consumers much more to heat the same area or travel the same distance.
There are plenty of ways on how to save energy, but smart meters and insulation provide some of the quickest returns. Smart meters, which are essentially small, networked computers, can provide more detailed information about electricity consumption habits. By some estimates, greater awareness can help to reduce electricity use by some 10 percent. Meanwhile, depending on the type and age of housing, the insulation of buildings can slash heating costs by up to 50 percent.
Granted, few of these ideas are inherently new or original. The Baltics are already busy improving their energy systems and many of those initiatives have long proceeded the Russian invasion of Ukraine. In fact, Estonia is already one of the leading European Union countries for smart meter deployment.
Some of these proposals also overlook other important issues that are closely related to the clean energy transition — the challenge of integrating renewables and balancing the grids, the fragility of supply chains, and the future availability of critical materials. Yet, despite all of that, these three pathways still provide the Baltics with the clearest path of meeting their energy and climate goals.
It is hard to overstate the negative effects of the energy crisis for the public and private sectors alike. Equally, it is difficult to predict how and when exactly it will end. Yet, if there is one thing that is clear, it is that the current crisis provides the Baltics with the window of opportunity to fast-track their energy transition and become better prepared for what the future might bring.