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Model Y cars are pictured during the opening ceremony of the new Tesla Gigafactory for electric cars in Gruenheide, Germany, on March 22.POOL/Reuters

The European energy markets were shaken to their core – literally – on Monday, when two subsea explosions ripped apart the twin Nord Stream natural gas pipelines that connect Russia to northern Germany. The European Union and NATO were quick to conclude that the explosions were acts of sabotage. Russia was the assumed, but not proven, guilty party.

The explosions had no direct impact on Europe’s gas supply since neither the Nord Stream 1 nor the Nord Stream 2 pipeline was delivering gas. The Kremlin stopped all deliveries by the former in late August; the German government halted the permitting process of the latter just before the war started in February.

Still, the repercussions on the energy markets will be long and profound.

EU vows retaliation for Nord Stream pipeline explosions Russia claims were not its doing

It is possible, even likely, that the Nord Stream pipelines will never operate for technical and political reasons, depriving the European Union of one of its main sources of imported energy. In 2021, fully a quarter of the EU’s energy came from gas, according to Eurostat (the rest came from oil, coal, renewable energy and nuclear power).

While the EU might be able to avoid freezing in the dark this winter, thanks to the ample gas reserves built up over the spring and summer, there is little doubt that energy prices, especially electricity prices, will stay high for a long time – wholesale gas prices are up tenfold since this time last year.

Replacing all that lost Russian gas will not happen overnight. For instance, it can take five years to plan, secure permits and build wind-power projects, ditto for liquefied natural gas (LNG) terminals. The scarcity of crucial metals, such as copper and rare earths, that go into wind turbines, storage batteries and other electrical kit will almost certainly drag out the timelines of these projects.

We can only guess how the gas crunch and the high electricity prices will reshape the energy markets and the behaviour of industries and consumers who have been paying cruel prices for power since the start of the war.

There will certainly be a nuclear revival. Note that the German government, beholden to the disastrous anti-nuke Green Party energy agenda for two decades, now plans to extend the life of its few remaining nuclear plants – just three of the fleet of 17 are left. There will be an accelerated push for renewable energy. Decommissioned coal plants will be given the kiss of life and new ones will be built. New gas pipelines across the Mediterranean and LNG terminals will be built.

But all these projects (bar firing up old coal plants) are slow, agonizing burns. In the meantime, the energy-intensive businesses such as steel- and glass-making will take a beating. Some companies in those industries have already called it quits.

The shock of daylight-robbery electricity prices will not be felt only in the energy-intensive businesses. Some surprising victims will emerge. My guess is that the electric vehicle “revolution,” as it is often touted by the zealous technical and environmental press, will not live up to its hype.

The idea of surging EV sales was oversold even before Russia invaded Ukraine, with wild projections that cars with internal-combustion engines would soon die a polite death as battery technology improved and purchase prices came down (in fact, EV prices are rising, putting most models firmly into the luxury goods category). Many of the world’s biggest markets, including the EU and California, planned to accelerate the demise of traditional vehicles by banning their sale after 2035. The net-zero crowd cheered them on.

Cheap recharging was one of the selling points of EVs, meaning that the cost of a typical journey would be far less than that of a car burning gasoline or diesel. In some regions, this is no longer the case, all the more so since oil prices are well off their postinvasion peak. On Friday, oil was US$88 a barrel, down 36 per cent from its 52-week high.

Britain’s Royal Automobile Club (RAC) in September reported that high electricity prices had raised the costs of using EV public-charging points by 42 per cent in four months (home charging is somewhat cheaper). The hike means that the cost of driving one kilometre on battery or gasoline power is almost identical.

Cheap recharging costs were never enough to guarantee the success of EV. In many parts of the world, there is simply not enough generating power to recharge millions of EVs, even in the United States. California faces the threat of rolling blackouts, partly because its renewable energy network can’t cope with peak demand, since the sun does not always shine and the wind does not always blow.

Everywhere, electricity grids are maxed out or close to it. A 2018 – four years before the energy crisis began – report by Wood Mackenzie determined that charging only 60,000 EVs simultaneously could bring down the electricity grid, assuming they were plugged into 100-kilowatt fast chargers. To accommodate millions of EVs, Texas would have to build more peak-generating plans, probably coal- or gas-burners. Cost aside, that would be a rather pointless exercise, since EVs are supposed to make the air cleaner.

EVs are coming, to be sure. But to sell in potentially vast numbers, they need to be cheap to operate. The energy crisis has ensured bargain running costs are no longer the case.