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Here’s What’s in the Debt Ceiling Deal

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Two years of spending caps, additional work requirements for food stamps and cuts to I.R.S. funding are among the components in the deal.The full legislative text of Speaker Kevin McCarthy’s agreement in principle with President Biden to suspend the nation’s borrowing limit revealed new and important details about the deal, which House lawmakers are expected to vote on this week.The centerpiece of the agreement remains a two-year suspension of the debt ceiling, which caps the total amount of money the government is allowed to borrow. Suspending that cap, which is now set at $31.4 trillion, would allow the government to keep borrowing money and pay its bills on time — as long as Congress passes the agreement before June 5, when Treasury has said the United States will run out of cash.In exchange for suspending the limit, Republicans demanded a range of policy concessions from Mr. Biden. Chief among them are limits on the growth of federal discretionary spending over the next two years. Mr. Biden also agreed to some new work requirements for certain recipients of food stamps and the Temporary Aid for Needy Families program.Both sides agreed to modest efforts meant to accelerate the permitting of some energy projects — and, in a surprise move, a fast track to construction for a new natural gas pipeline from West Virginia to Virginia that has been championed by Republican lawmakers and a key centrist Democrat.Here’s what the legislation would do:Temporarily suspends the debt limitThe deal suspends the nation’s $31.4 trillion borrowing limit until Jan. 2025. Suspending the debt limit for a period of time is different than setting it at a new fixed level. It essentially gives the Treasury Department the latitude to borrow as much money as it needs to pay the nation’s bills during that time period, plus a few months after the limit is reached, as the department employs accounting maneuvers to keep up payments.That’s different than the bill passed by House Republicans, which raised the limit by $1.5 trillion or through March 2024, whichever came first.Under the new legislation, the debt limit will be set at whatever level it has reached when the suspension ends. For political reasons, Republicans tend to prefer suspending the debt limit rather than raising it, because it allows them to say they did not technically green-light a higher debt limit.The suspension will kick the next potential fight over the nation’s debt load to 2025 — past the next presidential election.Caps and cuts spendingThe bill cuts so-called nondefense discretionary, which includes domestic law enforcement, forest management, scientific research and more — for the 2024 fiscal year. It would limit all discretionary spending to 1 percent growth in 2025, which is effectively a budget cut, because that is projected to be slower than the rate of inflation.The legislative text and White House officials tell different stories about how big those cuts actually are.Some parts are clear. The proposed military spending budget would increase to $886 billion next year, which is in line with what Mr. Biden requested in his 2024 budget proposal, and rise to $895 billion in 2025. Spending on veterans’ health care, including newly approved measures to assist veterans exposed to toxic burn pits, would also be funded at the levels of Mr. Biden’s proposed budget.Legislative text suggests nondefense discretionary outside of veterans’ programs would shrink in 2024 to about last year’s spending levels. But White House officials say a series of side deals with Republicans, including one related to funding for the Internal Revenue Service, will allow actual funding to be closer to this year’s levels.Although Republicans had initially called for 10 years of spending caps, this legislation includes just 2 years of caps and then switches to spending targets that are not bound by law — essentially, just suggestions.The White House estimates that the agreement will yield $1 trillion in savings over the course of a decade from reduced discretionary spending.A New York Times analysis of the proposal — using White House estimates of the actual funding levels in the agreement, not just the levels in the legislative text — suggests it would reduce federal spending by about $55 billion next year, compared with Congressional Budget Office forecasts, and by another $81 billion in 2025. If spending then returned to growing as the budget office forecasts, the total savings over a decade would be about $860 billion.Speaker Kevin McCarthy has said he believes a majority of his conference would vote for the deal.Haiyun Jiang for The New York TimesClaws back I.R.S. fundingThe legislation takes aim at one of President Biden’s biggest priorities — bolstering the I.R.S. to go after tax cheats and ensure companies and rich individuals are paying what they owe.Democrats included $80 billion to help the I.R.S. hire thousands more employees and update its antiquated technology in last year’s Inflation Reduction Act. The debt limit agreement would immediately rescind $1.38 billion from the I.R.S. and ultimately repurpose another $20 billion from the $80 billion it received through the Inflation Reduction Act.Administration officials said on Sunday that they had agreed to reprogram $10 billion of extra I.R.S. money in each of the 2024 and 2025 fiscal years, in order to maintain funding for some nondefense discretionary programs.The clawback will eat into the tax collection agency’s efforts to crack down on rich tax cheats. It is also a political win for Republicans, who have been outraged by the prospect of a beefed up I.R.S. and approved legislation in the House to rescind the entire $80 billion.Still, because of the leeway that the I.R.S. has over how and when it spends the money, the clawback might not affect the agency’s plans in the next few years. Officials said in a background call with reporters that they expected no disruptions whatsoever from the loss of that money in the short term.That’s likely because all of the $80 billion from the 2022 law was appropriated at once, but the agency planned to spend it over eight years. Officials suggested the I.R.S. might simply pull forward some of the money earmarked for later years, then return to Congress later to ask for more money.New work requirements for government benefitsThe legislation would impose new work requirements on older Americans who receive food stamps through the Supplemental Nutrition Assistance Program and who receive aid from the Temporary Assistance for Needy Families Program.The bill imposes new work requirements for food stamps on adults ages 50 to 54 who don’t have children living in their home. Under current law, those work requirements only apply to people age 18 to 49. The age limit will be phased in over three years, beginning in fiscal year 2023. And it includes a technical change to the T.A.N.F. funding formula that could cause some states to divert dollars from the program.The bill would also exempt veterans, the homeless and people who were children in foster care from food-stamp work requirements — a move White House officials say will offset the program’s new requirements, and leave roughly the same number of Americans eligible for nutrition assistance moving forward.Still, the inclusion of new work requirements has drawn outrage from advocates for safety net assistance, who say it punishes vulnerable adults who are in need of food.“The agreement puts hundreds of thousands of older adults aged 50-54 at risk of losing food assistance, including a large number of women,” Sharon Parrott, president of the Center on Budget and Policy Priorities, said in a statement.President Biden also agreed to some new work requirements for certain recipients of food stamps.Pete Marovich for The New York TimesPermitting reformThe agreement includes new measures to get energy projects approved more quickly by creating a lead agency to oversee reviews and require that they are completed in one to two years.The legislation also includes a win for Senator Joe Manchin III of West Virginia, a Democratic centrist, by approving permitting requests for the Mountain Valley Pipeline, a natural gas project in West Virginia. The $6.6 billion project is intended to carry gas about 300 miles from the Marcellus shale fields in West Virginia across nearly 1,000 streams and wetlands before ending in Virginia.Environmentalists, civil rights activists and many Democratic state lawmakers have opposed the project for years.The bill declares that “the timely completion of construction and operation of the Mountain Valley Pipeline is required in the national interest.”Mr. Manchin said on Twitter that he is proud to have secured the bipartisan support necessary to “get it across the finish line.” Republican members of the West Virginia delegation also claimed credit.Student loans and unspent Covid moneyThe bill officially puts an end to Mr. Biden’s freeze on student loan repayments by the end of August and restricts his ability to reinstate such a moratorium.It does not move forward with the measure that House Republicans wanted to include that would halt Mr. Biden’s policy to forgive between $10,000 and $20,000 in student loan debt for most borrowers. That initiative, which the Biden administration rolled out last year, is currently under review by the Supreme Court and could ultimately be blocked.The bill also claws back about $30 billion in unspent money from a previous Covid relief bill signed by Mr. Biden, which had been a top Republican priority entering negotiations. Some of that money will be repurposed to boost nondefense discretionary spending.According to an administration official, the deal leaves intact funding for two key Covid programs: Project NextGen, which aims to develop the next generation of coronavirus vaccines and treatments, and an initiative to offer free coronavirus shots to the uninsured.Preventing a government shutdownThe agreement only sets parameters for the next two years of spending. Congress must fill them in by passing a raft of spending bills later this year. Large fights loom in the details of those bills, raising the possibility that lawmakers will not agree to spending plans in time and the government will shut down.The agreement between Mr. Biden and Mr. McCarthy attempts to prod Congress to pass all its spending bills and avoid a shutdown, by threatening to reduce spending that is important to both parties. If lawmakers have not approved all 12 regular funding bills by the end of the year, the agreement tightens its spending caps. Nondefense discretionary spending would be set at one percent below current year levels, and it is possible that the I.R.S. would not see its $10 billion in funding for next year repurposed for other programs.The same levels would apply to defense and veterans’ spending — which would be, in effect, a significant cut to those programs compared to the agreed-upon caps. Democrats see the looming military cuts as a particularly strong incentive for Republicans to strike a deal to pass appropriations bills by the end of the year.What’s not in the billThe final agreement includes far less reduction in future debt than either side proposed.Republicans wanted much deeper spending cuts and stricter work requirements. They also wanted to repeal hundreds of billions of dollars in tax incentives signed by Mr. Biden to accelerate the transition to lower-emission energy sources and fight climate change. Mr. Biden wanted to raise taxes on corporations and high earners, and to take new steps to reduce Medicare’s spending on prescription drugs. None of those made it into the deal. More

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    EU Leaders Say Putin’s Gas Power Is Weakening

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    In Germany and elsewhere, leaders are growing more confident that months of work to stockpile and line up alternate energy sources may help them blunt Russia’s weaponization of exports.BERLIN — Not long after Russian forces invaded Ukraine, another mobilization began. European energy ministers and diplomats started jetting across the world and inking energy deals — racing to prepare for a rough winter should Russia choose to cut off its cheap gas in retaliation for Western sanctions.Since then, President Vladimir V. Putin of Russia has fiddled with the gas tap to Europe repeatedly. Through Gazprom, the Kremlin-controlled gas monopoly, Russia has vastly reduced supplies or suspended them for days at a time — until last week, when it announced that it would indefinitely halt flows through the Nord Stream 1 pipeline that supplies Germany, and through it, much of Europe.Yet when the blow finally came, it provoked more ridicule than outrage among European leaders, who say that by now they would expect nothing less from Mr. Putin and that they have accepted that the era of cheap Russian gas is over, unimaginable as that might have seemed just months ago.In some corners, even as Europe’s leaders scramble to blunt the blow from lower gas supplies and higher prices, there is a growing sense that perhaps Russia’s weaponizing of gas exports is a strategy of diminishing returns — and that Mr. Putin may have overplayed his hand.“It would have been surprising the other way around,” Robert Habeck, Germany’s economy minister, said this week of Russia’s announcement that Nord Stream 1 would remain shut. “The only thing from Russia that is reliable is the lies.”Even the markets seemed to take the latest disruption in stride. After rising 5 percent on the heels of Gazprom’s announcement, prices are now lower than they were at the start of last week.That does not mean that European nations are not feeling the pain, or have skirted the risk that the energy crunch could sow social unrest, fracturing their unity against the Kremlin this winter. But a lot of the damage has already been done, with gas prices several times above anything that would be considered normal and pressure mounting on consumers and businesses.The question remains, then, of just how successful the hard pivot from Russian energy actually is — whether Europe has lined up enough new sources, whether its stockpiles can get it through the winter, whether conservation efforts can make a difference and whether governments can help shield consumers from rising prices.“The only thing from Russia that is reliable is the lies,” said Robert Habeck, right, Germany’s economy minister, with Chancellor Olaf Schulz, center, and Christian Lindner, the finance minister.Tobias Schwarz/Agence France-Presse — Getty ImagesRussian officials are watching and waiting for what they believe is the inevitable collapse of European resolve as the economic pain bites.“I think that the coming winter will show how real their belief is in the possibility of refusing Russian gas,” the Russian energy minister, Nikolai Shulginov, said in an interview with the Russian state-run news agency Tass. “This will be a completely new life for the Europeans. I think that, most likely, they will not be able to refuse.”Russian state news outlets are full of reports of protests in Europe. Italians, Russian state media reported, are being told to boil their pasta for just two minutes before turning off the heat, while Germans are forgoing showers.The message: Sooner or later, the Europeans’ unity against Russia will crumble under the weight of high gas prices, while Russia’s standing has been elevated.“We have not lost anything and will not lose anything,” Mr. Putin said on Wednesday.But increasingly, Europe’s leaders are signaling that, having spent months preparing for this moment, they are ready for the showdown.“Now our work is paying off!” the European Commission president, Ursula von der Leyen, said on Wednesday in Brussels. “At the beginning of the war, Russia’s pipeline gas was 40 percent of all imported gas. Today it is now down to only 9 percent of our gas imports.”That is because European leaders — especially those from Italy and Germany, which rely most on Russian energy — have crisscrossed the globe. From Algeria to Qatar, Senegal, Congo and Canada, they have been negotiating deals to replace Russian supplies.Gazprom’s Orenburg gas processing plant in Russia. Steep energy prices netted the company $41.75 billion profit in the first half of the year — $10 billion of which went to the Kremlin.Alexander Manzyuk/ReutersGermany has also leaned heavily on Norway and the Netherlands, which agreed to extend the life of its biggest gas field to combat the energy crisis.As a result, Germany’s dependency on cheap Russian gas — once more than half its overall gas imports — decreased to less than 10 percent in August.In Italy, consumption from Moscow has dropped to 23 percent from 40 percent.Chancellor Olaf Scholz of Germany and other European leaders are defiantly claiming the end of an era.For decades, dating to the days of the Soviet Union, Moscow had insisted to Germany and others that it was a reliable energy partner, no matter the political context. But now, European leaders say, Mr. Putin has shattered that understanding.“Something that held true throughout the Cold War no longer applies,” Mr. Scholz said last weekend. “Russia is no longer a reliable energy supplier. That is part of the new reality.”That new reality, perhaps, should not have come as such a shock. Mr. Putin’s gas brinkmanship dates to 2004, when Gazprom cut deliveries to Belarus, in a battle for control of a transit pipeline into Western Europe.In 2009, as Ukraine sought NATO membership under a pro-Western president, Mr. Putin ordered a sharp reduction in gas flows through the country; after Ukraine elected a pro-Russian president a year later, the Kremlin rewarded him with a 30 percent cut in natural gas prices.And even before Russia invaded Ukraine, it reduced exports in the summer of 2021, and did not refill Gazprom-owned storage sites in Europe.A compressor station near the German-Polish border for Russian gas through the Yamal-Europe pipeline.Filip Singer/EPA, via ShutterstockSergey Vakulenko, an analyst in Bonn, Germany, who worked for years in Russia’s energy industry, said that over the last two decades Russian officials had seen the geopolitical power that the United States derived from its influence over the global financial system, and sought to harness Russia’s status as a major energy exporter in a similar way.“There was a great desire, as a superpower, to have something similar,” he said. “There was the feeling that oil and gas was the answer.”Yet Russia’s cuts in gas exports to Europe since its invasion of Ukraine are of a different order of magnitude. “This is now just blackmail,” said Mikhail Krutikhin, a Russian energy analyst. “We haven’t seen it on this scale before.”In going so far, Mr. Putin has also invited greater risks. An internal Russian government economic forecast described this week by Bloomberg News estimated that a full cutoff of gas to Europe would cost as much as $6.6 billion in lost tax revenues.But with Gazprom netting a record profit of $41.75 billion in the first half of the year — $10 billion of which it passed on to the Kremlin — that is a cost Mr. Putin has calculated to be acceptable.For Russia, oil is the biggest revenue source, and Mr. Putin may be keen to use gas as a political weapon while he can, said Thomas O’Donnell, an energy expert at the Hertie School, a public policy school in Berlin.“This is where he’s got his biggest leverage to cause the most trouble in the European Union,” Mr. O’Donnell said. He added, “It’s a lever that he knows he’s going to lose in a year — or even maybe after this winter.”And a lot may depend on the severity of the winter. Even if liquid natural gas imports to Europe from other sources continue at their record high rate, a study released this week by the research institute Bruegel estimated that a complete stop to Russian supplies would require all of Europe to cut its consumption by 15 percent.European nations that used to rely on Russian gas imports for big chunks of their domestic energy production have been racing to fill gas storage facilities. Germany’s are now at 86 percent capacity, Italy’s at almost 84 percent.In Germany, large industry players have so far managed to drop their consumption by around 20 percent. A similar amount would have to be shaved off household usage, according to German energy and economy ministry models, should Russian gas remain shut off. If households don’t cut back, Germany’s gas regulator has repeatedly warned, the option could be rationing.Lights switched off in apartments in Frankfurt. German energy officials have repeatedly warned that households must conserve energy or face rationing.Michael Probst/Associated PressEurope is aiming to have enough liquid natural gas solutions in place by next year. Germany recently signed a deal for a fifth floating L.N.G. terminal, while terminals in Belgium, France and the Netherlands are fully booked.The key to surviving this winter in the face of a Nord Stream shutdown will be how well European states work together.So far, only Hungary has signed a deal for additional supplies with Gazprom.France and Germany, in contrast, agreed this week that Paris would send any excess gas to Germany, where it is badly needed, and in return Berlin promised to send its extra electricity.The tricky issue will be what happens should more critical German industry have to cut back, and voters begin to insist supplies not be diverted to neighbors — like the Czech Republic, where 70,000 people already came out in protest of soaring prices. It is a challenge many European leaders may face this winter, warned Annalena Baerbock, Germany’s foreign minister.“That will be the central question that will really put us to the test in the coming months,” Ms. Baerbock said, at a meeting of German ambassadors in Berlin this week. “Will we be able to secure our energy supply for all people in Europe together in solidarity, or not?”Gaia Pianigiani More

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    Portugal Could Hold an Answer for a Europe Captive to Russian Gas

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    Portugal has no coal mines, oil wells or gas fields. Its impressive hydropower production has been crippled this year by drought. And its long-running disconnect from the rest of Europe’s energy network has earned the country its status as an “energy island.”Yet with Russia withholding natural gas from countries opposed to its invasion of Ukraine, the tiny coastal nation of Portugal is suddenly poised to play a critical role in managing Europe’s looming energy crisis.For years, the Iberian Peninsula was cut off from the web of pipelines and huge supply of cheap Russian gas that power much of Europe. And so Portugal and Spain were compelled to invest heavily in renewable sources of energy like wind, solar and hydropower, and to establish an elaborate system for importing gas from North and West Africa, the United States, and elsewhere.Now, access to these alternate energy sources has taken on new significance. The changed circumstances are shifting the power balances among the 27 members of the European Union, creating opportunities as well as political tensions as the bloc seeks to counter Russia’s energy blackmail, manage the transition to renewables and determine infrastructure investments.The Alto Tamega dam, part of a hydropower facility in northern Portugal that will be operational in 2024.Matilde Viegas for The New York TimesThe urgency of Europe’s task is on display this week. On Wednesday, Russia’s energy monopoly, Gazprom, again suspended already reduced gas deliveries to Germany through its Nord Stream 1 pipeline. With natural gas costing about 10 times what it did a year ago, the European Union has called for an emergency meeting of its energy ministers next week.As Brussels tries to figure out how to manage the crisis, the possibility of funneling more gas to Europe through Portugal and Spain is gaining attention.Portugal and Spain were among the first European nations to build the kind of processing terminals needed to accept boatloads of natural gas in liquefied form and to convert it back into the vapor that could be piped into homes and businesses.This imported liquefied natural gas, or L.N.G., was more expensive than the type much of Europe piped in from Russia. But now that Germany, Italy, Finland and other European nations are frantically seeking to replace Russian gas with substitutes shipped by sea from the United States, North Africa and the Middle East, this disadvantage is an advantage.Solar panels in Sintra. Connecting such panels to Europe’s electricity grid could help ease energy shortages on the continent.Matilde Viegas for The New York TimesTogether, Spain and Portugal account for one-third of Europe’s capacity to process L.N.G. Spain has the most terminals and the biggest, though Portugal has the most strategically located.Its terminal in Sines is the closest of any in Europe to the United States and the Panama Canal; it was the first port in Europe to receive L.N.G. from the United States, in 2016. Even before the war in Ukraine, Washington identified it as a strategically important gateway for energy imports to the rest of Europe.Spain also has an extensive network of pipelines that carry natural gas from Algeria and Nigeria, as well as large storage facilities.Understand the Decline in U.S. Gas PricesCard 1 of 5Understand the Decline in U.S. Gas PricesGas prices are falling. More

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    Estonia Never Needed to Import Gas by Ship. Until It Did.

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    In Paldiski, Estonia, abandoned Soviet-era bunkers, splattered with graffiti and overgrown with weeds, are a reminder of the centuries-long domination that Russia once exerted over the Baltic region.Now this port city in the northwestern corner of the country is hastily being turned into a bulwark against Russian efforts to politically pressure Europe. Ever since Moscow threatened to withhold natural gas as retribution for countries opposed to its invasion of Ukraine, workers in Paldiski have been constructing an offshore terminal for non-Russian gas at a round-the-clock pace.The project is one piece of Europe’s strategy to quickly wean itself off the Russian energy that is heating homes and powering factories across the continent.The Estonian terminal will serve as a floating dock for a gargantuan processing tanker that will receive deliveries of liquefied natural gas and convert it back into a vapor that can be piped through the existing network that serves the Baltics and Finland. With a scheduled finish date in November, Paldiski is on route to be the first new L.N.G. terminal completed in Europe since the war started.Shipping natural gas in a liquefied form has become Europe’s eureka solution to what the European Commission has labeled “energy blackmail” by President Vladimir V. Putin of Russia. Since the fighting began in late February, 18 new facilities or expansions of existing ones have been proposed in 11 European countries, including Germany, the Netherlands, Italy and Greece, according to Rystad Energy.The L.N.G. project in Paldiski is one of 18 proposed or under expansion in Europe since Russia attacked Ukraine.Marta Giaccone for The New York TimesGiant beams were installed with a floating crane.Marta Giaccone for The New York TimesEuropean leaders have been traveling to the Middle East and Africa — including to some countries previously held at arm’s length because of human rights abuses — to compete for the world’s limited L.N.G. supply or plead for the rapid development of additional sources. Until the war, China, South Korea and Japan were the biggest customers.“L.N.G. is really the only supply element that is able to step up for the coming years” during the transition to more climate-friendly renewable energy sources, said James Huckstepp, head of European gas analysis at S&P Global Commodity Insights.Although the United States and Qatar, the biggest producers of L.N.G., are ramping up operations, it will take at least a couple of years to significantly increase capacity. So businesses and households are bracing for high prices and painful shortages during the cold winter months. Governments have drawn up emergency plans to cut consumption and ration energy amid dark warnings of social unrest.Marti Haal, the founder and chairman of the Estonia energy group Alexela, shakes his head at the feverish race to construct liquefied natural gas terminals. He and his brother, Heiti, proposed building one more than a dozen years ago, arguing that it was dangerous for any country to be solely dependent on Russia for natural gas.“If you would talk with anyone in Estonia in 2009 and 2010, they would call me and my brother idiots for pursuing that,” Mr. Haal said. He was driving his limited-edition Bullitt Mustang, No. 694, in Steve McQueen green, to the site of the terminal in Paldiski that his company is now building. He slowed down to point out the border of a restricted zone that existed before the Soviet Army left in 1994. When Moscow was in control, Paldiski was emptied of its population, turned into a nuclear training center and surrounded by barbed wire.The facility was met with shrugs when it was first proposed over a decade ago. Now construction is on a frenzied pace.Marta Giaccone for The New York TimesAs he drove on, Mr. Haal recalled the debate over building an L.N.G. receiving station: “Everybody we talked to said, ‘Why do we need diversification?’” After all, gas had been reliably arriving through Russian pipelines since the 1950s.Today the brothers are looking more like visionaries. “If at the time, they would have listened to us, we wouldn’t have to run like crazy now to solve the problem,” Mr. Haal said.Mr. Haal, who spent that morning competing in a regatta, always had an entrepreneurial streak — even under Communism. In 1989, as the Soviet Union was dissolving, he and his brother started building and selling car trailers. Mr. Haal said he would drag one on board the ferry to Finland — the fare to bring it by car was too expensive — and deliver it to a buyer at the Helsinki port. He collected the cash and then returned to pay everyone’s salary.When they started selling gas, they named the company Alexela — a palindrome — so that they would have to erect only one sign that could be read by drivers in both directions.Their L.N.G. venture at one point looked like a failure. As it turns out, the millions of dollars and years of frustration meant that when Estonia and Finland agreed in April to share the cost of renting an L.N.G. processing vessel and build floating terminals, the preliminary research and development was already done.In the months leading up to Russia’s invasion, Mr. Haal said, soaring gas prices had already begun to change the economics of investing in an L.N.G. terminal. Now, his major concern is ensuring that the Estonian government completes the pipeline connection to the national gas network on time.Over the years, the question of building more L.N.G. facilities — in addition to the two dozen or so already in Europe — has been repeatedly debated in ports and capitals. Opponents argued that shipping the chilled, liquefied natural gas was much more expensive than the flow from Russia. The required new infrastructure of port terminals and pipes aroused local opposition. And there was resistance to investing so much money in a fossil fuel that climate agreements had eventually targeted for extinction.One of the countries saying no was Europe’s largest economy, Germany, which was getting 55 percent of its gas from Russia.“The general overview was that Europe had more L.N.G. capacity than it needs,” said Nina Howell, a partner at the law firm King and Spalding. After the invasion, projects that had not been considered commercially viable, “and probably wouldn’t have made it, then suddenly got government support.”The first layer of reinforced concrete structure.Marta Giaccone for The New York TimesConcrete line pressure pipes.Marta Giaccone for The New York TimesEstonia, which shares a 183-mile border with Russia, is actually the European country least dependent on its gas. Roughly three-quarters of Estonia’s energy supply comes from domestically produced oil shale, giving it more independence but putting it behind on climate goals.Still, like the other former Soviet republics Lithuania and Latvia, as well as former Communist bloc countries like Poland, Estonia was always more wary of Russia’s power plays.Two days before the war started, the Estonian prime minister chided “countries which don’t border Russia” for not thinking through the risks of depending on Russian energy.By contrast, Poland moved to quit itself of Russian natural gas and began work in 2013 on a pipeline that will deliver supplies from Norway. It is scheduled to be completed in October. Lithuania — which at one point had received 100 percent of its supply through a single pipeline from the Russian monopoly Gazprom — went ahead and completed its own small L.N.G. terminal in 2014, the year that Russia annexed Crimea.Liquefied natural gas terminals are not the only energy source that European countries once disdained and are now compelled to explore. In a hotly disputed decision, the European Parliament last month reclassified some gas and nuclear power as “green.” The Netherlands is re-examining fracking. And Germany is refiring coal plants and even rethinking its determined rejection of nuclear energy.In Paldiski, enormous wind turbines are along the coast of the Pakri peninsula. On this day, gusts were strong enough not only to spin the blades but also to halt work on the floating terminal. A giant tracked excavator was parked on the sand. At the end of a long skeletal pier, the tops of 200-foot-long steel pipes that had been slammed into the seabed poked up through the water like a skyline of rust-colored chimney stacks.Paldiski Bay, which is ice-free year-round and has direct access to the Baltic Sea, has always been an important commercial and strategic gateway. Generations before the Soviets parked their nuclear submarines there; the Russian czar Peter the Great built a military fortress and port there in the 18th century.Now, the bay is again playing a similar role — only this time not for Russia.Remains of a Soviet-era bunker. The region that will boost the energy security of the Baltics was used as a nuclear training site when Moscow was in charge.Marta Giaccone for The New York Times More

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    Germany Hopes to Outrace a Russian Gas Cutoff and Bone Cold Winter

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    Russian natural gas has fired the furnaces that create molten stainless steel at Clemens Schmees’s family foundry since 1961, when his father set up shop in a garage in the western part of Germany.It never crossed Clemens’s mind that this energy flow could one day become unaffordable or cease altogether. Now Mr. Schmees, like thousands of other chieftains at companies across Germany, is scrambling to prepare for the possibility that his operations could face stringent rationing this winter if Russia turns off the gas.“We’ve had many crises,” he said, sitting in the company’s branch office in the eastern city of Pirna, overlooking the Elbe River valley. “But we have never before had such instability and uncertainty, all at once.”Such sentiments are reverberating this week in executive suites, at kitchen tables and in government offices as Nord Stream 1, the direct gas pipeline between Russia and Europe, was shut down for 10 days of scheduled maintenance.Germany, the pipeline’s terminus and a gas transit hub for the rest of Europe, is the largest and most important economy on the continent. And anxiety that President Vladimir V. Putin may not switch the gas back on — as a display of brinkmanship with countries that oppose Russia’s invasion of Ukraine — is particularly sharp.“We have never before had such instability and uncertainty, all at once,” said Clemens Schmees, whose family has owned a foundry since 1961.Lena Mucha for The New York TimesIn Berlin, officials have declared a “gas crisis” and triggered an emergency energy plan. Already landlords, schools and municipalities have begun to lower thermostats, ration hot water, close swimming pools, turn off air-conditioners, dim streetlights and exhort the benefits of cold showers. Analysts predict that a recession in Germany is “imminent.” Government officials are racing to bail out the largest importer of Russian gas, a company called Uniper. And political leaders warn that Germany’s “social peace” could unravel.The crisis has not only set off a frantic clamber to manage a potentially painful crunch this winter. It has also prompted a reassessment of the economic model that turned Germany into a global powerhouse and produced enormous wealth for decades.Nearly every country on the continent is facing potentially profound energy shortages, soaring prices and slower growth. On Thursday, the European Commission cut its growth forecast for this year to 2.7 percent. In another sign of recession anxiety, the value of the euro dipped below the dollar this week.Still, “Germany is worse off than the eurozone as a whole,” said Jacob Kirkegaard, a senior fellow at the German Marshall Fund in Brussels.The Russia-Ukraine War and the Global EconomyCard 1 of 7A far-reaching conflict. More

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    Republicans Wrongly Blame Biden for Rising Gas Prices

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    They have pointed to the Biden administration’s policies on the Keystone XL pipeline and certain oil and gas leases, which have had little impact on prices.WASHINGTON — As gas prices hit a high this week, top Republican lawmakers took to the airwaves and the floors of Congress with misleading claims that pinned the blame on President Biden and his energy policies.Mr. Biden warned that his ban on imports of Russian oil, gas and coal, announced on Tuesday as a response to Russia’s invasion of Ukraine, would cause gas prices to rise further. High costs are expected to last as long as the confrontation does.While Republican lawmakers supported the ban, they asserted that the pain at the pump long preceded the war in Ukraine. Gas price hikes, they said, were the result of Mr. Biden’s cancellation of the Keystone XL pipeline, the temporary halt on new drilling leases on public lands and the surrendering of “energy independence” — all incorrect assertions.Here’s a fact check of their claims.What Was Said“This administration wants to ramp up energy imports from Iran and Venezuela. That is the world’s largest state sponsor of terror and a thuggish South America dictator, respectively. They would rather buy from these people than buy from Texas, Alaska and Pennsylvania.”— Senator Mitch McConnell, Republican of Kentucky and the minority leader, in a speech on Tuesday“Democrats want to blame surging prices on Russia. But the truth is, their out-of-touch policies are why we are here in the first place. Remember what happened on Day 1 with one-party rule? The president canceled the Keystone pipeline, and then he stopped new oil and gas leases on federal lands and waters.”— Representative Kevin McCarthy, Republican of California and the minority leader, in a speech on Tuesday“In the four years of the Trump-Pence administration, we achieved energy independence for the first time in 70 years. We were a net exporter of energy. But from very early on, with killing the Keystone pipeline, taking federal lands off the list for exploration, sidelining leases for oil and natural gas — once again, before Ukraine ever happened, we saw rising gasoline prices.”— Former Vice President Mike Pence in an interview on Fox Business on TuesdayThese claims are misleading. The primary reason for rising gas prices over the past year is the coronavirus pandemic and its disruptions to global supply and demand.“Covid changed the game, not President Biden,” said Patrick De Haan, the head of petroleum analysis for GasBuddy, which tracks gasoline prices. “U.S. oil production fell in the last eight months of President Trump’s tenure. Is that his fault? No.”“The pandemic brought us to our knees,” Mr. De Haan added.In the early months of 2020, when the virus took hold, demand for oil dried up and prices plummeted, with the benchmark price for crude oil in the United States falling to negative $37.63 that April. In response, producers in the United States and around the world began decreasing output.As pandemic restrictions loosened worldwide and economies recovered, demand outpaced supply. That was “mostly attributable” to the decision by OPEC Plus, an alliance of oil-producing countries that controls about half the world’s supply, to limit increases in production, according to the U.S. Energy Information Administration. Domestic production also remains below prepandemic levels, as capital spending declined and investors remained reluctant to provide financing to the oil industry.Russia’s invasion of Ukraine has only compounded the issues.“When you throw a war on top of this, this is possibly the worst escalation you can have of this,” said Abhiram Rajendran, the head of oil market research at Energy Intelligence, an energy information company. “You’re literally pouring gasoline on general inflationary pressure.”These factors are largely out of Mr. Biden’s control, experts agreed, though they said he had not exactly sent positive signals to the oil and gas industry and its investors by vowing to reduce emissions and fossil fuel reliance.Mr. De Haan said the Biden administration was “clearly less friendly” to the industry, which may have indirectly affected investor attitudes. But overall, he said, that stance has played a “very, very small role pushing gas prices up.”President Biden announced a ban on imports of Russian oil in response to the country’s invasion of Ukraine.Tom Brenner for The New York TimesMr. Rajendran said the Biden administration had emphasized climate change issues while paying lip service to energy security.“There has been a pretty stark miscalculation of the amount of supply we would need to keep energy prices at affordable levels,” he said. “It was taken for granted. There was too much focus on the energy transition.”But presidents, Mr. Rajendran said, “have very little impact on short-term supply.”“The key relationship to watch is between companies and investors,” he said.It is true that the Biden administration is in talks with Venezuela and Iran over their oil supplies. But the administration is also urging American companies to ramp up production — to the dismay of climate change activists and contrary to Republican lawmakers’ suggestions that the White House is intent on handcuffing domestic producers.Speaking before the National Petroleum Council in December, Jennifer M. Granholm, the energy secretary, told oil companies to “please take advantage of the leases that you have, hire workers, get your rig count up.”Understand Rising Gas Prices in the U.S.Card 1 of 5A steady rise. More

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    Why the Toughest Sanctions on Russia Are the Hardest for Europe to Wield

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    Moscow relies on the money it makes by selling oil and gas, but that energy fuels Europe’s economy and heats its homes.The punishing sanctions that the United States and European Union have so far announced against Russia for its invasion of Ukraine include shutting the government and banks out of global financial markets, restricting technology exports and freezing assets of influential Russians. Noticeably missing from that list is a reprisal that might cause Russia the most pain: choking off the export of Russian fuel.The omission is not surprising. In recent years, the European Union has received nearly 40 percent of its gas and more than a quarter of its oil from Russia. That energy heats Europe’s homes, powers its factories and fuels its vehicles, while pumping enormous sums of money into the Russian economy.How each country’s dependence on Russian gas has changedShare of total natural gas imports from Russia More

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    New U.S. Sanctions Target Russian Company Behind Nord Stream 2

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    The move by President Biden came as administration officials warned that a Russian military assault on Ukraine could be imminent.WASHINGTON — President Biden said on Wednesday that he would issue economic sanctions on the company behind a new natural gas pipeline between Russia and Germany, the latest in a series of penalties that the White House has promised will continue as Russia escalates hostilities against Ukraine.The move by Mr. Biden came hours before President Vladimir V. Putin of Russia began a military operation in Ukraine that administration officials had warned could be a full-scale assault. But it was also a reversal for the president after he waived sanctions against the pipeline, known as Nord Stream 2, last year despite calls from both Democrats and Republicans to halt the energy project.“These steps are another piece of our initial tranche of sanctions in response to Russia’s actions in Ukraine,” Mr. Biden said in a statement on Wednesday before the Russian military operation. “As I have made clear, we will not hesitate to take further steps if Russia continues to escalate.”Administration officials said Mr. Biden decided it was necessary to move forward with the penalties after Chancellor Olaf Scholz of Germany announced on Tuesday that he would suspend the certification of the pipeline in response to Moscow ordering Russian troops to cross the border into separatist regions in eastern Ukraine that the Kremlin has recognized as independent states.The new sanctions are against a subsidiary of Gazprom, a Russian company that is controlled by the Kremlin, and they are part of a unified effort by NATO allies meant to stop what Mr. Biden has described as “the beginning of a Russian invasion of Ukraine.”On Wednesday, the European Union also announced new sanctions on Russia’s defense minister, Mr. Putin’s chief of staff and high-profile Russians from the media world. On Tuesday, the Biden administration imposed sanctions on two Russian banks and a handful of the country’s elites and cut off the ability of Russia to raise financing in Western markets. The administration said it was preserving the possibility of even greater sanctions if Mr. Putin escalates the conflict by trying to seize more territory in Ukraine — or even the entire country.The White House did not issue the sanctions against the company behind the gas pipeline earlier because it was unclear whether those measures would halt the project, which was already 90 percent completed when Mr. Biden took office, according to Ned Price, a spokesman for the State Department.President Biden meeting with Mr. Scholz in the Oval Office this month. The Nord Stream 2 pipeline has caused years of tension between the United States and Germany.Al Drago for The New York TimesBut on Tuesday, Mr. Scholz gave Mr. Biden an opening when he halted the certification of the project.“So by acting together with the Germans,” Mr. Price said, “we have ensured that this is an $11 billion prize investment that is now a hunk of steel sitting at the bottom of the sea.”Jen Psaki, the White House press secretary, had described the action against the pipeline as part of an attempt to stop an armed conflict.“What we’re trying to do is prevent a war, prevent devastation on the Ukrainian people,” Ms. Psaki said. Referring to Mr. Putin, she said, “We’re going to continue to make clear that if he continues to escalate, we will as well.”But the sanctions apparently did not discourage Mr. Putin from advancing in Ukraine, as he announced a mission to “demilitarize” the country early Thursday local time, and explosions were reported from Kyiv, the capital, and other cities.The Nord Stream 2 pipeline has caused years of tension between Germany and the United States. Germany has long been hesitant to endanger its energy trade with Russia; Mr. Scholz last month dodged questions of whether he agreed with Mr. Biden’s assertion that the project would be stopped if Russia invaded Ukraine.Still, Mr. Biden’s move was welcomed by Democrats and Republicans who had for a year called for him to quickly punish Russia and halt the pipeline.Senator Ted Cruz, Republican of Texas, on Wednesday lifted his objections to 17 of Mr. Biden’s nominees, many of them for State Department positions, now that the president has announced sanctions on the company behind the pipeline.Mr. Cruz had used Senate procedure to slow down the pace at which the chamber could approve Mr. Biden’s nominations, demanding that the administration impose sanctions on Nord Stream 2.“Allowing Putin’s Nord Stream 2 to come online would have created multiple cascading and acute security crises for the United States and our European allies for generations to come,” Mr. Cruz said.Senator Rob Portman, Republican of Ohio, said that the initial sanctions announced by the administration this week were “an important first step,” but that they did not “go far enough.”“To create an effective deterrent, tougher sanctions must be expanded to other financial institutions and export controls must be implemented,” Mr. Portman said.Mr. Biden had previously said the pipeline was too advanced to stop. “Nord Stream is 99 percent finished,” he said last year. “The idea that anything was going to be said or done that was going to stop it is not possible.” The construction of the pipeline was completed last year but the project’s approval process had been stalled.Daleep Singh, a deputy national security adviser, said on Tuesday that shutting down the project would sacrifice “what would have been a cash cow for Russia’s coffers.”“It’s not just about the money,” Mr. Singh said. “This decision will relieve Russia’s geostrategic chokehold over Europe through its supply of gas, and it’s a major turning point in the world’s energy independence from Russia.”On Wednesday, Secretary of State Antony J. Blinken and Wendy R. Sherman, the deputy secretary of state, spoke with top European diplomats to coordinate economic sanctions against Russia, the State Department said.Catie Edmondson More

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    Russian Conflict in Ukraine is Reshaping the Climate Debate

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    Energy security has gained prominence while the conflict in Ukraine raises concerns over the possible interruption in the supply of oil and natural gas.It was only three months ago that world leaders met at the Glasgow climate summit and made ambitious pledges to reduce fossil fuel use. The perils of a warming planet are no less calamitous now, but the debate about the critically important transition to renewable energy has taken a back seat to energy security as Russia — Europe’s largest energy supplier — threatens to start a major confrontation with the West over Ukraine while oil prices are climbing toward $100 a barrel.For more than a decade, policy discussions in Europe and beyond about cutting back on gas, oil and coal emphasized safety and the environment, at the expense of financial and economic considerations, said Lucia van Geuns, a strategic energy adviser at the Hague Center for Strategic Studies. Now, it’s the reverse.“Gas prices became very high, and all of a sudden security of supply and price became the main subject of public debate,” she said.The renewed emphasis on energy independence and national security may encourage policymakers to backslide on efforts to decrease the use of fossil fuels that pump deadly greenhouse gases into the atmosphere.Already, skyrocketing prices have spurred additional production and consumption of fuels that contribute to global warming. Coal imports to the European Union in January rose more than 56 percent from the previous year.In Britain, the Coal Authority gave a mine in Wales permission last month to increase output by 40 million tons over the next two decades. In Australia, there are plans to open or expand more coking coal mines. And China, which has traditionally made energy security a priority, has further stepped up its coal production and approved three new billion-dollar coal mines this week.“Get your rig count up,” Jennifer Granholm, the U.S. energy secretary, said in December, urging American oil producers to raise their output. Shale companies in Oklahoma, Colorado and other states are looking to resurrect drilling that had ceased because there is suddenly money to be made. And this month, Exxon Mobil announced plans to increase spending on new oil wells and other projects.A coal-fired power station in Gelsenkirchen, Germany, in January.Martin Meissner/Associated PressIan Goldin, a professor of globalization and development at the University of Oxford, warned that high energy prices could lead to more exploration of traditional fossil fuels. “Governments will want to deprioritize renewables and sustainables, which would be exactly the wrong response,” he said.Europe’s transition to sustainable energy has always been an intricate calculus, requiring it to back away from the dirtiest fossil fuel like coal, while still working with gas and oil producers to power homes, cars and factories until better alternatives are available.For Germany, dependency on Russian gas has been an integral part of its environmental blueprint for many years. Plans for the first direct pipeline between the two countries, Nord Stream 1, started in 1997. A leader in the push to reduce carbon emissions, Berlin has moved to shutter coal mines and nuclear power plants, after the 2011 disaster at the Fukushima nuclear plant in Japan. The idea was that Russian gas would supply the needed fuel during the yearslong transition to cleaner energy sources. Two-thirds of the gas Germany burned last year came from Russia.Future plans called for even more gas to be delivered through Nord Stream 2, a new 746-mile pipeline under the Baltic Sea that directly links Russia to northeastern Germany.On Tuesday, after President Vladimir V. Putin of Russia recognized two breakaway republics in Ukraine and mobilized forces, Chancellor Olaf Scholz of Germany halted final regulatory review of the $11 billion pipeline, which was completed last year.The Nord Stream 2 pipeline was set to deliver Russian gas to Lubmin, Germany.Stefan Sauer/picture alliance via Getty Images“I don’t think the threat from Russia is outweighing the threat of climate change, and I don’t see coal mines opening up across Europe,” said James Nixey, director of the Russia-Eurasia program at Chatham House, a research organization in London.Certainly, the path of energy transition has never been clear. Five climate summits have taken place over the past 30 years, and progress has always fallen short. This latest setback may just be the latest in a long series of halfway measures and setbacks.Still, without a more comprehensive strategy to wean itself off gas, Europe won’t be able to accomplish its goal of reducing emissions 55 percent by 2030 compared with 1990 levels, or to reach the Glasgow summit’s target of cutting net greenhouse gases to zero by 2050.As Mr. Nixey acknowledged, “this debate is changing” as leaders are forced to acknowledge the downsides of dependency on Russian energy.Even in Germany, where the progressive Greens have gained a more influential voice in the government, there has been a shift in tone.This month, Robert Habeck, Germany’s new minister for the economy and climate change and a member of the Greens, said events had underscored the need to diversify supplies. “We need to act here and secure ourselves better,” he said. “If we don’t, we will become a pawn in the game.”Energy prices started to climb before Mr. Putin began massing troops on Ukraine’s eastern border, as countries emerged from pandemic closures and demand shot up.But as Mr. Putin moved aggressively against Ukraine and energy prices soared further, the political and strategic vulnerabilities presented by Russia’s control of so much of Europe’s supply took center stage.“Europe is quite dependent on Russian gas and oil, and this is unsustainable,” said Sarah E. Mendelson, the head of Heinz College in Washington. She added that the United States and its European allies had not focused enough on energy independence in recent years.Overall, Europe gets more than a third of its natural gas and 25 percent of its oil from Russia. Deliveries have slowed significantly in recent months, while reserves in Europe have fallen to just 31 percent of capacity.Mateusz Garus, a blacksmith at a coal mine in Poland. “We will destroy the power sector,” he said, “and we will be dependent on others like Russia.”Maciek Nabrdalik for The New York TimesFor critics of the European Union’s climate policies, the sudden focus away from greenhouse gas emissions and on existing fuel reserves is validating.Arkadiusz Siekaniec, vice president of the Trade Union of Miners in Poland, has long argued that the European Union’s push to end coal production on the continent was folly. But now he hopes that others may come around to his point of view.The climate policy “is a suicidal mission” that could leave the entire region overly dependent on Russian fuel, Mr. Siekaniec said last week as American troops landed in his country. “It threatens the economy as well as the citizens of Europe and Poland.”For Mateusz Garus, a blacksmith at Jankowice, a coal mine in Upper Silesia, the heart of coal country, politics and not climate change are driving policy. “We will destroy the power sector,” he said, “and we will be dependent on others like Russia.” More