Vows to cut gas imports from Russia by two-thirds before end of 2022
by J. Kasper Oestergaard, European Correspondent, Forecast International.
The Russian invasion of Ukraine has forced a reckoning over Europe’s deep energy links to Russia. As a direct response, on March 8 the European Commission unveiled a new ambitious energy strategy. Under the strategy, titled “REPowerEU: Joint European action for more affordable, secure and sustainable energy,” the European Union announced it will be able to reduce Russian natural gas imports by a staggering two-thirds already this year, followed by complete elimination by the end of this decade. The long-term plan is to make Europe independent from Russian fossil fuels well before 2030. In 2021, Russia accounted for a whopping 45 percent of the EU’s gas imports and 40 percent of its total gas consumption. Russia also accounts for 27 percent of oil imports and 46 percent of coal imports.
To eliminate European dependence on fossil fuels from Russia, the Commission proposes to increase the resilience of the EU-wide energy system based on two pillars: 1) diversifying gas supplies via higher liquefied natural gas (LNG) and pipeline imports from non-Russian suppliers, and introducing larger volumes of biomethane and renewable hydrogen production and imports; and 2) speeding up the reduction in fossil fuel use in homes, buildings, industry, and power systems by boosting energy efficiency, increasing renewables and electrification, and addressing infrastructure bottlenecks. In cooperation with member states, the European Commission will have the REPowerEU plan ready by summer.
According to the European Commission, following Russia’s invasion of Ukraine, the case for a rapid clean energy transition has never been stronger or clearer. Commission President Ursula von der Leyen remarked, “We must become independent from Russian oil, coal and gas. We simply cannot rely on a supplier who explicitly threatens us. We need to act now to mitigate the impact of rising energy prices, diversify our gas supply for next winter, and accelerate the clean energy transition.”
Already next month, the European Commission intends to present a legislative proposal that requires underground gas storage across the EU to be filled up to at least 90 percent of capacity by October 1 of each year. The storage filling level across Europe is just under 30 percent at the moment. Even in case of a full disruption of supplies from Russia, gas storage is sufficient to cover demand until the end of next winter.
With the measures in REPowerEU, at least 155 billion cubic meters (bcm) of fossil gas use would be gradually removed, equivalent to the volume imported from Russia in 2021. Nearly two-thirds of that reduction can be achieved within a year, effectively ending the EU’s overdependence on a single supplier.
To address skyrocketing energy prices, the European Commission will look into all possible options for emergency measures to limit the impact of natural gas prices on the price of electricity, such as temporary price limits. The Commission will also assess options to optimize the EU’s electricity market design. Other measures might include temporary taxation of windfall profits and aid to companies facing high energy costs. The European Central Bank (ECB) recently estimated that energy price shocks will reduce GDP growth by around 0.5 percentage points this year.
RePowerEU Highlights:
- Diversifying gas supplies and working with international partners to move away from Russian gas, and investing in the necessary infrastructure.
- Decarbonizing industry by accelerating the switch to electrification and renewable hydrogen and enhancing the EU’s low-carbon manufacturing capabilities.
- Encouraging the installation of more heat pumps and rooftop solar panels for energy savings and to reduce dependence on fossil fuels, making homes and buildings more energy efficient.
- Speeding up the renewables permit process to minimize time for roll-out of renewable projects and grid infrastructure improvements.
- Doubling the EU’s ambition for biomethane: The strategy calls for producing 35 bcm per year by 2030, in particular from agricultural waste and residues.
- Quadrupling of hydrogen use by 2030: An additional 15 million tonnes of renewable hydrogen will replace 25-50 bcm per year of imported Russian gas.
For some countries, it might make sense to switch from Russian natural gas to coal in the short term; however, this move would lead to higher greenhouse gas emissions.
Looking Ahead
The new geopolitical and energy market reality has forced the EU to drastically accelerate its clean energy transition and increase Europe’s energy independence from unreliable suppliers and volatile fossil fuel prices. Europe simply cannot continue to be in a position where much of its energy supply comes from what is effectively a totalitarian regime waging aggressive war. Europe’s path is now a gradual, determined and ambitious effort to replace Russian energy imports with supplies from other nations while, at the same time, increasing the share of renewables in its energy mix.
References:
- https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=COM%3A2022%3A108%3AFIN
- https://ec.europa.eu/commission/presscorner/detail/en/IP_22_1511
- https://ec.europa.eu/commission/presscorner/detail/en/fs_22_1513
- https://ec.europa.eu/commission/presscorner/detail/en/qanda_22_1512
- https://www.reuters.com/business/energy/europes-plan-wean-itself-off-russian-gas-faster-2022-03-02/
- https://audiovisual.ec.europa.eu/en/photo-details/P-055281~2F00-13
- https://www.euractiv.com/section/energy/news/eu-rolls-out-plan-to-slash-russian-gas-imports-by-two-thirds-before-year-end/
- https://time.com/6155885/eu-plan-cut-russian-gas-imports/
- https://www.bbc.com/news/science-environment-60664799
- https://www.dw.com/en/eu-unveils-plan-to-reduce-russia-energy-dependency/a-61047997
Based in Denmark, Joakim Kasper Oestergaard is Forecast International’s AeroWeb Webmaster and European Editor. In 2008, he came up with the idea for what would eventually evolve into AeroWeb. Mr. Oestergaard is an expert in aerospace & defense market intelligence, fuel efficiency in civil aviation, defense spending and defense programs. He has an affiliation with Terma Aerostructures A/S in Denmark – a leading manufacturer of composite and metal aerostructures for the F-35 Lightning II. Mr. Oestergaard has a Master’s Degree in Finance and International Business from the Aarhus School of Business – Aarhus University in Denmark.
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