EU outlines actions to eliminate dependence on Russian fossil fuels
In light of Russia’s attack on Ukraine, the European Commission has proposed an outline of a plan, which is supposed to make European Union member states independent from Russian fossil fuels well before 2030, starting with gas. This could reduce Europe’s demand for Russian gas by two-thirds before the end of the year.
Given that Russia produces and exports large amounts of oil and gas, the security of energy supply and the reduction of reliance on Russian fossil fuels has been at the forefront of global governments’ thinking ever since Russia’s attack on Ukraine started.
With this in mind, the United States government has already banned imports of Russian oil, liquefied natural gas, and coal while the UK government has decided to phase out Russian oil imports.
Last year, the U.S. imported nearly 700,000 barrels per day of crude oil and refined petroleum products from Russia. On the other hand, Russian imports account for 8 per cent of total UK oil demand.
Europe’s plan also outlines a series of measures to respond to rising energy prices in Europe and to replenish gas stocks for next winter. Europe has been facing increased energy prices for several months, but now uncertainty on supply is exacerbating the problem.
In an effort to combat this crisis, REPowerEU will seek to diversify gas supplies, speed up the roll-out of renewable gases, and replace gas in heating and power generation. This can reduce EU demand for Russian gas by two thirds before the end of the year, a Tuesday statement from the EC said.
Commission President, Ursula von der Leyen, said: “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.
“The quicker we switch to renewables and hydrogen, combined with more energy efficiency, the quicker we will be truly independent and master our energy system. I will be discussing the Commission’s ideas with European leaders at Versailles later this week, and then working to swiftly implement them with my team.”
Executive Vice-President for the European Green Deal, Frans Timmermans, said: “It is time we tackle our vulnerabilities and rapidly become more independent in our energy choices. Let’s dash into renewable energy at lightning speed.”
Commissioner for Energy, Kadri Simson, said: “For the remaining weeks of this winter, Europe has sufficient amounts of gas, but we need to replenish our reserves urgently for next year.”
In addition to the Commission’s ‘Energy Prices Toolbox’ from last October, which aimed to help the member states to mitigate the impact of high prices on vulnerable consumers, the Commission is presenting the member states with additional guidance, confirming the possibility to regulate prices in exceptional circumstances, and setting out how the states can redistribute revenue from high energy sector profits and emissions trading to consumers.
EU State Aid rules also offer member states options to provide short-term support to companies affected by high energy prices and help reduce their exposure to energy price volatility in the medium to long term.
Following consultation on targeted amendments to the Emission Trading System State aid Guidelines, the Commission will also be consulting with the member states on the needs for and scope of a new State aid Temporary Crisis Framework to grant aid to companies affected by the crisis, in particular those facing high energy costs.
By April, the Commission intends to present a legislative proposal requiring underground gas storage across the EU to be filled up to at least 90 per cent of its capacity by 1 October each year. The proposal would entail the monitoring and enforcement of filling levels and build in solidarity arrangements between the member states. The Commission continues its investigation into the gas market in response to concerns about potential distortions of competition by operators, notably Gazprom.
To address the skyrocketing energy prices, the Commission will look into all possible options for emergency measures to limit the contagion effect of gas prices in electricity prices, such as temporary price limits.
In order to phase out Europe’s dependence on fossil fuels from Russia well before 2030, the Commission proposes to develop a REPowerEU plan that will increase the resilience of the EU-wide energy system based on two pillars, diversifying gas supplies, via higher Liquefied Natural Gas (LNG) and pipeline imports from non-Russian suppliers, and larger volumes of biomethane and renewable hydrogen production and imports; and, reducing faster the use of fossil fuels in homes, buildings, industry, and power system, by boosting energy efficiency, increasing renewables and electrification, and addressing infrastructure bottlenecks.
Full implementation of the Commission’s ‘Fit for 55′ proposals would already reduce the annual fossil gas consumption by 30 per cent, equivalent to 100 billion cubic metres (bcm), by 2030. With the measures in the REPowerEU plan, Europe could gradually remove at least 155 bcm of fossil gas use, which is equivalent to the volume imported from Russia in 2021.
Nearly two-thirds of that reduction can be achieved within a year, ending the EU’s overdependence on a single supplier. The Commission proposes to work with the member states to identify the most suitable projects to meet these objectives, building on the extensive work done already on national Recovery and Resilience Plans.
Meanwhile, the United States and 30 IEA members have committed to releasing a total of 60 million barrels of oil from strategic reserves in an effort to stabilise the global energy markets as the oil prices have been going through the roof since the attack started.
The IEA this month also released its 10-Point Plan to reduce the European Union’s reliance on Russian natural gas.
According to the IEA, the European Union in 2021 imported an average of over 380 million cubic metres (mcm) per day of gas by pipeline from Russia, or around 140 billion cubic metres (bcm) for the year as a whole. As well as that, around 15 bcm was delivered in the form of liquefied natural gas (LNG). The total 155 bcm imported from Russia accounted for around 45 per cent of the EU’s gas imports in 2021 and almost 40 per cent of its total gas consumption.