Oil & Gas

09 Mar 2022

How the EU Plans to Cut Dependence on Russian Gas by Two-Thirds This Year

09 Mar 2022  by   

Russian President Vladimir Putin attends a meeting with the head of the Russian Union of Industrialists and Entrepreneurs Alexander Shokhin in Moscow, Russia March 2, 2022. Mikhail Klimentyev | Sputnik | Reuters

The European Union announced Tuesday it will reduce its purchases of Russian gas by two-thirds before the end of the year, in response to the country’s invasion of Ukraine.

That marks a significant change because the EU is highly dependent on Russian energy imports. The EU imported 45% of its total gas imports from Russia in 2021.

The plan is called REPowerEU.

Here’s how the EU will accomplish its goal, according to documents published by the European Commission, the executive arm of the EU:

The EU has enough gas in storage — storage filling is just under 30% — for the winter heating season, the EC said, “even in case of full disruption of supplies from Russia.” But the EU must refill gas storage tanks before the next winter heating season. The EU will make a legislative proposal by April to set a target of filling 90% of gas storage tanks by Oct. 1 each year. Until official legislation is passed, the EU “urges” member states to begin preparing to have their gas storage tanks filled for the next winter heating season.

The EU has already been speaking with countries besides Russia to obtain gas through pipelines or by liquid natural gas, including Algeria, Azerbaijan, Egypt, Israel, Japan, Korea, Nigeria, Norway, Qatar, Turkey and the U.S. Those conversations have allowed the EU to import a record amount of liquid natural gas in January and February. The European Commission said those developing relationships will allow for another 50 billion cubic meters each year.

Producing 35 billion cubic meters of biomethane by 2030, which is doubling the previously stated goals. To do this, the EU would use biomass sources such as agricultural waste.

Creating a Hydrogen Accelerator to develop necessary infrastructure, storage and port capabilities. The goal here is for the EU to replace 25 to 50 billion cubic meters per year of imported Russian gas by 2030 with renewable hydrogen, which is hydrogen produced with an electrolyzer powered by renewable energy sources, such as wind or solar.

Aggressively investing in improving energy efficiency in homes, buildings and industries, which it estimates can save 25 billion cubic meters each year .

Accelerating the rollout of renewables, both wind and solar, and heat pumps. For solar, the EU should accelerating the rollout of rooftop solar systems up to 15 terawatt-hours this year, which would save 2.5 billion cubic meters of gas. The European Commission promised a more full communication on the EU’s solar strategy in June. The EU also proposes rolling out 10 million heat pumps in the next five years.

Speeding up permitting processes associated with building renewables and making associated grid infrastructure improvements. The European Commission promised a more full communication in May on how to accelerate the permitting process for renewables.

Providing financing mechanisms to enable the development of power purchase agreements in Europe. That process is already underway and so more communication should be due by summer, the EC said.

As the EU drops Russian natural gas imports, the price will almost certainly increase. To ease the burden of on consumers and small businesses, the EU has permitted a member states to take number of actions, given “the current exceptional circumstances.” Those include:

Regulating prices for vulnerable consumers and small businesses, which the EU calls “micro-enterprises,” and providing companies with short-term support.

Levying temporary taxes on “windfall” profits of energy companies garnered from exceptionally high energy prices. Those taxes on windfall profits could then be turned around and paid out to customers to help them pay for the high energy bills.

Using increased emissions trading revenues to buffer the high price of energy bills for vulnerable consumers. “Such measures need to fulfill certain criteria to ensure that they are proportionate, limited in time and that they avoid undue market distortions,” the EU said.

The world has imposed strict sanctions on the Russian economy in response to the invasion, and on Tuesday both the U.S. and United Kingdom said they would ban Russian oil imports.


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