EU adopts watered-down plan to cut gas demand by 15% by March

EU energy ministers approved the proposal to voluntarily reduce the demand for natural gas by 15% by the end of March. As several member states opposed the initial version, the text was adjusted to limit the European Commission’s ability to impose mandatory targets.

Germany, Italy and Austria are at the greatest risk of gas shortages in the European Union as the prospects for supply from Russia are uncertain. The European Commission has laid out a gas demand reduction plan last week to member states, which led to an extraordinary meeting of energy ministers.

The proposal was passed with amendments as a group of countries expressed opposition to the blueprint. Hungary is the only EU member country that voted against it.

The main sticking point was the proposal to allow the European Commission to make the 15% savings measures mandatory if it decides to declare the highest level of alert. In the end, member states decided the EU’s executive body would have to get their approval states first. The gas demand reduction level is envisaged to be achieved by the end of March.

Deal reached against all odds

There was fierce criticism ahead of the vote, mostly from Portugal, Spain and Greece. Italy, Poland and other member states also asked for exemptions and solidarity from countries like Germany for other matters.

“Unlike other countries, we have not lived beyond our means in terms of energy,” Spain’s Ribeira said before the vote, presumably referring to Germany

Spain’s Third Deputy Prime Minister and Minister for the Ecological Transition and the Demographic Challenge Teresa Ribeira has said the European Commission failed to conduct a debate. “Unlike other countries, we have not lived beyond our means in terms of energy,” she stressed, presumably referring to Germany.

Poland complained it may lack coal and that the costs for the Emissions Trading System or EU ETS are burdening its citizens.

Moreover, Gazprom said yesterday that it would halve the gas supply to Germany through the Nord Stream 1 pipeline to 20% of capacity, adding to the crisis. But the energy ministers seemingly had no choice but to show unity – at least in a declarative manner.

Winter will be much cheaper

“The EU is united and solidary. Today’s decision has clearly shown the member states will stand tall against any Russian attempt to divide the EU by using energy supplies as a weapon. Adopting the gas reduction proposal in record time has undoubtedly strengthened our common energy security. Saving gas now will improve preparedness. The winter will be much cheaper and easier for EU’s citizens and industry,” Czech Minister of Industry and Trade Jozef Síkela said.

Member states can request a derogation to adapt their demand reduction obligations if they have limited interconnections to other member states and they can show that their interconnector export capacities or their domestic LNG infrastructure are used to re-direct gas to other member states to the fullest.

In the meantime, Germany agreed to take a 30% stake in Uniper, the country’s biggest gas importer, which was suffering from severe illiquidity. The bailout package, worth EUR 15 billion, may turn out to be only the start of tectonic shifts in the energy sector.