EU rolls out plan to cut demand for Russian gas by two thirds in 2022

The European Commission outlined a plan to make Europe independent from Russian fossil fuels well before 2030, starting with gas, in light of the country’s military offensive in Ukraine. EU officials said the proposed measures could reduce demand for Russian gas by two thirds by the end of the year.

The European Union is reluctant to impose direct sanctions on Russia’s oil, gas and coal sectors as it lacks alternative sources. But the European Commission drafted a comprehensive proposal for measures that it believes can eliminate the domestic demand for fossil fuels from the country well before the end of the decade.

The West has responded to the military incursion into Ukraine with severe sanctions against the Kremlin which include severing Russia from payment systems. It makes all trade difficult, so fossil fuels are also heavily affected anyway.

The United States has just announced it is banning imports of Russian oil, gas and coal. The United Kingdom said it would do essentially the same with oil by the end of the year and consider phasing out Russian gas. Brent oil jumped to as high as USD 133.15 per barrel but soon pared most of the gains for the day. Yesterday the price briefly topped USD 139, hitting the highest mark since 2008.

Priority is to refill underground gas storage by next winter

The European Commission said the proposal is designed to curb energy prices and replenish gas stocks for next winter amid the uncertainty of supply. The plan called REPowerEU aims to diversify gas supplies, speed up the roll-out of renewable gases and replace fossil gas in heating and power generation. It can reduce demand for Russian gas by two thirds before the end of the year, according to top officials.

The European Commission is determined to enable a rise in the planned supply of biogas by 35 billion cubic meters per year and another 15 million tons of green hydrogen

Building on the framework developed since the onset of the energy crisis last year, the EU is working on the introduction of support for joint procurement of gas and refilling of underground storage.

The plan calls for doubling the ambition for biomethane, to reach 35 billion cubic meters of output per year by 2030. The European Commission said it wants to facilitate the addition of 10 million tons of imported renewable hydrogen per year together with five million tons from domestic sources more than planned so far.

Deployment of renewables at lightning speed

“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. Renewables are a cheap, clean, and potentially endless source of energy and instead of funding the fossil fuel industry elsewhere, they create jobs here. Putin’s war in Ukraine demonstrates the urgency of accelerating our clean energy transition,” Executive Vice-President for the European Green Deal Frans Timmermans (pictured right) said.

Gas storage in the EU will need to be filled up to at least 90% by the beginning of October

The European Commission said it would develop schemes for more rooftop solar panels, heat pumps and energy savings and speed up renewables permitting.

Europe has sufficient amounts of gas for the rest of the winter, according to European Commissioner for Energy, Kadri Simson (left). By October 1, gas storage in the EU will need to be filled up to at least 90% she revealed and added the plan includes price regulation, state aid and tax measures to protect households and businesses.

Truly independent

“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,” European Commission President Ursula von der Leyen stated.

Member states are slated to get the possibility to regulate prices in exceptional circumstances and redistribute revenue from high energy sector profits and emissions trading to consumers, the EU leadership stressed. State aid rules offer EU countries options to provide short-term support to companies affected by high energy prices, they added.

EU lawmakers are set to get the proposal for obligatory gas storage by April

The commissioners intend to present the legislative proposal on underground gas storage by April. The EU’s executive body said it would also optimize the electricity market design.

Gas supplies are planned to be diversified via higher liquefied natural gas (LNG) and pipeline imports and larger volumes of biomethane and renewable hydrogen production and imports. The EU said it would step up energy efficiency measures and accelerate electrification and the deployment of renewables.

The EU covers 90% of its gas consumption from other countries and Russia accounts for 45% of imports. It also has shares of 25% in incoming oil shipments and 45% in the coal purchased abroad.