The EU has agreed to cut its gas consumption by 15% in an attempt to stave off a winter crisis triggered by a sharp reduction or total shutdown of Russian gas supplies to the bloc.
What has been agreed?
From next month until the end of March 2023, all EU member states will strive for a voluntary 15% reduction in gas consumption. In the event of a major supply shock – a complete shutdown of Russian gas – the EU may declare an emergency and make the target mandatory with immediate effect.
Three island nations that are not connected to the EU gas network – Cyprus, Ireland and Malta – would be exempt from the compulsory energy savings.
But almost any member state, especially those with little connection to the gas network, or those facing an electricity supply shock, would be entitled to apply for an opt-out.
How would it work?
EU governments can choose how to ration gas, as long as they protect supplies to households.
Industrial users will feel the pinch first; factories could be given targets to reduce heating and cooling. Some could be spared, such as manufacturers of critical goods, or plants that are difficult to restart after switching off energy.
While consumers are protected, they are expected to do their bit. EU authorities are urging governments to launch campaigns to encourage people to switch off lights and turn down thermostats and air conditioning.
EU governments are being urged to speed up the switch to renewable energy, but are also asked to consider delaying their exit from nuclear power or coal – an effort to find any alternative to Russian gas.
Member states are required to report to EU authorities in Brussels on their energy savings plan every two months, a form of peer pressure intended to chivvy them into action.
Why is the EU doing this now?
As the EU was in the final throes of negotiating the plan, Gazprom announced that a drastic cut in supplies via the crucial Nord Stream 1 pipeline would take effect on Wednesday. The timing was a coincidence, but underlines why the EU is pushing to reduce Russian gas use.
Since Russia’s invasion of Ukraine, the EU has decided to phase out Russian fossil fuels, which are major sources of funding for the Kremlin’s war effort.
For many EU member states, ending the use of Russian gas will be painful. Before the invasion, Russia supplied 40% of the EU’s gas and 55% of Germany’s, although Europe’s biggest economy has since reduced its dependence.
How is the bloc divided on the subject?
EU member states have very different energy mixes: a few countries were nearly 100% dependent on Russian gas, while others used none.
Countries that took little or no Russian energy objected to making sacrifices for those that benefited from years of cheap fuel from their eastern neighbour.
Spain and Portugal, which have little connection to the EU gas network, argued that the blanket 15% target was unfair. In the end, all countries in the bloc supported the plan with the exception of Hungary, where the government is a longtime Kremlin ally that supports EU sanctions reluctantly.
France, Luxembourg and the Netherlands supported the original plan, fearing the economic ripples of a recession from the German economy.
How much energy will be saved?
If the EU reduces gas use by 15%, it would avoid using 45bn cubic metres of the fuel, according to European Commission estimates. The various opt-outs depress that total, but officials say that even if countries took full advantage of the exemptions, the plan would still see the EU through an averagely cold winter.
The 15% target, however, was designed to see the EU through a bitterly cold winter. Expect the long-range weather reports to be as keenly studied as the EU’s economic forecast.
What happens next?
The 2022-23 winter is expected to be difficult, especially if temperatures plunge. But some fear the following winter could be even worse. EU gas storage levels are at 66%, but by the end of next spring they could be seriously depleted with fewer options to replace stocks.
EU officials suggest the gap could be filled by pipeline gas from Norway and Azerbaijan, more tanker-delivered liquified natural gas from as far afield as the US, and efforts to reduce demand.
The original gas-savings plan was meant to last for two years, but EU governments reduced the scope to one year. The plan for winter 2023-24 still has to be written.
