Europe seeks urgent break with Russian gas – POLITICO

European Union leaders met in Versailles on March 11 to discuss steps to phase out Russian natural gas, oil and coal from Europe’s energy system “as soon as possible”.

More than 40 percent of Europe’s gas consumption comes from Russia, and the appalling war in Ukraine is forcing it calculate with the European Union’s dependence on Russian gas.

At Versailles, European leaders I Agree accelerating the reduction of fossil fuel consumption, diversifying natural gas imports, strengthening the market for hydrogen, accelerating the deployment of renewable energy, and improving electricity grid connections across the continent. The agreement also calls for securing sufficient gas storage capacity before next winter and coordinating the build-out of new liquefied natural gas (LNG) infrastructure.

Details have yet to be worked out, and the Versailles Agreement calls for the European Commission to come up with a detailed plan by May.

The summit came days after the commission was published REPowerEU plan, a proposal to hasten Europe’s break with Russian energy. Many of these proposals were reflected in the Versailles Declaration.

Break dependence on Russian energy

“It’s time we addressed our weak points and quickly became more independent in our energy decisions. Let’s rush into renewable energy at lightning speed,” European Commission Executive Vice-President Frans Timmermans said on March 8. “Putin’s war in Ukraine shows the urgency of accelerating our clean energy transition.”

The REPowerEU plan could reduce Europe’s natural gas consumption by 155 billion cubic meters over time, equivalent to the volume of Russian gas imports in 2021. Crucially, two-thirds of those reductions could be achieved as early as next winter, the commission said, in a dramatic overhaul and crucial break in a longstanding energy relationship.

“This is a big change of perspective, as all pre-war plans were based on continued Russian supplies,” said Marco Giuli, a researcher at the Brussels School of Governance Outlook gas.

In a separate proposal, the International Energy Agency (IEA) released a 10-point plan on how the EU could cut Russian gas consumption by a third before next winter. The ideas were similar to the Commission’s strategy and focused on more renewable energy, gas storage, other sources of gas imports, electrification of home heating, efficiency and savings measures.

Meanwhile, on March 11, the partners of the EU and the G7 announced a new wave of sanctions explicitly banning all investment in any part of Russia’s energy sector. The ban includes financial services and technology transfers related to energy exploration and production.

Slow down or speed up the transition?

The big question is how the urgent need for energy security relates to Europe’s medium- and long-term climate goals. The REPowerEU plan does not change these targets, leaving the EU target of net zero by 2050 and a 55 percent reduction in greenhouse gas emissions by 2030.

But in the struggle to import more LNG to offset Russian gas, the continent risks ending up locking up new fossil fuel infrastructure that will be more difficult to mine later.

“The EU already has more LNG capacity than would be required given the climate neutrality targets. However, the need to quickly reduce dependence on Russian gas is changing the picture,” Giuli said.

He added that because imported LNG will replace Russian gas, this alone would not necessarily change gas consumption in Europe.

“The risk of a supply blackout is real, however, as new projects are also likely to come with long-term contracts to justify fresh waves of upstream investment,” Giuli said.

LNG contracts can last 20 years and the infrastructure has a lifetime and payback period of several decades. “Some investment decisions risk being rushed based on strategic considerations made under the pressure of the current times,” Giuli said. “They face not only long-term risks related to decarbonization targets, but also near- to medium-term risks related to extreme geopolitical uncertainty.”

Instead, he said, Europe should prioritize “no regret options” such as renewable energy, electrification of residential heating, efficiency and energy conservation.

But while in the US, high energy prices are making the oil and gas industry aggressive to quarrel for new drilling and government support for more pipelines and LNG export infrastructure, the EU proposals could accelerate the underlying trend towards clean energy, notwithstanding stronger interest in LNG and coal in the near term, said Aleksandra Gawlikowska-Fyk, director of the Energy Sector Program at Poland Forum Energii think tank.

She was less concerned about demands for new LNG, noting that it was too early to tell how much new LNG import capacity would actually be built and commissioned. LNG import terminals in Europe are only at 60 percent capacity, which means some spare capacity could be called upon, Gawlikowska-Fyk said.

“There should be no doubt that the EU’s goal is to accelerate the transition, not slow it down,” said Gawlikowska-Fyk Outlook gas. “Even if the physical availability of energy temporarily becomes more important, which may increase the use of coal, the direction for purification will not change.”

This article was originally published by @gasoutlook.

This article was supported by the European Climate Foundation to Outlook gas Initiative. The responsibility for the information and views reproduced here lies with the author. The European Climate Foundation cannot be held responsible for the use that may be made of the information contained or expressed therein.