The EU has agreed to cut its gas consumption by 15% in an attempt to avoid 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 to voluntarily reduce their gas consumption by 15%. In the event of a major supply shock – a complete shutdown of Russian gas – the EU can 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 mandatory energy savings.
But almost all member states, especially those with little connection to the gas network or those facing an electricity supply shock, would be entitled to request a derogation.
How would that work?
EU governments can choose how to ration gas, as long as they protect household supplies.
Industrial users will feel the pinch first; factories could be assigned heating and cooling reduction targets. Some could be spared, such as manufacturers of critical goods or factories that are difficult to restart after cutting power.
Although consumers are protected, they are expected to do their part. EU authorities are urging governments to launch campaigns to encourage people to turn off lights and turn down thermostats and air conditioning.
EU governments are urged to accelerate the switch to renewables, but are also urged to consider delaying their exit from nuclear or coal – an effort to find an alternative to Russian gas.
Member states are required to report to EU authorities in Brussels on their energy saving plan every two months, a form of peer pressure meant to push them into action.
Why is the EU doing this now?
As the EU negotiated the plan, Gazprom announced that a drastic cut in supplies through the crucial Nord Stream 1 pipeline would come into effect on Wednesday. The timing was coincidental, but underlines why the EU is pushing to reduce Russian gas consumption.
Since Russia’s invasion of Ukraine, the EU has decided to phase out Russian fossil fuels, which are the main sources of funding for the Kremlin’s war effort.
For many EU member states, ending the use of Russian gas will be painful. Prior to the invasion, Russia supplied 40% of the EU’s gas and 55% of Germany’s, although Europe’s largest economy has since reduced its reliance.
How is the block divided on the subject?
EU member states have very different energy mixes: some countries relied almost 100% on Russian gas, while others used none.
Countries that took little or no Russian energy resisted making sacrifices for those who benefited from years of cheap fuel from their eastern neighbor.
Spain and Portugal, which have little connection to the EU gas network, argued that the overall 15% target was unfair. In the end, every country in the bloc backed the plan except Hungary, where the government is a longtime Kremlin ally that reluctantly backs EU sanctions.
France, Luxembourg and the Netherlands supported the initial plan, fearing the economic repercussions of a recession in the German economy.
How much energy will be saved?
If the EU reduced its gas consumption by 15%, it would avoid using 45 billion cubic meters of fuel, according to European Commission estimates. The various waivers bring that total down, but officials say that even if countries took full advantage of the exemptions, the plan would still get the EU through a moderately cold winter.
The 15% target, however, was designed to get the EU through an extremely cold winter. Expect long-term weather reports to be as studied as EU economic forecasts.
What happens next?
Winter 2022-23 promises to be difficult, especially if temperatures drop. But some fear that the following winter will 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 the pipeline from Norway and Azerbaijan, more liquefied natural gas delivered by tanker from as far away as the United States and efforts to reduce demand.
The original gas savings plan was to last two years, but EU governments have reduced the scope to one year. The plan for winter 2023-24 remains to be written.