As Russian gas supplies to some EU Member States have been cut and reduced in recent months, the European Commission is to present a ‘European Gas Demand Reduction Plan’ on 20 July to prepare the EU for a full disruption in the gas supply from Russia.
According to a draft version of the Commission’s communication obtained by EUROPE, this plan will take the form of a set of guidelines to help Member States reduce gas demand in a coordinated, cost-effective and timely manner to a level adequate for a “safe winter”, even in the event of a complete cut-off of Russian supplies.
“This coordinated demand reduction is the key to minimising cost and disruption later in the year. Energy saved during the summer is energy that can be used in winter”, the document points out.
Indicating the concerning nature of the current situation, simulations carried out by the European Network of Transmission System Operators for Gas (ENTSOG) indicate that a total halt in Russian supplies from July onwards would result in EU gas storage being filled to between 65% and 71%, below the 80% target set out in the new EU storage regulation (see EUROPE 12980/3).
This would result in a deficit of 20 bcm of gas during the winter under normal winter conditions, based on annual demand of 380 bcm, the preliminary draft says.
Nevertheless, protected customers, notably households, “would not be impacted by large-scale Russian disruptions, unless they happen in combination with other currently unforeseen events”.
These customers represent less than 37% of total EU gas consumption.
Preparing for a total cut-off
Taking as an example the recent decision by Russian gas giant Gazpom to further reduce its supply to Italy (see EUROPE 12991/23), the Commission considers that there is “concrete, serious and reliable information that an event likely to result in significant deterioration of the gas supply situation may occur”. This would result in “the emergency level being triggered in several Member States”, a decision already taken by the German government (see EUROPE 12978/11).
The EU must therefore “anticipate” this risk and “prepare in a spirit of solidarity for protracted and possibly full disruption of gas from Russia at any moment”, the institution insists.
It estimates that acting now could reduce the impact on GDP of a sudden supply disruption by a third.
Substituting gas and easing environmental restrictions
In order to save gas in a preventive way, the Commission recommends replacing it in the industrial sector and in electricity generation, while recognising that this is not always technically or economically feasible.
“According to a first estimate, half of the gas consumed in the electricity sector is considered as critical to ensure the security of electricity supply”, the preliminary draft says.
Among the measures envisaged, the document mentions switching from gas to biomass, biomethane, solar and other renewables; using oxygen instead of natural gas in some industrial plants and replacing gas-fired steam engines with electric engines; postponing the closure of nuclear power plants or switching to nuclear; postponing the switch from coal-fired to gas-fired power plants; temporarily using heavy fuels or coal to “ensure the smooth functioning of sectors critical or strategic to Europe’s societal needs”.
In view of the potential costs associated with such operations, the Commission intends to analyse as a matter of priority State aid schemes aimed at strengthening their economic viability in sectors considered critical.
It is also prepared to allow a “temporary relaxation” of environmental regulatory restrictions, as switching from gas to another fuel (e.g. coal) may increase greenhouse gas emissions from industry.
The Commission thus intends to make use, for a limited period of time, of the derogations from the emission limits for certain pollutants provided for in the Industrial Emissions Directive (IED) and the Environmental Impact Assessment Directive.
Under the IED, some of these derogations can be extended beyond 10 days, and prolonged as long as necessary, if there is an overriding need to maintain energy supply.
Reducing gas consumption
Another lever that the Commission wishes to mobilise is saving gas used in buildings.
It recommends that Member States reduce heating and cooling in buildings owned or operated by or for public authorities (mandatory reduction), as well as in shopping centres, offices and public spaces.
For public buildings, heating should be limited to 19°C and cooling to 25°C, unless this is not technically possible, the preliminary draft says.
According to the Commission, public authorities should also set new temperature and/or hourly thresholds for heating and/or district heating in the household sector where gas is used.
The institution also recommends launching information campaigns to encourage consumers to reduce their gas consumption where possible, for example by turning down their thermostat by 1°C during the heating season.
Mobilising market-based instruments
The third aspect highlighted in the recommendations is the use of market-based instruments.
In particular, the document mentions auctions or tender systems whereby Member States encourage industries to voluntarily reduce their consumption in exchange for compensation.
“Such auctions could be organised jointly between several Member States”, the draft text states.
According to the Commission, the package of measures presented in its plan could save between 25 and 60 bcm of gas for next winter: 11 bcm through reductions in heating or cooling; between 4 and 40 bcm saved in electricity generation; and about 10-11 bcm on industrial demand.
The Commission’s plan will be discussed by Member States’ Energy Ministers at an extraordinary meeting in Brussels on 26 July.
See the preliminary draft and its annex: https://aeur.eu/f/2ms ; https://aeur.eu/f/2mt (Original version in French by Damien Genicot)