The President of the European Commission, Ursula von der Leyen, accompanied by the Executive Vice-President in charge of the ‘Green Deal’, Frans Timmermans, and two Commissioners, unveiled, on Wednesday 20 July, a plan to reduce gas demand by 15% in all EU Member States over the next eight months in order to be able to do without Russian gas during the winter.
“Russia is using energy as a weapon. Whether it is a partial or a major cut-off of Russian gas, or a total cut-off of Russian gas, Europe needs to be ready”, said von der Leyen.
While Russian President Vladimir Putin had assured the previous day (Tuesday) that gas giant Gazprom would meet its obligations “in full”, the Commission President said that a possible total disruption of Russian gas supplies was now a “likely scenario”.
In particular, the Commission fears that the Kremlin will invent a technical problem to prevent the restarting of the Nord Stream 1 pipeline, which is under maintenance until 21 July, or that it will further reduce deliveries via this pipeline when it is reopened. Furthermore, both Ms von der Leyen and the German government have described Gazprom’s justification that the recent reductions in deliveries via Nord Stream 1 are due to the absence of a Siemens gas turbine that was being repaired in Canada as a “pretext”.
Faced with the risk of a total shutdown of Russian gas supplies, the Commission wants Member States to be proactive and make gas savings this summer, allowing more gas to be stored for the winter.
“We need to save gas to keep our homes heated and industry running when winter comes”, said Frans Timmermans.
The EU’s underground gas reserves are currently close to 65% full, a level that could prove insufficient if Russian supplies are completely cut off (the EU’s target is 80% by November - see EUROPE 12980/3).
Proposal for an EU Council Regulation
At the heart of the Commission’s plan is a proposal for an EU Council Regulation setting a target of a voluntary reduction in gas demand of 15% in all Member States between the 1st of August 2022 and 31 March 2023 compared to their average consumption in the same period over the previous five years.
This target corresponds to 45 bcm of gas, explained Ms von der Leyen, which will allow the EU to “make it safely through this winter”.
The Commission estimates that a total interruption of Russian supplies would lead to a gap between gas supply and demand in the EU of around 30 bcm in a moderately cold winter and 45 bcm in a colder winter. This gap could be “even bigger, if the winter is exceptionally cold”, warned the Commissioner for Energy, Kadri Simson.
This is a rather ambitious target given that the EU has reduced its gas demand by only 5% compared to previous years in the first half of 2022.
To achieve this, Member States will have to update their existing national contingency plans by the end of September with the demand reduction measures they are planning.
They will also be required to consult the Commission and relevant stakeholders before introducing new demand reduction measures and to report to the Commission on the reduction achieved every two months.
In addition, Member States requesting gas supplies on the basis of solidarity will have to report on the measures they have taken to reduce demand at national level.
As regards the legislative procedure, the regulation would be established on the basis of Article 122 of the Treaty on the Functioning of the European Union (TFEU), which allows the EU Council, on a proposal from the Commission, to decide on “appropriate measures” if “serious difficulties arise in the supply of certain products, in particular energy”.
Towards a binding target?
While the 15% target would a priori be voluntary, the proposed regulation provides for the possibility of declaring an alert at EU level to introduce a mandatory target where there is a risk that voluntary demand reduction measures will not be sufficient.
This process would be initiated by the Commission on its own initiative or at the request of at least three Member States that have declared national alerts, after consulting the EU Council.
At present, only Germany has declared a national alert for its gas supply, while eleven Member States have triggered an early warning.
A three-pronged approach
In addition to the proposed regulation, the Commission’s plan sets out a number of measures that Member States could implement to reduce their gas demand by 15% over the next eight months
These recommendations cover three areas: - switching from gas to alternative fuels, giving priority to renewable energy; - incentives for industries to reduce consumption through market tools; - energy savings in the heating and cooling sector through mandatory reductions in the public sector and public awareness campaigns.
While the Commission’s communication is quite similar to the draft version previously detailed in our columns (see EUROPE 12993/3), it no longer specifies the maximum level at which heating and cooling should be set in public buildings, offices, shopping centres and open spaces such as outdoor terraces.
The measures envisaged by the Commission also include the introduction of new temperature thresholds and hourly thresholds for gas heating and district heating for households.
With regard to the first part, the plan provides for the possibility of using the derogations provided for in the European Industrial Emissions Directive(IED) in the event of a temporary switch from gas to a more polluting fuel (coal, for example). “The exceptional and temporary nature of such a derogation requires continuous monitoring and notification to the Commission”, the institution said.
Member States can also offer support to industries under the amendment to the Temporary Crisis Framework on State aid adopted by the Commission today (see EUROPE 12997/4).
Anticipating to reduce the economic impact
In economic terms, a total interruption of Russian gas supplies would have an impact of between 0.6 and 1% of GDP on average in the case of an average winter and between 0.9 and 1.5% in the case of a cold winter, the Commission estimates.
Nevertheless, the rapid implementation of measures to reduce gas demand would reduce this impact to 0.4% (average winter) and 0.6% (cold winter).
A challenge for European unity
The Commission’s plan will be discussed by Member States’ energy ministers at an extraordinary meeting in Brussels on 26 July. The proposed EU Council regulation could already be adopted on this occasion or shortly afterwards, an European official said.
While the Commission has strongly emphasised the importance of unity and solidarity between Member States, some countries may be tempted to go it alone.
The institution is in discussions with Hungary because of the Hungarian government’s decision to declare a national energy emergency which would include measures restricting gas flows from the country to other Member States (see EUROPE 12994/13).
Like all EU Council regulations, the proposal requires a qualified majority in the EU Council to enter into force.
See the proposed regulation: https://aeur.eu/f/2pe
See the communication: https://aeur.eu/f/2pg and its annexes: https://aeur.eu/f/2ph (Original version in French by Damien Genicot)