Energy is the commodity that fuels the economy. The EU's prosperity and security depend on a stable and affordable energy supply. EU energy policy has driven significant change in recent years, with a considerable drop in the most polluting fuels, as consumption has moved more towards natural gas and renewables. While EU production of renewables has grown substantially in recent years, gas production has declined, leading to a greater reliance on gas imports.
The surge in energy prices and high volatility seen since last autumn already triggered calls last year for reducing our dependence on energy imports. Russia’s invasion of Ukraine has taken this debate further and prompted strategic EU policy changes.
Security of supply
Ever since the gas disruptions that hit some eastern EU countries in the winters of 2006 and 2009, the EU has worked on a common energy policy to strengthen its energy security and the internal energy market. By investing in infrastructure, in particular cross-border connections, the EU has reduced the number of EU countries exclusively dependent on one single supplier.
The EU’s growing energy demand and diminishing domestic production of gas have made it indispensable to have measures to secure gas supply in the EU. The Security of Supply Regulation ((EU) 2017/1938), updating the original 2010 regulation, establishes a common framework where the security of supply is a shared responsibility of natural gas undertakings, EU countries and the Commission. One of its main objectives is to enhance EU emergency preparedness and resilience to gas disruptions. This includes an early warning system to identify potential problems ahead, and a standing advisory group – the Gas Coordination Group, comprised of experts from the Commission, EU countries authorities and leading stakeholders – to assess and discuss security of supply issues.
REPower EU to cut dependence on Russian gas imports
In 2021, the EU imported more than 40% of its total gas consumption, 27% of oil imports and 46% of coal imports from Russia. Energy represented 62% of EU total imports from Russia, and cost €99 billion. Although it represents a significant drop in comparison with 2011, when energy represented almost 77% of EU imports from Russia (equivalent to €148 billion), the EU is taking further measures to cut its dependence on Russian energy imports.
On March 8, the Commission published its REPowerEU plan, outlining measures to drastically reduce Russian gas imports from its 2021 level of 155 bcm before the end of this year – and reach complete independence from Russian fossil fuels well before the end of the decade. The key elements in this plan are diversifying supplies, reducing demand and ramping up the production of green energy in the EU.
Diversification of gas supply can particularly contribute to increasing the resilience of the EU’s energy system and strengthening its international partnerships with key energy gas suppliers. In 2021, 43.5% of the EU’s natural gas imports came from Russia, but there were also significant volumes that came from Norway (23.6%), Algeria (12.6%) and the US (6.6%). Most of these imports came through pipelines, but a growing share has come in liquid form, notably from the US, whose LNG exports to the EU have substantially increased since its first shipment in April 2016.
Liquefied natural gas
Liquefied natural gas (LNG), which is natural gas converted to liquid form for ease of storage or transport, can contribute to enhancing the diversification of gas supply and accelerating the decarbonisation of gas markets.
Over the last decade, the EU has invested significant amounts in LNG infrastructure, with more than 20 large-scale terminals now in operation and connected to the grid, and more under construction. Further accelerating the upgrade and extension of LNG infrastructure and diversifying sources and routes of pipeline gas are therefore a priority to make the EU energy system more resilient. The EU is prioritising the assessment of measures and investments that might be needed to overcome bottlenecks to the full use of the EU’s LNG capacity.
Two weeks after the Commission outlined the REPower EU concept, the US committed to increasing its LNG export volumes for the EU market with an additional 15 bcm this year, and up to 50 bcm annually by 2030. The EU is also closely working with energy partners such as Norway, Japan, South Korea and Qatar to address the current challenges on energy markets worldwide, and to further develop their cooperation on LNG.
Gas storage facilities are another instrumental element to EU security of supply as they provide back-up volumes in case of strong demand or supply disruptions. They account for between 25% and 30% of the gas consumed in winter. In short, storage reduces the need to import additional gas during the heating season.
Following Russian’s invasion of Ukraine, the Gas Coordination Group estimated that the biggest threat to security of supply would come from the failure to restock gas storage facilities ahead of next winter. To address this, the Commission proposed on 23 March an amendment to the Security of Gas Supply Regulation ((EU) 2017/1938) to include measures to deal with the market imbalances for energy, ensure well-filled gas storage in the EU and enhance the resilience of the EU’s energy system. This proposal includes a requirement for EU countries to ensure that the storage infrastructures in their territories are filled up to at least 90% of their capacity by 1 November each year, and to 80% this year.
A further initiative in this respect is the concept of establishing joint purchases of gas. In this context, the Commission has already established a platform to optimise infrastructure and bargaining power without distorting competition rules.
Accelerating the European Green Deal
The other two priorities to reduce dependence on imports identified under the RePower EU concept are already the two central pillars of EU energy policy: ramping up renewables and boosting energy efficiency.
The existing rules, agreed in 2018 and 2019, set targets for renewables and energy efficiency by 2030 that will deliver an overall 40% reduction in greenhouse gas emissions, in line with EU commitments under the Paris Agreement. However, in 2021 the Commission tabled proposals to go further and faster in the coming decade, with a view to achieving a 55% reduction in emissions by 2030.
The RePower EU plan also identified the potential for moving considerably faster on wind and solar power. Based on an analysis of the state of play of solar energy across the EU, the Commission will present in May a solar strategy proposing a European Solar Rooftops Initiative to reap the benefits of rooftop solar energy. The plan also refers to the important role that biomethane can play (providing an additional 18bcm by 2030). Renewable hydrogen is also seen as a major new alternative supply source, with the potential to reach 10bcm by 2030, with scope for an additional 10bcm through imports.
The Commission is aware of the need to address the different bottlenecks that hinder the roll out of renewable energy projects. To address this issue, it will publish in May a recommendation on fast permitting for renewable energy projects, which aims to support the use of all flexibilities already granted by EU legislation and to remove remaining obstacles. Power purchase agreements is another identified area where guidelines at EU level would potentially accelerate change and ensure the most efficient development.
Citizens can also play a key role to reduce the EU’s overall energy consumption and make energy savings. Turning off the lights, using lids on saucepans, lowering the room temperature and taking public transport are just some examples of the many different things that can be done as individuals or collectively. The Commission is working with the International Energy Agency, consumer organisations and other stakeholders to look at ways in which citizens can further reduce their energy consumption.
Building upon the outlined REPowerEU concept, guidelines, legislative proposals and budgetary support to further reduce the EU’s dependence on imports of Russian fossil fuels are expected in the near future. These will also take into consideration broader issues to tackle energy prices hikes and their impact on consumers and businesses.
20 April 2022