27. July 2022 By Stephen Lorenzen, Lars Zimmermann and Georg Benhöfer
How Europe has responded to the threat of cuts to its gas supply – a comparison
We have already reported on how the German government has responded to its dependence on Russian gas in previous blog posts:
But what about the EU?
We are currently seeing a supposedly united European response to Russia, with various sanctions and a European plan to reduce gas demand – since almost half of the Member States are already affected by supply cuts. The EU has rules on preventing and responding to a disruption to its supply that require Member States to have plans in place to manage supply disruptions at three crisis levels: early warning, alarm and emergency. But what is happening in some of the countries that are affected? How have the governments of individual EU countries responded? We will provide an overview.
Germany is seriously feeling the effects of the interruption to its gas supply from Russia in particular, as the country obtains about 39 per cent of its natural gas from there. Had the supply of Russian gas flowing through Nord Stream 1 not restarted after it was shut down for maintenance, the economic costs of the interruption could have reached €193 billion in the second half of 2022. After the recent cut to Nord Stream 1, Germany passed emergency legislation to reactivate some coal-fired power plants in order to support electricity generation, as well as measures to promote the expansion of renewable energy and increase LNG imports from countries such as Argentina. This should help Germany wean itself off Russian gas and secure its energy supply before winter by generating some of its electricity with coal instead of gas. Returning to nuclear energy is no longer an option, as the country’s three remaining nuclear power plants are to be shut down this year.
How are other EU countries responding?
Italy was the second largest European buyer of Russian gas after Germany, with a share of around 45 per cent (2019). Italy, which is looking for new suppliers and relying on coal and renewable energies, says it could be independent of Russian gas by 2024. The Italian government has repeatedly announced that it wants to end its dependence on Russia for gas supplies after the invasion of Ukraine. It is looking for new sources, as demonstrated by a recent agreement to increase gas supplies from Algeria, and has reported plans to burn more coal to compensate for reduced gas supplies and also to boost renewable energy generation. The country could be independent of Russian gas by the end of 2024. Since Putin’s invasion of Ukraine, the Italian government has been rapidly diversifying its energy sources to get away from Russian gas. It has signed energy agreements with Algeria, Angola, Egypt and other countries and increased its regasification capacity by purchasing a new LNG plant.
Austria gets most of its gas from Russia. According to Eurostat estimates, 59 per cent of its gas comes from Russia – while domestic experts adamantly put this figure at around 80 per cent. Austria has activated the first stage of the three-stage contingency plan, is examining measures to diversify its gas supply and will convert one gas-fired power plant to coal-fired power generation.
France is working on contingency plans in case Russian gas supplies fail, while energy company bosses are urging individuals and businesses to reduce their electricity consumption. The energy industry in France has switched to oil. A number of companies are converting their gas boilers to use oil so as to avoid disruptions should a further reduction in Russian gas supplies lead to power cuts. Although France is far less dependent on Russian gas than Germany (17 per cent), breakdowns and repairs to ageing power plants mean that national electricity provider Electricite de France is also struggling to meet France’s electricity demand, putting increasing pressure on the energy sector.
The Czech Republic has stated that it has replaced the reduced gas supplies from Russian supplier Gazprom with other sources. In addition, Germany and the Czech Republic recently signed a joint declaration committing to overcoming dependence on Russian fossil fuels and accelerating the transition to low-carbon energy.
Bulgaria, which gets over 90 per cent of its gas from Russia, has agreed to buy liquefied natural gas (LNG) from the US and has stepped up talks with Azerbaijan to increase gas supplies. In addition, the Bulgarian natural gas grid operator has opened a tender for underground drilling in order to be able to locate gas deposits.
Poland obtains around 50 per cent of its annual gas requirements from Russia, but says it has no plans to restrict gas consumption at present.
The Netherlands, which buys between 15 and 20 per cent of its gas from Russia, has activated the early warning phase of its energy crisis plan and lifted the production restriction for coal-fired power plants. The cap on coal-fired power plant production was lifted to reduce dependence on Russian gas in the wake of the war in Ukraine. In addition, the population has been asked to consume less gas. Gazprom’s recent decision to interrupt natural gas supplies to the Netherlands has no impact on the physical supply of gas to Dutch households. The Dutch government states on its website that the country has sufficient gas reserves in the short term and plans to import more liquefied natural gas from countries other than Russia.
Finland has taken preparatory measures, such as maintaining alternative energy sources, and leasing a floating LNG terminal with Estonia. About 60 to 70 per cent of the gas consumed in Finland comes from Russia. However, preliminary data from the Finnish Statistical Office shows that natural gas accounted for little more than five per cent of the country’s total energy consumption, while oil, wood-based biomass and nuclear power were the main energy sources. Although the share of gas in Finland’s total consumption is very small in percentage terms, the gas is used by industrial sectors where it cannot be easily replaced. The largest consumer is Finland’s chemical industry, which includes the oil refinery owned by energy company Nestle.
Solidarity is the key
As different as the individual dependencies and measures within the European Union may be with regard to Russia, it once again seems all the more important to seek solidarity with partners and to act as a community. Even if some Member States are less dependent on Russian gas, all of them will feel the consequences of such a disruption through the internal market. EU-wide coordination and solidarity are essential to prepare for potentially severe disruptions this winter. The EU Security of Supply Regulation from 2017 requires EU countries to make the necessary technical, legal and financial arrangements to enable the provision of solidarity gas in practice. However, only six bilateral gas solidarity agreements have been signed between EU countries so far according to the Commission. Bilateral agreements serve to supply the legally protected customers of neighbouring countries with gas in the event of a crisis. All Member States can contribute to saving and storage and should show willingness to share gas with other neighbours if energy solidarity is required. Only together can we make it through this crisis.
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