Countries in Europe are going to have to cut back on their consumption of natural gas, just like they will with a wide range of products that they import from Russia.
The executive arm of the European Union will be proposing a plan on how countries can prepare for winter when their energy needs are much higher.
As the result of Russia’s invasion of Ukraine, the energy giant Gazprom claims it cannot honor its gas contracts with the bloc — a big headache for European nations given their heavy reliance on Russian energy up until now.
According to CNBC Monday, a senior EU official, who declined to be named as the proposal is still being finalized, one of the “most controversial” items is the gas reduction targets.
With details from the Financial Times seen draft document, the official notes that this idea will be controversial because each European Union member has different energy needs. So, for example, it is harder for Germany, a huge importer of Russian energy, to cut gas usage by 5% when the comparison is to Spain.
The European Commission declined to comment on the plan before its publication.
A report in Monday’s Financial Times indicated that Brussels plans to tell EU countries to cut all gas consumption “immediately” and that mandatory reduction targets will be implemented in the event of severe disruptions in the gas supply.
Following Moscow’s offensive in Ukraine, the European Union has been preparing for the possibility of a total shutdown of gas supplies from Russia. Meanwhile, the level of preparedness seems to be increasing as concerns grow that Russia will in fact drastically cut its flows to Europe, or even end them altogether.
The Nord Stream 1 pipeline – a key transit point of Russian gas to Europe – is closed until July 21 for maintenance. European officials, on the other hand, are skeptical that flows will resume at full capacity.
The Russian energy giant Gazprom says it cannot carry out gas contracts with Europe due to unforeseeable circumstances; Germany’s Uniper rejects Gazprom’s claim.
As concerns grow that Russia may cease all gas deliveries to Europe in the near future, this latest development from that region only added to what has already been a frustrating trend over the past few months.
“Russia is intensifying its commodity war against Europe by freezing gas supplies through Nord Stream 1,” Velina Tchakarova, director at Austria-based think tank AIES, told CNBC.
She also told me that these latest developments may mean that Russia will stop sending gas to Europe because they aren’t completely filled with supplies and Russia’s exports to Europe may hurt Europe economically.
With prices of inflation at all-time highs and forecasts for economic growth in the past few years continuously lowering, the European economy is in an economic downturn. It is a fact that much of this economic reality is caused by the energy crisis, which has been exacerbated by the war in Ukraine.
While preparations are being made for the upcoming winter, the Commission is also busy buying more oil from foreign parts of the world. The company previously signed deals with the U.S. and Azerbaijan and announced a new agreement on Monday.
Europe’s Energy Commissioner Kadri Simson says that European capacity is currently over 56%, but some countries have to improve their levels in the coming weeks. Three months ago, the commissioner had asked for a target of storing 80% of emissions at Nov. 1.