EU to call on member states to ‘immediately’ slash gas usage

Brussels is preparing to tell EU members to reduce “immediate” gas consumption, warning that without increased conservation, the continent risks a shortage of fuel this winter, as Russia restricts supplies.

The European Commission will provide members next week with voluntary gas reduction targets, according to a draft paper seen by the Financial Times, which warns that targets will be made mandatory in the event of a severe supply disruption.

“Joint action will now be less disruptive and costly, will facilitate solidarity and avoid the need for unplanned and uncoordinated actions later in a possible crisis situation when gas reserves run out,” the document said.

The move comes as the International Energy Agency has warned that efforts to stay away from Russian gas are no longer sufficient on their own and that Europe is facing energy rationing unless demand is limited to allow for the filling of storage facilities ahead of the winter.

Russia has in the past month reduced capacity in the main pipeline to Germany and the IEA fears that further cuts cannot be ruled out. Fatih Birol, IEA’s chief executive, said Europe was facing a “red alert” and that a “further significant reduction” was needed to “prepare Europe for the difficult winter ahead”.

Ursula von der Lane, President of the European Commission, on Monday signed a supply deal with Azerbaijan that will increase shipments to Europe by 48% this year and aim to double them by 2025, although Azerbaijan imports are only a small part of the EU total.

The central country in Asia is one of several countries, including Qatar, the United States, Israel and Nigeria, followed by the EU courting as it seeks alternatives to Russian supplies.

Italy is also on the verge of increasing supplies from Algeria, with Italian energy giant Eni and TotalEnergies and Occidental in France signing a deal with Sonatrach Algeria on Tuesday for a new $ 4 billion gas development project, which will eventually bring supplies new.

But the IEA, which serves as the West’s energy watchdog, said Monday that efforts to increase supplies are still falling and the EU needs stricter measures, including limiting demand for air conditioning and auctioning off gas supplies to industry.

The committee’s draft paper did not include exact data, but these are expected to be completed before the final publication of the proposal on Wednesday.

The latest documents are an update of Plan A leak last week recommends limiting central heating and cooling in buildings as well as exempting coal-fired power plants from emission reduction targets.

EU diplomats and officials closed in on talks on potential targets and how they will be implemented given the different energy mix of the various member states.

One EU official said there were ongoing negotiations over the penalties that could be enforced if the targets were made mandatory and not met.

Europe previously relied on Russia for about 40% of its gas, but since Russia’s invasion of Ukraine, this supply has increasingly become a weapon by Moscow in response to EU support for Kiev.

Russia has already shut off supplies to the Baltic states, Finland, Poland and Bulgaria and reduced cash flow to Germany and Italy.

In the draft plans, the committee noted that in June, gas flows from Russia to the EU fell by less than 30% from the average between 2016 and 2021. Europe imported a total of 155 billion cubic meters of gas from Russia in 2021 and consumes close to 400 bcm of gas in total in a normal year.

The leaked gas plan warned that further cuts in Russian gas supplies could lead to a drop in EU GDP by up to 1.5%, depending on the level of disruption. The European Commission declined to comment.

Von Der Lane said in a speech in Baku that the EU should “diversify away from Russia and turn to more reliable and credible suppliers” and described Azerbaijan as a “vital energy partner”.

The plan is that Azeri supplies will increase to 12 bcm this year, compared to 8.1 bcm in 2021, and will eventually reach “at least” 20 bcm by 2027, according to a memorandum. The fuel will reach the EU through the Southern Gas Corridor pipeline, a joint project between Brussels and Baku that opened in 2018 and is supplied mainly by gas fields in the Caspian Sea.

But despite EU efforts to set up a joint effort to purchase gas similar to the coordinated purchase of Cubid vaccines, officials have admitted it is competing in a tight market where countries already have long-term contracts.

Another report by Peggy Hollinger in London and Amy Casmin in Rome

EU to call on member states to ‘immediately’ slash gas usage Source link EU to call on member states to ‘immediately’ slash gas usage

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