Brussels accelerates autonomy against Russian gas and supports regulating prices in the face of the Ukraine invasion crisis

The Russian invasion of Ukraine is exacerbating the energy crisis in Europe. And the European Commission is proposing to "dramatically speed up the clean energy transition and increase Europe's energy independence from unreliable suppliers and volatile fossil fuels."

Thus, according to data from the Community Executive, "the EU imports 90% of its gas consumption, and Russia provides around 45% of these imports, a percentage that varies between Member States. Russia also represents around 25% of the oil imports and 45% of coal imports".

"The approach can be extended to the gradual elimination of dependence on Russian oil and coal, for which the EU has a broader diversity of potential suppliers," says Brussels.

The debate, opened by countries such as Spain and France last autumn, on the functioning of a market that forms prices from the most expensive energy, in this case gas, seemed lost in what had to do with the reform of the market itself. On the other hand, the positions of Spain were being reflected in the consideration, by the Community Executive, of addressing joint purchases of gas and storage to prevent periods of shortage. But, for the moment, the idea of ​​decoupling the electricity bill from the price of gas does not work.

The most that Brussels says about this Tuesday is the following: "To deal with the current emergency, the European Commission will study all possible options for emergency measures to limit the contagion effect of gas prices on electricity prices. electricity, such as temporary price caps. It will urgently consult all stakeholders and propose options in the coming weeks."

Russia, for its part, is already threatening to cut off the gas tap, to shut off the supply that reaches Europe through the Nord Stream 1 gas pipeline. Russian Deputy Prime Minister Alexander Novak said on Tuesday: "For decades, Russia has been a reliable partner. Even now, Gazprom fulfills its obligations to deliver gas to Europe."

"At the same time, we understand that, with the baseless accusations against Russia regarding Europe's energy crisis and the ban on Nord Stream 2, we have every right to retaliate and impose an embargo on gas pumped through Nord Stream. 1, which today is one hundred percent full", he stressed.

The attack of the Russian president, Vladimir Putin, decreed on February 24 on Ukraine is changing everything. Among other things, because of the great European dependence on Russian gas and fuels. 40% of the gas consumed in the EU comes from Russia – neither Gazprom nor Sberbank nor Gazprombank are subject to sanctions at the moment – ​​and represents about 660 million euros per day for Moscow.

Thus, the European Commission is committed to make independent Europe from Russian fossil fuels well before 2030, starting with gas, following the Russian invasion of Ukraine. The Brussels plan attempts to tackle the rise in energy prices in Europe and stockpile gas reserves for next winter: "Diversify the gas supply, speed up the deployment of renewable gases and replace gas in heating and power generation. This can reduce demand for Russian gas in the EU by two-thirds before the end of the year."

Regulated prices

The European Commission states in its proposal that it will also "evaluate options to optimize the design of the electricity market to take advantage of the benefits of cheap energy".

Thus, Brussels says that "it will take into account the final report of the European Union Agency for the Cooperation of Energy Regulators (ACER) and other contributions on the operation of the electricity market in relation to the advantages and disadvantages of the mechanisms electricity pricing alternatives. Will follow up to keep electricity affordable without interrupting supply and further investment in the green transition."

The European Central Bank has recently calculated that the crisis in energy prices will reduce GDP growth by 0.5 percentage points in 2022. Brussels recognizes that "the invasion of Ukraine will aggravate the situation".

In addition, the European Commission "confirms that, in the current exceptional circumstances, Member States may establish regulated prices for vulnerable consumers, households and micro-enterprises in order to help protect consumers and the economy, and micro-enterprises and households for a limited period of time to facilitate the transition to effective competition between suppliers". The Commission "also confirms that Member States may consider temporary tax measures on windfall profits and, exceptionally, decide to capture a part of these profits to redistribute them to consumers."

That yes, the community Executive affirms that "such measures must meet certain criteria to guarantee that they are proportionate, limited in time and that they avoid undue distortions of the market" and recalls "the possibility of using the increase in income from the trading of CO2 emission to relieve pressure on households".

According to the International Energy Agency, these tax measures on profits fell from the sky could make available up to 200,000 million euros in 2022 to partially offset higher energy bills, recalls the European Commission: "Member States can also use income trading of emission rights higher than expected. From January 1, 2021 to February 28, 2022, the income generated by the auction of emission rights amounted to about 30,000 million".

Reservations at 90% with a view to winter

The European Commission highlights "the EU's resistance to large-scale blackouts and the fact that gas supplies are sufficient even in the event of a total supply disruption from Russia for this winter heating season." However, Brussels states that "it is crucial to ensure that storage is recharged before the next winter heating season."

Stored gas usually represents 25%-30% of the EU's gas consumed in winter, explains the Community Executive, which is committed to "achieving higher levels of gas storage to be well prepared for next winter". In April, the European Commission will present a legislative proposal on minimum gas storage, "setting a target of 90% filling by October 1 of each year, designating gas storage as critical infrastructure and addressing the risks of ownership of storage infrastructure.

As long as the legislation is not in force, the Commission urges Member States "to take measures to recharge storage before the next heating season. Taking into account that not all Member States have storage capacity available on their territory, the The Commission's proposal will establish a mechanism to ensure a fair allocation of security of supply costs. The Commission will also support coordinated gas refueling operations, for example through joint procurement, order picking and supply matching."

The Community Executive recalls that last December it presented legislative proposals "to strengthen the security of gas supply with specific measures to better coordinate storage and allow the joint acquisition of strategic stocks, as well as strengthen solidarity between Member States", and encourages "co-legislators to speed up agreement on these proposals."

The EU public aid rules "may also offer options to support companies affected by high energy prices in the short term and help reduce their exposure to energy price volatility in the medium and long term" says Brussels.

In this sense, "the Commission will also consult Member States on the needs and scope of a new state aid crisis temporary framework to grant aid to companies affected by the crisis, in particular those facing high energy costs" .

"Reenergize the EU"

The president of the European Commission, Ursula von der Leyen, has assured: "We have to get rid of dependence on Russian gas, oil and coal."

But how? The Commission proposes the "REPowerEU, a plan to increase the resilience of its energy system, diversify its gas supply sources through more liquefied gas and gas pipelines from non-Russian suppliers, and boost the use of biomethane and renewable hydrogen Already before the end of the year, RePowerEU could cause EU gas demand to decline by volumes equivalent to two-thirds of last year's Russian gas imports."

In recent months, the European Commission has reached agreements with "partners around the world to diversify the supply of gas through pipelines or liquefied gas [GNL]: The United States, Norway, Qatar, Azerbaijan, Algeria, Egypt, Korea, Japan, Nigeria, Turkey, and Israel are among those countries. This has resulted in record volumes of LNG imports in January and February."

"An energy system based largely on renewable energies and greater energy efficiency is the most cost-effective solution to reduce our dependence on fossil fuels in homes, buildings and industry", continues Brussels: "This is the second pillar of the Commission's REPowerEU plan The full implementation of the Fit for 55 Commission's proposals [plan verde europeo] would already reduce our gas consumption by 30%, equivalent to 100 bcm, by 2030. Reducing energy consumption in homes and businesses means not only reducing energy imports from Russia, but also reducing energy costs for EU citizens and businesses".

Brussels now wants an "accelerated deployment of heat pumps, wind and solar, which could bring significant energy savings and significantly reduce the use of fossil gas for energy and in buildings. As for solar energy, the Commission estimates that by accelerating By deploying rooftop solar PV systems at up to 15 TWh this year, the EU could save an additional 2.5 bcm of gas.

Brussels will present in June a communication dedicated to solar energy "to unlock its potential" and deploy 10 million heat pumps in the next five years "to help European families reduce their dependence on gas and their energy bills". And it will publish another recommendation in May to speed up authorizations "for renewable energy projects that address the main barriers."

During his visit to Spain on Saturday to meet with the Prime Minister, Pedro SánchezVon der Leyen recognized that "Spain is a pioneer" due to the "impressive share of renewable energies", while "in the national energy mix, renewable energies play an important role. With extensive LNG capacities. But also with considerable experience and industrial agents in the field of renewable energies".

"Therefore", said Von der Leyen, "Spain can and will play an important role in supplying Europe. To do this, we must work, in effect, on the interconnections between the Iberian Peninsula and the rest of the European Union. A second priority right now, of course, is the need to help consumers, households and businesses that are indeed struggling with high energy bills."

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