The Green Brief: Europe’s great gas U-turn

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The last week has seen a previously unthinkable political U-turn by the European Union to end its reliance on all fossil fuels imported from Russia.

Faced with the Kremlin’s war on Ukraine, EU heads of states and government made a bold commitment: getting rid of Russian gas. Entirely. And as quickly as possible.

“We agreed to phase out our dependency on Russian gas, oil and coal imports as soon as possible,” EU leaders said in a statement adopted after a summit last Friday in Versailles, France.

To achieve this, EU heads of states invited the European Commission to draw up a “plan” and submit it to them “by the end of May”.

The EU executive has already outlined such a plan and presented it to EU leaders last week.

Dubbed REPowerEU, it suggests cutting the EU’s reliance on Russian gas by two-thirds before the end of 2022 and ditching it entirely “well before 2030”. According to the Commission, this can be achieved by a combination of gas supply diversification, faster roll-out of renewable gases and replacing gas in heating and power generation.

Make no mistake, this is a U-turn on previous EU policy.

Until now, the European Commission had positioned fossil gas as a “transition fuel”, with EU Green Deal chief Frans Timmermans saying it was a “caveat” in the energy transition because it emits about half the climate-warming emissions of coal.

Just over a year ago, under pressure from gas-hungry Germany, Poland and other eastern EU countries, EU heads of states recognised gas as a “transitional technology” on the way towards a zero-emission economy. In December, the Commission even proposed including fossil gas under its green finance taxonomy and carved out special exceptions for gas in its usually strict state aid rules, allowing governments to funnel money into new installations replacing coal power plants.

All these moves were based on one fragile assumption though – that cheap Russian gas would keep flowing unhindered to European consumers. Now, with Russian gas considered politically dead, all these assumptions are thrown out of the window.

“Putin has broken the narrative of natural gas as a bridging technology, the bridge has collapsed,” said Patrick Graichen, state-secretary at the German ministry for economic affairs and climate action.

Much like with the COVID-19 crisis two years ago, the European Green Deal – once envisaged as a mid- to long-term objective – is now becoming an even more urgent imperative.

“Following the invasion of Ukraine by Russia, the case for a rapid clean energy transition has never been stronger and clearer,” the Commission wrote in the first sentence of its communication to EU leaders last week.

This includes an acceleration of the EU’s green objectives, “with higher or earlier targets for renewable energy and energy efficiency” for 2030, the EU executive said.

In the European Parliament, lawmakers are ready to push for more ambitious green targets.

Even the usually conservative centre-right EPP group is now backing a 45% share for renewable energies by 2030, a significant rise from the Commission’s 40% proposal tabled less than a year ago. At current rates, this means roughly doubling the share of renewables in less than eight years (the EU stands at around 22%, according to Eurostat).

The EU’s determination in those exceptional times must be applauded, of course. Tackling the EU’s gas dependency while speeding up the energy transition are all welcome moves.

But let’s not fool ourselves, getting out of Russian gas in such a short timeframe will be incredibly painful. And costly.

The EU relies on imports for 90% of its gas consumption, with Russia representing almost half (45%) of this. Russian gas is cheap and not all of it can be replaced by LNG imported from Qatar and the US, said Thierry Bros, an energy and climate expert who teaches at Sciences Po Paris university.

“This is going to hurt really bad,” Bros told EURACTIV.

Still, banning energy imports is the only way Europe can stop money flowing to Moscow and fuelling the Kremlin’s war, he added. “If gas volumes diminish while prices go up, nothing will change,” Bros warned, arguing in favour of a full EU ban on gas imports before year end.

It’s also difficult to shake off the impression that the EU’s response has been somewhat botched. For instance, last week’s plan by the Commission contained no indication about the cost of cutting the EU’s reliance on Russian gas, including the likely recessionary effects this will have on the European economy.

“We’re heading for a recession in the order of 10%, which will be worse than COVID. We should be open about this,” Bros said.

Yet, with Russia’s war in Ukraine, sacrifices that seemed unimaginable only three weeks ago have now become a political priority. And a price worth paying.

– Frédéric Simon


This week’s top stories

Other news:


News from the capitals

BERLIN. German households will go cold without Russian gas. Halting Russian energy imports to Germany would have major ramifications for household heat supply this winter, the country’s biggest energy company, RWE, warned on Tuesday during the presentation of its annual report. Read more.

MADRID. Sanchez to soon begin EU trip to build consensus on energy market reform. Prime Minister Pedro Sánchez will start a trip to eight EU countries on Wednesday in Bratislava to build a broad consensus on the need to reform energy markets and reduce Europe’s dependency on Russian gas. Read more.

LISBON. Seven Portuguese ceramics companies forced to close due to energy crisis. Seven ceramics companies have stopped work due to rising energy prices, affecting about 1,000 workers, the president of the association that represents them told EURACTIV’s partner Lusa on Tuesday. Read more.

SOFIA. Bulgaria unlikely to stop gas deliveries via Balkan Stream Pipeline. The chances of Bulgaria halting the delivery of natural gas through the Balkan Stream Pipeline are slim, the general manager of the state-owned natural gas provider Srbijaga, Dušan Bajatović, said on Tuesday. Read more.

TIRANA. Borrell complains about his electricity bill in Europe’s second-poorest country. Energy prices are increasing everywhere, said EU Chief Diplomat Josep Borrell during his visit to Europe’s second-poorest country Albania, adding that instead of paying €50 mWh for his electricity, he is now paying €500. Read more.

LONDON. Fracking off the agenda, confirms minister. The government appears to have ruled out shale gas exploration just days after hinting that it could be back on the agenda. Read more.

VIENNA. Austria pushing for suspension of EU minimum tax rates on oil. Austria is looking to reduce the burden caused by record-high energy prices by dropping taxes below the EU threshold after recently launching a €1.7 billion package to alleviate the strain on households and firms. Read more.

LISBON. IAEA director: Kyiv fears nuclear plant agreement ‘recognises Russian control’. Ukraine fears that the agreement on the safety of nuclear power plants it is negotiating with Russia will be used by Moscow as a future “tacit recognition” of its control of the facilities, according to the UN Agency for Atomic Energy. Read more.

Tension between Chernobyl plant managers and Russians, power problems. Ukraine’s Chernobyl nuclear power plant continues to have power supply problems that could affect the reactor cooling and “tension” between technicians and the occupying Russian military, the director of the UN Agency for Atomic Energy said on Monday. Read More.

WARSAW. Poland appeals for suspension of Russia from IAEA. Climate Minister Anna Moskwa appealed for the suspension of Russia as a member of the International Atomic Energy Agency (IAEA) amid the country’s military actions in Ukraine, especially at the occupied nuclear power plants in Chernobyl and Zaporijia reports Polish Press Agency (PAP). Read more.

LJUBLJANA. Slovenia reintroduces fuel price caps. The prices of the two main motor fuels, regular petrol and diesel, will be capped as of Tuesday, after prices reached all-time highs last week and were set to rise further this week without government action. Read more.

BUCHAREST. Romania to extend capping energy prices by one year, asks for EU support. Romania will ask for the reallocation of unused funds from previous EU-financed programmes to provide aid to Romanian enterprises, Prime Minister Nicolae Ciuca said Monday. Read more.

PARIS. French faced with soaring fuel prices to soon receive rebate. All French citizens who use petrol will be reimbursed 15 cents per litre as of 1 April, Prime Minister Jean Castex announced on Saturday to the newspaper Le Parisien in response to the surge in fuel prices exacerbated by the current war in Ukraine. Read more.

TIRANA. Albanian prime minister shames thousands protesting rising prices. Albanians should be ashamed as they are the only NATO member protesting the “consequences of war in Ukraine”, said Prime Minister Edi Rama as nationwide demonstrations continued for the fifth day. Read more.

VIENNA. Austrian industry warns Russian gas embargo would be ‘catastrophic’. Sanctions on Russian gas would have a devastating effect on the Austrian economy, said the country’s industry players who have so far backed the EU sanctions regime against Russia. Read more.

HELSINKI. Finland to power transport fuel from manure, other by-products. Finnish dairy producer Valio and energy company St1 are launching a biogas plant to produce renewable transport fuel in an effort to find new energy sources and improve the country’s self-sufficiency. Read more.

LISBON. Portuguese government approves reinforcement of subsidy for fuel purchases. The government approved on Thursday in a cabinet meeting the reinforcement of the financial subsidy for fuel purchases by citizens that in March is 40 cents per litre, up to a limit of 50 litres, a total of €20. Read more.

PRAGUE. Czechia pushes for “energy mix freedom” once again. Nuclear-forward Czech Republic has been pushing for EU countries to have “energy mix freedom” for many years, this time in the wording of the Versailles Declaration focused on decreasing energy dependency on Russia. Read more.

BRATISLAVA. Slovakia backs Russian energy import ban, despite dire consequences. Slovakia will support the ban of Russian energy commodities imports, Slovak Prime Minister Eduard Heger (OĽaNO) said in Versailles on Thursday. However, consequences will be dire, the country’s Economic Minister Richard Sulík (SaS) warned. Read more.

BUCHAREST. Petrol stations monitored after high price spree. Romanian authorities have launched extensive checks on fuel retailers, which they suspect have raised pump prices artificially. Read more.

LJUBLJANA. Momentum gathering in Slovenia for return of fuel price regulation. Momentum is gathering in Slovenia for a return of administered prices as the cost of petrol continues to soar, despite the country being late to fuel price liberalisation, taking until 2020 to remove price controls fully. Read more.

BERLIN. German business warns of recession over energy sanctions. With the German economy heavily dependent on Russian energy exports – especially gas, German businesses worry that Europe’s biggest economy could face a major recession. This comes as EU leaders on Thursday will discuss possible additional sanctions against Russia, with German Chancellor Olaf Scholz having rejected calls to ban Russian oil and gas, despite pressure from Washington and Kyiv. Read more.

THE HAGUE. Rutte calls on EU to steer away from Russian gas dependency. Advances in the EU’s green response need to be made to steer away from Russia’s control on gas, Dutch Prime Minister Mark Rutte told students at Science Po University before he met with French President Emmanuel Macron on Wednesday. Read more.

HELSINKI. Finland unkeen on EU joint bond sales idea to fund energy and defence. To free itself from Russian energy, boost the green transition and increase defence spending, the EU is rumoured to be planning a vast recovery package. The initial response from Finland is distinctly cool. Read more.

BUCHAREST. Romanians panic buy at petrol stations. Romanian drivers queued up at many petrol stations throughout the country following rumours that gasoline and diesel oil prices will skyrocket overnight. Read more.


News in brief

Lawmakers green light corporate sustainability reporting directive (CSRD). The Legal Affairs Committee in the European Parliament on Tuesday (15 March) adopted its position on the Corporate Sustainability Reporting Directive (CSRD) with 22 votes in favour and one against.

The text introduces more detailed reporting requirements for companies, ensuring businesses are more accountable for their impact on people and the planet. Disclosed information should be audited, more easily accessible, reliable and comparable, MEPs agreed.

The European Financial Reporting Advisory Group (EFRAG) will be tasked with developing mandatory EU sustainability-reporting standards, covering environmental matters, social affairs and governance.

French centrist MEP Pascal Durand, who steered the proposal through Parliament, said the text was “a further step in the evolution of our business model and investment practices.” Environment committee chair Pascal Canfin hailed the agreement, saying it “reinforces the Commission’s proposal by beefing up the transition plans” that companies will have to submit. “This is an important new step forward in the fight against greenwashing and to align business models and strategies with the Paris Agreement,” Canfin said.

Talks to finalise the law will begin with the EU Council of Ministers, representing the EU’s 27 member states, once Parliament votes its position in an upcoming plenary session. The Council agreed its general approach on 24 February 2022. Click here for more detail on the Parliament website. Reaction from NGO alliance here. (Frédéric Simon | EURACTIV.com)

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Lawmakers vote in favour of major gas projects. Last week, EU lawmakers voted to approve a list of priority cross-border energy projects (the 5th PCI list), including major gas projects. In the wake of Russia’s war invasion of Ukraine, there was a strong push from the French wing of Renew Europe to oppose the list, but it did not prove enough to stop it.

Once a cheap source of energy heralded by some as the key to the energy transition, gas has become expensive and unreliable. There are also concerns that buying Russian gas helps to indirectly fund the country’s war in Ukraine.

“The dark times we live in show clearer than ever that Europe’s fossil fuel dependence brings harm, energy poverty and insecurity,” said Frida Kieninger, director of EU affairs at the NGO Food and Water Action Europe.

“The answer to this must not be creating more fossil gas dependence through 30 massive fossil gas pipelines and LNG projects worth €13 billion. The answer must be putting all possible support behind 100% renewable energy and energy efficiency,” she added. (Kira Taylor | EURACTIV.com)

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Closer EU-US cooperation on batteries, raw materials. European Commission vice-president Maroš Šefčovič and US deputy secretary of energy David Turk on Monday (14 March) threw their weight behind a collaboration between the European Battery Alliance and the U.S. Li-Bridge alliance. The cooperation will seek to accelerate development of robust supply chains for lithium-ion and next generation batteries, including the critical raw materials segments. 

Areas of cooperation include: developing industry capacity to meet growing demand for batteries, research into next generation high-performance battery technologies, and ensuring ethical sourcing of critical raw materials, including recycling and recovery. Full statement here. (Frédéric Simon | EURACTIV.com)

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Barriers to renewable energy, identified. A report by independent energy consulting firm eclareon for the first time draws up a comprehensive overview of barriers to wind and solar power deployment across the EU’s 27 member countries and the UK. The research identified barriers to projects in all countries, with administrative processes like planning and permitting seen as the most common.

“The main barrier to new wind energy is not political will. Nor public acceptance, finance or technology. It’s administrative bottlenecks that make the permitting of new wind farms too slow and complex,” said Giles Dickson, CEO of WindEurope, a trade association. According to Giles, the report is “essential reading for European policymakers as they prepare their Guidance to Member States on how to simplify permitting rules and procedures”.

Walburga Hemetsberger, CEO of SolarPower Europe said: “Solar is the fastest deployed energy technology. If permitting is in place, a project can build 1 MW of solar in roughly one month. At a time when we need to accelerate the renewable transition faster than ever, it is crucial that we address the administrative barriers limiting the rapid roll-out of solar PV.”  The report can be downloaded here. (Frédéric Simon | EURACTIV.com)

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Nickel prices go through the roof. Eurofer, the European Steel Association, called on Wednesday (9 March) to suspend nickel trading at the London Metal Exchange (LME) until price stability can be guaranteed. 

The LME was forced to halt nickel trading and cancel trades on Tuesday (8 March) after prices soared to more than $100,000 per tonne in a surge that sources blamed on short covering by one of the world’s top producers.

The EU imports around 85% of its nickel from Russia, according to 2018 statistics from the World Bank and there are fears of supply disruptions due to sanctions imposed on Moscow in response to Russia’s invasion of Ukraine. 

About 70% of nickel is used as a key ingredient to make stainless steel. “We have seen an unprecedented surge in nickel prices that cannot be explained by supply and demand, nor by the sanctions recently imposed on Russia,” said Eurofer Director General Axel Eggert. Eurofer called for a probe into trading practices by some market players to determine whether they constitute market abuse or intentional market disruption. (Frédéric Simon | EURACTIV.com with Reuters)

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Sweden to cut fuel taxes. Sweden will temporarily cut fuel taxes, compensate car owners and extend a scheme to reduce electricity bills amid soaring energy prices as a result of Russia’s invasion of Ukraine.

The government said cutting taxes on fuels would cost around 3.7 billion crowns (€350 million) while compensation to car owners would add another 4 billion. Another 4 billion crowns would be put aside in the budget to incentivise consumers to switch to electric vehicles. (EURACTIV.com with Reuters)


Opinions


Upcoming events

16 MARCH. Efficient district heating systems: How to achieve cost-effective decarbonisation? Join this EURACTIV Virtual Conference to discuss the new definition of efficient district heating systems in the energy efficiency directive proposal, and how stakeholders can best cooperate to achieve cost-effective decarbonisation. Speakers include Claudia Canevari, head of unit for energy efficiency at the European Commission, Tsvetelina Penkova, who is shadow rapporteur for the “Energy performance of buildings” revision and

Eleonora Evi, rapporteur for the environment committee opinion the energy efficiency directive. Programme and registration here. (Supported by PGE)

28 MARCH. Media partnership: Energy transition – challenges and opportunities in Brazil. In this webinar, the focus will be on demonstrating how Brazil is dealing with the energy transition, and the strategy to use Brazilian wealth of natural resources to meet the purpose of a neutral economy. Speakers include Carlos Alexandre, director at the Department for Energy Development, Brazilian Ministry of Mines and Energy (MME) and Agnes da Costa, special advisor for regulatory issues, Brazilian Ministry of Mines and Energy (MME). Programme and registration here. (Organised by The Embassy of Brazil in Berlin and ApexBrasil)

30 MARCH. How to develop the heating sector to ensure better air quality? Join this EURACTIV Virtual Conference to discuss the link between pollution and district heating systems, and the impact that the proposal for the recast energy efficiency directive plays in this regard. Speakers include Piotr Sprzaczak, director of the District Heating Department at the Polish Ministry of Climate and Environment, Claudia Canevari, head of unit for energy efficiency at the European Commission and Ciarán Cuffe, rapporteur for the “Energy performance of buildings” revision in the European Parliament. Programme and registration here. (Supported by PKEE)

29 APRIL. Circularity of bottles: contributing to the Green Deal. Join this EURACTIV Virtual Conference to discuss what’s the best recipe for meeting circular economy and climate objectives and whether deposit return schemes are an efficient way to meet collection and recycling targets for EU natural mineral and spring water producers. Speakers include Martin Hojsík from the European Parliament’s environment committee and more. Programme and registration here. (Supported by Natural Mineral Waters Europe)


On our radar

17 MARCH. Environment Council.

23 MARCH. Nature protection package: Revision of rules around sustainable use of pesticides and nature restoration targets.

24-25 MARCH. European Council.

30 MARCH. Circular economy package 1:

  • Sustainable products policy initiative, including a revision of the Ecodesign Directive
  • Review of the Construction Product Regulation
  • Proposal for a Regulation on substantiating environmental claims using the Product/ Organisation Environmental Footprint methods (green claims)
  • Strategy on sustainable textiles
  • Empowering consumers for the green transition 

5 APRIL. Emissions and pollutants package:

  • Revision of the Industrial Emissions Directive and update of the European Pollutant Release and Transfer Register (E-PRTR)
  • Review of EU rules on fluorinated greenhouse gases
  • Regulation on substances that deplete the ozone layer
  • Development of post-Euro 6/VI emission standards for cars, vans, lorries and buses 

3 MAY. International partnerships and energy package:

  • New strategy on international energy engagement
  • Joint Communication on a partnership with the Gulf

25-27 MAY. G7 meeting of climate and energy ministers.

7 JUNE. Joint Communication on international ocean governance

27 JUNE. Energy Council.

28 JUNE. Environment Council.

5 JULY. New design requirements and consumer rights for electronics tbc

20 JULY. Circular Economy Package 2:

  • Policy framework for bio-based, biodegradable and compostable plastics
  • Review of the Packaging and packaging waste directive to reinforce the essential requirements for packaging and establish EU level packaging waste prevention measures and targets
  • Review of the Urban Wastewater Treatment directive

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