Yesterday, 20 July 2022, the Commission proposed ‘save gas for a safe winter’, a new plan to prepare Member States for further disruptions or gas cuts by Russia in the upcoming winter. The plan includes the proposal for a new Regulation on Coordinated Demand Reduction Measures for Gas and the European Gas Demand Reduction Plan, which contains guidelines for Member States to consider when planning reductions.
The measures aim to reduce European gas demand by 15% between 1 August 2022 and 31 March 2023 and add to the series of actions the EU had already taken in the energy sector. For quite some time now, Europe has been preparing to improve its gas storage capability and diversification of supply. However, the recent war in Ukraine has made the need for these measures more urgent. Additionally, actions such as Russia’s latest decision to further reduce supplies to Italy, suggest a deterioration in gas supplies is likely to increase in the coming months. Member States have therefore been urged to increase coordination and solidarity in view of what could be a difficult winter. Only their coordinated actions could allow for cost-effective and less damaging consequences for civil society and the economy.
Specifically, the new regulation requires Member States to adopt national preventive action plans and emergency plans to be updated by the end of September to show how they intend to achieve the reduction target. Progress would have to be reported to the Commission every two months. The legislative proposal would also create a new solidarity mechanism, the ‘Union alert’, that would be triggered once a risk of a serious gas shortage is detected or following a too high gas demand. The mechanism would allow Member States to request solidarity gas supplies from other European countries in case of difficulties after demonstrating that they have taken all possible measures to reduce domestic demand.
Moreover, the European gas demand reduction plan aims at achieving the envisaged gas demand reduction of 15% by:
- Examining all possibilities for fuel substitution, non-mandatory savings programmes and alternative energy sources by prioritising, if possible, the transition to renewable energies. As a purely temporary tool, the European executive would allow switching to coal, oil or nuclear;
- Evaluating market-based measures such as launching auction or tender systems to reduce possible impacts on society and the economy;
- Launching awareness campaigns to promote the reduction of heating and cooling;
- Providing a set of criteria to help Member States identify and prioritise which of their stakeholders (customers and installations) would be most impacted by gas-related shocks. The following criteria are to be considered: societal criticality, cross-border supply chains, damage to installations, gas reduction possibilities and product/component substitution.
Both the regulation and the plan respond to the concerns that affect the whole of Europe nowadays. In its conclusions of 30-31 May and 23-24 June, the European Council had already underlined the urgency of reducing Europe’s dependence on Russian fossil fuels and making Europe more resilient, by inviting the Commission to examine, together with Europe’s international partners, the solutions to contain the increase in energy prices and the gas supply crisis.
Indeed, concerns grew after the temporary shutdown last 11 July of both lines of the Nord Stream 1 pipeline system for routine maintenance work, including testing of mechanical elements and automation systems to ensure reliable, safe and efficient pipeline operations. Gas supply is expected to resume on 21 July. However, Europe fears Russia may soon curb gas supply using the excuse of maintenance work on Nord Stream. This is especially so after Gazprom, the Kremlin-controlled energy giant, reduced gas exports to 40% of capacity in June, blaming delays in the return of a turbine that Siemens Energy was repairing in Canada and which had been implicated in the sanctions.
The initiatives presented, by answering the urgent call for action, outline the actions to be taken to ensure that Europe is fit for possible gas supply crises and the other tools Europe already has at its disposal for coordinated demand reduction. The goal is to protect households, jobs and the European economy as a whole, especially after recovering from the effects of Covid-19.