MILAN - The European Commission has worked out a plan to replace over 70 percent of Russian gas imports this year by ramping up liquefied natural gas purchases, green energy and gas storage, Reuters news agency reported Tuesday.
Russia's invasion of Ukraine has been a tragic wake-up call to Europe. The 27-nation bloc imported 155 billion cubic meters (bcm) of gas from Russia last year, including LNG. That’s equivalent to nearly 40 percent of its annual gas consumption.
Replacing most Russian gas by next winter will be complicated. The Commission wants to cut 112 bcm of it this year alone, a draft seen by Breakingviews shows. The biggest chunk of the so-called RepowerEU plan, 50 bcm, involves boosting LNG imports.
The EU has more than 200 bcm of capacity to turn LNG into usable gas per year, including UK terminals. Yet Spain and France are not well connected with the rest. And to ensure a European destination for LNG cargoes, which often ship to wherever prices are highest, consumers might have to pay in line with inflated gas prices that have already risen 10-fold in a year. A 20 bcm hike to LNG imports is more realistic, the International Energy Agency suggests.
Other measures are similarly eye-catching. The Commission assumes a 14 bcm saving of gas largely by EU citizens turning down their thermostats by 1 degree Celsius. And its aspiration to replace 20 bcm of gas with accelerated wind and solar projects is three times what the IEA pencils in.
Still, replacing 10 bcm of Russian pipeline gas by importing more fuel from places like Algeria looks doable. And a proposal to ensure that the EU fills up 90% of its gas storages before the winter is a legislative no-brainer. These facilities supply up to 30% of EU gas in winter, but some are controlled by Russian gas giant Gazprom .
RepowerEU will be a stretch, but nations could use state subsidies to limit the impact. Or they could tax windfall profits from energy companies, which the IEA says could raise 200 billion euros this year. But as with Covid-19, the shock will hit EU countries unevenly. The bloc showed unity in the pandemic by pooling resources to fund a 750 billion euro stimulus plan to help badly hit countries.