Europe’s addiction to Russia’s gas: Why and how the EU must use this moment to invest in renewable energy

, by Kelly Schwarz

Europe's addiction to Russia's gas: Why and how the EU must use this moment to invest in renewable energy
Credits: Pexels Industrial machine during golden hour

Natural gas accounts for about 25%, and oil and petroleum account for about 32% of the EU’s energy consumption, with renewable energy and biofuels making up 18% and solid fossil fuels accounting for 11%. The EU is now the world’s biggest importer of natural gas. Russia is the largest contributor of natural gas with 41%, Norway with 24% and Algeria with 11% contribution towards the EU’s energy consumption basket. Russia also provides 25% of Europe’s crude oil imports. Therefore, the EU’s reliance on natural gas also entails a reliance on Russia.

It is surprising to note that European countries such as North Macedonia, Bosnia Herzegovina and Moldova are totally dependent on Russia’s gas and EU countries such as Finland and Latvia (with between 90 and 100% share of gas supply coming from Russia). Bulgaria is reliant on Russian gas to the extent of 77%, Germany at 49%, and Italy at 46%.

Why has Russia became so significant to the EU’s gas supply?

Firstly, Russia has the world’s largest natural gas reserves. It had already started exporting gas to Poland in the 1940s. In the 1960s, it built pipelines to transport fuel to and between former Soviet Union satellite states. Why did Europe become so dependent on Russia’s gas? Europe supplied nearly the same quantity of natural gas as it consumed in the 1960s and 1970s. Depletion of important natural gas field sources in the North Sea from the UK and The Netherlands led to a decline in Europe’s own production of natural gas.

Secondly, Russian gas sources are the cheapest. Instead of finding a diverse range of natural gas suppliers, the EU focused on finding or building more routes to import Russian gas: for instance, with Nord Stream 1 and 2 in Germany. Aside from Russia’s gas being the cheapest, its gas reserves were also larger than any other gas sources that are close to the EU.

In addition, alternative supplies are insufficient to close the growing import gap. Imports grew since 2016 due to a reduction in gas production in Europe. Even though Europe has effectively expanded its Liquefied Natural Gas (LNG) regasification [1] capacity, the increased LNG imports were not successful in meeting the increasing import demands. Another problem is Europe’s competition with Asia in purchasing LNG and Europe’s decreased gas import from Algeria and Libya and Azerbaijan’s import remaining modest.

What role does Ukraine play?

Ukraine is the transit country for almost a third of the Russian gas that flows to Europe. Ukraine used to be the most important transit point but new constructed pipelines in other countries reduced its importance. Until now, the war in Ukraine has not affected the EU’s gas supplies from Russia. According to gas importers such as Uniper and RWE in Germany, as well as dealers in the Baltics, Russia continues to provide gas to Europe. While Ukraine has restricted some cross-border gas transactions, it has stated that it will not stifle Russian gas exports to Europe. Within Ukraine, however, some pipelines received damage from airstrikes and bombardments, according to Ukraine’s gas pipeline contractor Gas TSO. It stated that it had to cut off supplies to various regions, leaving hundreds of thousands of people without gas. Thus, the invasion made EU’s dependency on Russia’s gas very clear.

How can the EU reduce its gas dependency?

The International Energy Agency (IEA) released a ten-point plan that outlines measures for reducing the EU’s reliance on Russia’s gas by more than a third while also improving the expansion of renewable energy to support the European Green Deal of greenhouse gas emissions reduction of 55% by 2030 and climate neutrality in Europe by 2050.

The first measure is to not sign new gas supply contracts with Russia. This would diversify gas supply to focus on importing gas from other countries. Given the fact that contracts with Gazprom (a major Russian gas and oil company) are ending by the end of 2022, not extending contracts is good timing.

A second measure is to use gas sources from other countries to replace Russian gas such as from Norway and Azerbaijan which would help to expand the supply of non-Russian gas.

A third action is to make companies obliged to have minimum gas storages which would improve market resilience. Gas storage is critical for handling seasonal demand fluctuations and providing protection against unforeseen catastrophes. This is especially important when unexpected events occur, such as the Ukrainian invasion of Russia, which produces price surges.

A fourth measure is to invest in new wind and solar energy projects.

A fifth action is to delay the closure of nuclear reactors and expand bioenergy. A temporary supply from nuclear reactors, as a low-emission source, would help to reduce gas reliance. Regarding the safety threat of a nuclear catastrophe, it should only be a temporary solution until renewable sources are expanded. In 2021, the EU’s huge fleet of bioenergy power plants was operating at around half of its overall capacity. If proper incentives and sustainable bioenergy supplies are set up, these plants can generate additional electricity in 2022.

A sixth measure is to protect consumers from high energy bills. High gas prices in the EU can lead to companies making windfall profits (a sudden or unexpected high income) which has detrimental effects on vulnerable consumers. To lower these windfall profits, temporary tax measures for electricity companies can be implemented. These tax revenues should be allocated to electricity users to help offset the cost of increasing energy bills.

A seventh action is to replace gas boilers with heat pumps. Heat pumps, which can replace boilers that use gas or other fossil fuels, are a very efficient and cost-effective way to heat homes. Heat pumps use electricity that can be retrieved from renewable sources and are hence, fossil fuel-free.

An eighth way is to invest in energy efficiency measures for buildings, household, businesses and industries to lower gas demand. Examples of such measures are annual maintenance checks of gas boilers, helping small businesses to improve energy efficiency, incentivising households to invest in smart heating controls and investing in the insulation of public buildings.

A ninth measure is encouraging consumers to reduce their thermostat by 1 Degree Celsius.

The last measure is to step up efforts to diversify and decarbonise the flexibility of the power supply system, which is the ability of a power system to adjust to changes in demand and supply. It allows for electricity security in Europe. At the moment, gas is the main source for this flexibility and is expected to deepen in the coming years. To manage the fluctuation of needs of energy consumers, the EU needs to develop more sustainable and cost-effective ways such as improved grids and more energy efficient measures.

Why does the EU need to use this moment to invest in renewable energy?

The future of Europe’s gas supply from Russia is jeopardised and uncertain. This is owing to, inter alia, the unpredictability of energy payments because of EU sanctions against Russia, uncertainty due to a politically motivated halt of delivery, and damage to Ukraine pipelines because of fighting.

Reducing the EU’s reliance on Russian gas will not be easy. A move away from it is projected to result in higher gas prices in the EU. However, the EU needs to use this moment to invest in renewable energy to disable energy shortages in the next winters and to accelerate the integration of renewable energy in Europe’s energy basket. This would also contribute to achieving the ambitious European Green Deal and send a signal that invading other countries is not acceptable in Europe.


[1Regasification is the process when the liquid state of the gas is converted back into its gaseous state by heating it up.

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