Natural gas pipeline model, EU and Russian flags, July 18, 2022. REUTERS/Dado Ruvic/Illustration
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- EU ministers agree to emergency cuts in gas consumption
- Voluntary cuts would become binding in the event of a supply emergency
- The final agreement exempts numerous countries and industries
- EU struggles to save gas as Russia cuts supply
BRUSSELS, July 26 (Reuters) – European Union countries on Tuesday approved a weakened emergency plan to curb their gas demand, after making compromise deals to limit cuts in some countries as they prepare for further reductions in supply to Russia.
Europe faces increased gas pressure from Wednesday, when Russia’s Gazprom ( GAZP.MM ) said it would cut flows through the Nord Stream 1 pipeline to Germany to a fifth of its capacity Read more
With a dozen EU countries already facing cutbacks in Russian supplies, Brussels is urging member states to save gas and store it for the winter amid fears Russia could cut off flows entirely in retaliation because of Western sanctions for its war with Ukraine.
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Energy ministers approved a proposal for all EU countries to voluntarily reduce gas consumption by 15% from August to March.
The cuts could be made binding in the event of a supply emergency, but countries agreed to exempt numerous countries and industries, after some governments resisted the EU’s original proposal to impose a binding 15% cut in all countries. Read more
German Economy Minister Robert Habeck said the deal would show Russian President Vladimir Putin that Europe is standing together in the face of Moscow’s latest gas cuts.
“You will not divide us,” Habeck said.
Hungary was the only country to oppose the deal, two EU officials said.
Russia’s Gazprom has blamed its latest reduction on the need to stop operating a turbine, a reason dismissed by EU energy chief Kadri Simson, who called the move “politically motivated”.
Russia, which supplied 40% of the EU’s gas before invading Ukraine, has said it is a reliable energy supplier.
It also says the invasion, which began on February 24, is a “special military operation”.
BINDING VS EXEMPTIONS
The EU agreement would exempt from the mandatory gas cut of 15% countries such as Ireland and Malta that are not connected to the gas networks of other EU countries.
News of the latest cut in Russian supply has pushed up gas prices, raising the cost of filling storage while creating incentives to use less.
Early on Tuesday, the benchmark Dutch first-month contract rose nearly 10% and is up more than 450% from a year ago, though below record highs hit shortly after Russia began its invasion of Ukraine
Countries that meet an EU target to fill gas storage by August could face weaker targets: softening cuts by about a dozen states, including Germany and Italy, depending on levels of current storage.
They can also exempt gas they use in critical industries, such as energy-intensive steelmaking, from the target.
In addition, those with limited capacity to export gas to other EU countries can apply for a lower target, as long as they export what they can. That could include Spain, which does not depend on Russian gas and has said that reducing its own demand would not help other countries as it lacks the infrastructure capacity to share spare fuel.
“Everyone understands that when someone asks for help, they have to help. The help can be in different ways, but I think the spirit of collaboration will prevail,” said the Spanish Minister of Energy, Teresa Ribera, this Tuesday.
The EU plan has tested the solidarity of countries, with Greece and Poland among the countries opposed to mandatory gas cuts. Read more
Polish Climate Minister Anna Moskwa said the deal would not impose any restrictions on Poland’s gas use and objected to the idea that a country would have to curb its use of industrial gas to help other states with scarcity
Some EU diplomats expressed concern that the number of opt-outs in the final regulation may mean it does not guarantee countries save enough gas for the winter.
Although governments, including Germany, Europe’s biggest gas user, have stepped up their energy-saving measures, EU countries have only reduced their combined gas use by 5%, despite months of ‘rising prices and declining Russian supply.
“Fifteen percent probably won’t be enough given what the Russians have just announced,” said Irish Environment Minister Eamon Ryan.
The deal requires the support of a majority of countries to trigger binding gas cuts, after many opposed the Commission’s original proposal to have the final say.
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Reporting by Kate Abnett, Philip Blenkinsop, Robin Emmott, Marine Strauss, Gabriela Baczynska; Edited by Philip Blenkinsop, Matthew Lewis and Barbara Lewis
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