Two weeks after the outbreak of hostilities in Ukraine, the EU is already a long way beyond the first step required of anyone trying to break a dependency - recognition of the problem. In the first days of the fighting, EU leaders and the heads of EU countries realized that Europe had changed, and that it had to reduce its dependence on Russian energy supplies immediately. Now, in record time for the EU, it has also produced an ambitious plan for doing that within the year.
A comprehensive plan presented in Brussels yesterday is in practice perhaps a more dramatic step as far as the Russian economy is concerned than US President Joe Biden's declaration of an embargo on Russian oil and coal. In fact, in the past two weeks, imports of Russian oil by the US and the UK have been frozen, whether because of businesses' fear of a public backlash, or out of a genuine desire to boycott a country that attacks another country without cause. The European move, on the other hand, is liable to cut billions of euros from the Russian economy and to turn billions worth of infrastructure into empty steel tubes.
So how does the EU plan to do it? The initial stage is to reduce imports of Russian gas by two-thirds before the end of the year. One third is to be made up for by deliveries of liquefied natural gas (LNG) from Qatar, Egypt, and the US to existing terminals in EU countries, to be then distributed throughout the block. Since Egypt imports gas from Israeli reservoirs and produces LNG from it, Israel could shortly find itself supplying Europe. Last year, Egypt exported a record quantity of LNG, about a third of it (two million metric tonnes) to Europe, ten times the quantity in the previous year, according to Egyptian data.
The question whether the countries mentioned can supply the quantities required is critical, and still open. There are no signed agreements yet. The EU will also ask Asian countries that are the main customers for LNG to send it surplus supplies. The price will undoubtedly be astronomical. The EU will also be replacing one dependence with another, and even increasing it.
The other third is supposed to come from a series of immediate steps: doubling the production of gas from biomass; reducing demand by lowering heating levels in the public sector and calling on the public to the same in their homes; improving home insulation; increased electricity production from renewable energy sources; and so on. The EU plans to use the coming spring and summer to fill storage tanks in advance of next winter with gas from Norway and LNG, and Azerbaijan could also send gas to the EU via existing pipelines.
As for the long term, the European Commission (the executive branch of the EU) says that the plan is to become weaned off Russian gas "well before 2030". That will mean increasing imports from other countries, and also huge investment in renewable energy and in electrifying industry, heating of buildings, and transport. Frans Timmermans, vice president of the European Commission, said in an interview that it would be possible to operate coal-fueled power plants for a longer time, instead of switching them to gas, "at the same time as boosting investment in renewable energy." The EU is not expected to change its carbon emissions targets. At present, Russia is the source of 40% of the gas imported by the EU (Germany and Italy are the most dependent countries) and of 25% of the EU's oil imports.
Published by Globes, Israel business news - en.globes.co.il - on March 9, 2022.
© Copyright of Globes Publisher Itonut (1983) Ltd., 2022.