Russia has turned off Nord Stream 1. Here’s what it means for the EU.

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First, Nord Stream 1 was shut down for maintenance. Now Russia says it’s being halted due to Western sanctions.

For EU officials, Russia stopping its key gas pipeline to Europe is proof the Kremlin is weaponising energy supplies.

It also means the next several winters are likely to be difficult for governments to manage and for vulnerable households to financially survive.

“In my view, this crisis will probably last three to four years, even if the war (in Ukraine) ends very soon, and hopefully it will,” Paul Deane, a research fellow at University College Cork, told Euronews.

Russia supplied 45% of the EU’s total gas imports last year, amounting to about 155 billion cubic metres (bcm). More than a third of that — 59.2 bcm — transited through Nord Stream 1.

Moscow started reducing supplies to the EU in August 2021, which many across Europe said was an attempt by Russia to drive up the price and boost its case for the opening of Nord Stream 2. 

After Russia launched its war in Ukraine, supplies to the EU were further reduced with Vladimir Putin demanding that European companies pay in roubles. Deliveries to 12 member states were either partially or completely stopped in what has been viewed as retaliation for sanctions.

Brussels swiftly announced a series of measures to mitigate the shortfall, ranging from new contracts with alternative suppliers to gas storage requirements for member states and gas-use reduction plans. 

US and Norway ramp up deliveries

But given the scale of the bloc’s dependency on Russian gas, the total Nord Stream cutoff now means that “Europe is entering a high-level gas insecurity,” Irina Kustova, a research fellow at the Centre for European Policy Studies (CEPS), told Euronews.

Russia is still delivering through other, smaller pipelines, but at reduced capacity, and “considering the current situation, an almost full interruption of supplies might be expected throughout the upcoming months,” she added.

This means, that “further production curtailments may be expected” which should affect energy-intensive industries most. 

Commission chief Ursula von der Leyen announced on Wednesday that Russia’s share of gas imports to the EU has now fallen to just 9%. 

Other countries have stepped in to deliver gas to Europe. This includes the US, Norway, Algeria, and Azerbaijan. 

In fact, the US has so far delivered more than 40 bcm of Liquified Natural Gas (LNG), up from the 22 bcm it supplied to the EU last year and Norway is now delivering more gas than Russia. 

This is good news, of course, but it comes at a price. 

“So far, commercial actors continued to source LNG, also offering a premium to the Asian market in the first half of 2022,” Kustova highlighted. “Again, the question is not so much about a possibility to source gas but at what price, which remains elevated as there is tight global supply.”

Weather uncertainty

Member states have meanwhile been ordered to fill their gas storage facilities to at least 80% capacity by the start of November to give them the best chance to ride out the winter months.

As of Wednesday, common storage was filled at 82% capacity, von der Leyen said. Ten of the 18 member states that have gas storage capacity have reached the target already.

Yet despite the new supply contracts and storage, the EU is not out of the woods for this winter. 

“Storage is important, but it’s not a game changer, it’s not a get-out-of-jail card. It is helpful, but it doesn’t help us solve the crisis,” Deane said. 

The problem is that if the EU comes out of winter with depleted storage, it will be on the back foot for the next heating season and the bloc will be once more scrambling to fill in storage before winter 2023 — from potentially much lower levels — and be in exactly the same situation.

Currently, Deane continued, “if we look at the numbers and do even just quite simple back-of-the-envelope calculations, we can’t get through the winter.”

And that’s without even taking into account two very unpredictable factors: war and weather, he added.

A mild winter could give the EU some breathing room energy-wise but a cold one would wreak havoc on households’ finances and companies’ ability to produce.

Then, of course, supplies from alternative suppliers need to remain reliable throughout the cold season.

The final prong of the EU strategy is an energy-saving plan. The Commission has called on member states to voluntarily reduce their gas use by 15% over the coming months with everyone, from citizens to businesses, urged to think about their own consumption and ways to slash it. 

This, Deane said, could really be a big help and would “be really crucial to get us beyond” the next three or four months — but there is a big caveat. 

Healthy storage, reliable LNG supplies and energy consumption reductions need to work together “to get us safely through the winter” but it would only take “one or two things to go wrong to amplify and to magnify the crisis,” he warned.

Nuclear and coal

For Europe to get out of this energy crisis, it needs to diversify not only suppliers but energy sources. The first one, as the Commission showed, can be done fairly quickly — albeit not necessarily cheaply — but the second one is not always as simple as flipping a switch. 

Some member states have, for instance, announced they will extend reliance on coal-powered plants or nuclear reactors to get through the coming months.

Yet, “the share of gas in power generation continued to rise” over the past few months, Kustova said, “as a lot of pressure came from a low hydro output and lower wind generation throughout the summer, as well as nuclear reactors’ maintenance (for instance) in France.”

A severe drought, believed to be the worst Europe has experienced in 500 years, led to a drop in hydropower generation while repeated intense heatwaves forced the closure of nuclear reactors over environmental concerns.

Relying on coal is also not a long-term plan as the bloc aims to completely phase it out to reach its goal of carbon neutrality by 2050. 

Focus on renewables

Renewables are now being touted not only as a means to become carbon neutral but also energy independent and von der Leyen said on Wednesday that the bloc will “deploy renewables this year that are equivalent to roundabout 8 bcm.”

But fully replacing gas with renewables will take more than a few months.

“A lot of the conversations we hear at the moment are about renewables and about hydrogen and energy efficiency and air source heat pumps but that’s the future. The problem isn’t the future, the problem is the present,” Deane said. 

He estimated that “realistically speaking, it’s going to take 5 to 10 years” to ramp up renewables and hydrogen to a high enough level that it would make a significant dent in the continent’s gas consumption and that “it will probably take a decade to two to fully move away from natural gas and fossil fuels in Europe.”

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