The EU has no choice but to save energy now
It is far from its goal to reduce Russian gas, and should not wait for winter to consume less in general
The gas headache in the European Union has not disappeared. Despite great progress in increasing purchases of liquefied natural gas (LNG), the bloc is far from its self-imposed year-end goal of cutting Russian gas imports by two-thirds, or about $100 billion. cubic meters (100 bcm). This leaves key member states such as Germany exposed to an economic shock if Russian President Vladimir Putin turns off the tap. They shouldn’t wait for the weather to cool down to implement forceful energy-saving measures.
Brussels’ REPowerEU plan calls for 50 bcm of additional LNG imports this year. During the first five months of 2022, the 27-country bloc imported 54 bcm of LNG, according to Rystad Energy. This represents an increase of 18 bcm, or 50%, compared to the same period last year.
The EU, which can import up to around 13 bcm of LNG a month, could in theory add another 20 bcm between now and the end of September, reaching its global target by the end of the year.
Looks a lot like. Spain imports a lot of LNG, but pipeline bottlenecks complicate shipping to its EU neighbors. Now some 11 bcm of EU imports this year are Russian LNG, making the actual substitution target even higher. Germany and Italy, the EU’s biggest consumers of Russian gas, have filled storage facilities to 60% capacity but may struggle to reach the EU’s critical target of 90% by October.
This leaves the bloc at the mercy of brutal gas cuts caused by Putin this winter. Hence the need to apply energy saving measures now to reduce demand and cool down the prices of fossil fuels. Relying on information campaigns to consume less energy, as the EU has done so far, is unlikely to work. Discounts on gasoline or cuts in the energy bill avoid social unrest, but they do not encourage savings.
A better approach has been Italy, which ordered in May to reduce the use of air conditioning in public buildings. With that alone, Rome should save 4 bcm, that is, 13% of its annual imports of Russian gas. The more temperate Germany, where 50% of office buildings nonetheless have air conditioning installed, should follow suit.
REPowerEU already calls for households to lower their thermostats by one degree Celsius, which would save 10 bcm per year, and European politicians may prefer to wait until it gets colder before applying such intrusive measures. But tensions with Russia are not going to go away, and prices this winter could soar. The time to act is now.
