EU clinches deal on 15% cut in gas consumption from next month

EU clinches deal on 15% cut in gas consumption from next month
Increasingly concerned about being cut off from Russian gas, the EU launched a voluntary scheme to reduce gas consumption by 15% to save gas before the winter. / wiki
By bne IntelliNews July 26, 2022

EU member states have agreed to back the European Commission’s proposal to implement a 15% cut in gas consumption starting next month, but the agreement includes some concessions to those countries that had voiced opposition to the measure.

The deal was hashed out following a meeting of EU energy ministers in Brussels on July 26, and is aimed at ensuring that the bloc has enough gas to last through the winter in the event that Russia cuts off supply completely. A day earlier Gazprom announced it would be making a further reduction in gas deliveries via the Nord Stream 1 pipeline to just 20% of its capacity, ostensibly because of the need to shut down a Siemens turbine because of its technical conditions. But European leaders have dismissed the move as politically motivated, as Gazprom could, if it wanted to, divert volumes to other transport routes such as Ukraine.

The European Council, comprising the leaders of all member states, the council’s president and the president of the European Commission, announced on July 26 that a political agreement had been reached to implement the voluntary reduction in gas use. This reduction will become mandatory in the event that a state of emergency, referred to as a “Union alert”, is triggered if the risk of gas shortages becomes acute. 

Under the deal, member states will implement the cut between August 1, 2022 and March 31, 2023, using average consumption over the last five years as a baseline. They will be able to use measures of their choice, and while EU countries have committed to do their best to meet the target, the agreement also covers certain exemptions. 

Notably, those member states that have no or only limited interconnection with others’ gas grids can be exempt from any mandatory cuts. This is a response to criticism from Cyprus, an island with no gas link to the mainland, and Spain and Portugal, which have argued that they are essentially an “energy island” because of their limited capacity to send gas to France and onwards.

What is more, member states can also secure a waiver from mandatory action if they have overshot their gas storage targets. Poland, for example, has filled its storage facilities to close to 99% of capacity – far above the EU average of 66.7% – and has expressed reluctance to share these reserves with other member states less prepared for winter. Member states can also avoid mandatory cuts if they are heavily dependent on gas as a feedstock for critical industries, or if their gas consumption has risen by at least 8% in the past year versus the average for the past five years.

“Today’s decision has clearly shown the member states will stand tall against any Russian attempt to divide the EU by using energy supplies as a weapon,” Czech Industry Minister Jozef Sikela commented in a statement. “Adopting the gas reduction proposal in record time has undoubtedly strengthened our common energy security. Saving gas now will improve preparedness. The winter will be much cheaper and easier for the EU’s citizens and industry.”

German Economy Minister Robert Habeck likewise said the agreement would show Russian President Vladimir Putin that Europe remained united, despite recent curtailments in gas supply. “You will not split us,” he said.

According to Reuters, the only country to oppose the deal was Hungary, which declared its own state of energy emergency last week, introducing the rationing of power and gas supplies, including to households.