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New report finds EU can end Russian gas imports
Report finds EU can phase out Russian gas imports by 2025, by speeding up the transition to clean energy, and without building new fossil fuel infrastructure or expanding use of polluting fuels.
A new report published by Bellona, Ember, RAP, and E3G, finds the European Union can end the import of Russian gas by 2025. The report finds that:
Renewables can replace 2/3 of EU imports of Russian gas by 2025;
New gas import infrastructure is not required;
Coal power does not need to be extended.
The report notes EU gas consumption was about 400 billion cubic meters (bcm) in 2020, with 38% being imports from Russia. The EU ‘Fit for 55’ policy package is projected to reduce net imports by 32 bcm by 2025. This new analysis finds clean energy and efficiency can reduce imports by an additional 69 bcm by 2025.
The authors note significant potential on the demand side for reduction in reliance on Russian fossil gas, writing:
“Energy efficiency measures can deliver an additional 13 bcm by 2025 – with each unit of gas avoided directly translating into cost savings for consumers. Heat pumps in buildings can reduce gas demand by an additional 19 bcm. Ramping up the electrification of space heating and low- to medium- temperature heat processes can deliver an additional reduction of 6.5 bcm by 2025. It is clear that these potentials are underleveraged in the REPowerEU plan and need more concrete measures to bring forward savings, alongside more ambition under ‘Fit for 55’.”
The authors also find decisions to lock in high gas prices beyond 2025 are based in flawed logic:
“Between the ‘Fit for 55’ package, expected to deliver 100 bcm in gas savings by 2030, and our analysis demonstrating that a 69 bcm reduction can already be achieved by 2025, the ‘substitution effect’ away from Russian gas to other imports sources will likely evaporate fast after 2025. This means there is no justification for the EU to lock in high price fossil gas contracts beyond this time horizon and new infrastructure would be unlikely to come online before then. If fossil fuel commitments extend beyond this, they risk burdening consumers with high-cost imports and simply replacing one fossil fuel dependency with another.“
The findings are significant for several reasons:
The EU can move up its timeline for phase-out of Russian energy imports;
There is evidence the most effective way to reduce geopolitical risk from fossil fuel imports is to accelerate the transition to clean energy;
Speeding the energy transition also means reducing the risk of energy price shocks and energy-shock inflation, creating conditions for more stable future economic development and shared prosperity;
This means the EU and other markets can aggressively shrink the overall demand for Russian exports that fund Putin’s regime;
Careful coordination with other major markets (China and India, for instance) could put Russia’s regime in a situation where it will have to negotiate not for Putin’s future, but for any future prospect of Russia being a major supplier of energy or exports;
Similar accelerated timelines should be considered for other commodities.
Incentivize the fastest possible economy-wide transition away from polluting practices
The Putin regime’s abuse of global energy markets and its repeated extortionate treatment of trading partners send a clear signal: resilience measures need to be developed and deployed universally to ensure this kind of situation is unlikely to arise again, with any rogue regime.
Food systems transformation can play a similar role to energy transition, localizing and diversifying traded commodities, supporting sustainable and inclusive development across all 17 Global Goals, and reducing risk of price shocks driven by lawless aggression or extortionate abuse of markets.
Among the resilience measures that can be applied, to remove the incentive for rogue regimes to abuse trade arrangements:
Rapid, pro-active realignment of agricultural subsidies;
Targeted debt relief to support expanded and diversified sustainable production from other sources;
Alignment of special drawing rights with long-term inclusive sustainable and climate-resilient development—to create a global market incentive to move away from pricing driven by suppliers’ ulterior aims;
Specialized development finance arrangements to reduce the scarcity incentive for key exporting nations—prioritizing both affordability and quality (for human health and environmental sustainability) of production;
Special holding accounts for agricultural exports, which would allow direct conditional payment of producers, without allowing regimes to access to food-related export payments.
These special holding accounts could support rural economic development, while separating a regime’s whims from the wellbeing and economic interest of key regions. Sanctions could still be applied to these accounts where appropriate, but such measures could foster global food system resilience and reduce the power of rogue states to interfere with food supplies.
The shift to clean, renewable power production as mainstream standard will also reduce the risk of price shocks in food systems. Regenerative food production is also a way to reduce the world’s reliance on other Russian exports that go into fertilizers and food production.
The new report finds specific measures should be taken to allow this accelerated EU phase-out of Russian fossil gas:
Invest in accelerated deployment of clean energy systems;
Leverage energy efficiency and circular economy processes to reduce waste, maximize efficiency, and realign market incentives;
Prioritize alternative fuels, including clean hydrogen, and relevant infrastructure and investment;
Target hydrogen to sectors with no other easy decarbonization options;
Restructure trade relationships to reduce vulnerability and expand energy sovereignty, while reinforcing global supply chains.
Vladimir Putin himself may not be willing to stop his campaign of war crimes, but other people influential in Russian business, government, and security circles, may prefer to see Russia as part of a functioning geopolitical and trade order, rather than being reduced and excluded for generations.
The findings also suggest the brighter future for import markets around the world is a future with less fossil fuel dependency, even before considering climate impacts, vulnerability, and related proliferating risks. Russia itself will have to take stock of this situation and diversify its post-Putin economy, to be relevant to a world that decisively shifts away from its combustible fuel business model.
Energy: Go green at wartime speed
UPDATE, March 25, 2022
Germany announces plans to end dependence on Russian gas by 2024
While US President Joe Biden meets with NATO, the European Council and allies, in Europe, Germany’s government has announced new plans to accelerate its phase out of Russian gas. The Financial Times reports:
Germany unveiled targets to rapidly cut dependence on Russian energy and the US set out plans to redirect gas to Europe as western allies stepped up efforts to reshape global energy markets and punish Moscow for the Ukraine war.
Berlin vowed to all but wean itself off Russian gas by mid-2024 and said it aimed to become “virtually independent” of Russian oil by the end of this year.
As Europe hunts for alternative suppliers, the US said it would aim to deliver at least 15bn cubic metres of additional liquefied natural gas to the EU this year along with other producers, an announcement that came on the second full day of US president Joe Biden’s trip to Europe.