Brussels launches its plan to disconnect hydrocarbons from Russia

  • The European Commission estimates 210 billion the cost of investments to end dependence on Russian oil and gas

  • The roadmap includes accelerating the implementation of renewablefurther increase the energy efficiency and diversify the supply sources

Vladimir Putin’s war against Ukraine has revealed the high energy dependency and vulnerability of the European Union regarding the fossil fuels from Russiafrom which 40% of the gas you consume, 28% of the Petroleum and 46% of Coal. To speed up the reduction as much as possible and get rid of Russian hydrocarbons “as soon as possible”, the European Commission presented this Wednesday its new strategy, baptized with the name of RepowerEU, which will pivot on three axes: more renewable energies, more energy efficiency and diversification of gas imports. Making this plan a reality, according to Brussels estimates, will require 210,000 million euros in investments until 2027.

“Putin’s war is destabilizing the global energy market. It shows how dependent we are on imported fossil fuels. And how vulnerable we are by relying on Russia to import our fossil fuels. Now we must reduce our energy dependence on Russia as quickly as possible. Russia. We can do it,” said the President of the European Commission, Ursula von der Leyenafter the adoption of the new package of proposals with which to shift towards energy independence that, until a few months ago, nobody except Poland or the Baltic countries they posed.

Overnight, the “brutal” war against Ukraine has changed everything and has made disengagement extremely urgent because continuing to depend on and pay for Russian gas and oil – some 800 million euros a day – means, first of all, , continue to finance the Kremlin’s war machine. For now, the Twenty-seven have already decided to get rid of coal, subject to European sanctions, but they are still struggling to adopt an oil embargo although at the moment the gas is still not on the table.

Diversify supply

Following Moscow’s decision to cut supplies to Bulgaria and Poland, Brussels is aware that it may be a matter of time before the Vladimir Putin fully close the faucet. To anticipate such a situation, they plan to diversify the import of oil, gas and hydrogen, build new infrastructure and create a voluntary platform for the Joint purchase that improves the negotiation capacity of the Twenty-seven and allows them to obtain cheaper prices.

“In this way we will be able to ensure the energy imports we need without competition between our member states,” says Von der Leyen, whose Executive has been negotiating for months with countries like the United States, with whom it closed an agreement last March, Norway, Qatar or Egypt. This bet will, however, require multimillion-dollar investments and massive reforms that Brussels proposes to finance with unused loans from the program Next Generation EU for the most part, cohesion funds, agricultural aid and the European Investment Bank among others.

“We will mobilize close to 300,000 million euros. Approximately 72,000 million in grants and 225,000 million in loans”, has quantified the president of the Commission. This amount will include up to 10,000 million to fill the gaps in gas and liquefied natural gas until 2030. In addition, Brussels proposes to allocate another 2,000 million to finance oil infrastructures that help the countries most dependent on Russian oil to do without this supplier, such as in case of Hungary, which continues to block the embargo proposal of the sixth sanctions package. The remainder of the funding will go towards accelerating and scaling up the clean energy transition.

The new roadmap also underlines the importance of the trans-European energy network and the development of projects of common interest such as the interconnections in the Iberian Peninsula. “These projects must be accelerated”, indicates the communication that encourages the Spanish and French authorities speed up the implementation of the three existing projects of common interest. The plan also points out that improving storage capacity will be key to guaranteeing supply and highlights the role that the Iberian Peninsula and its six liquefied gas terminals can play in this. “Additional investments to connect LNG terminals on the Iberian Peninsula and the European grid through hydrogen-ready infrastructure can help diversify gas supply in the internal market and help realize the long-term potential of renewable hydrogen,”

More efficiency and renewable

The second major pillar of the plan to reduce dependency focuses on increasing energy savings much faster than initially planned in the plan Fit for 55 , which proposes achieving climate neutrality by 2050, because it is the fastest and cheapest way to deal with the energy crisis. To do this, the mandatory energy efficiency target for 2030 will not be 9% but 13%, while the renewable energy target will go from 40% to 45%. To achieve this, Brussels proposes to expand and accelerate the transition to clean energy through different actions with which it calculates it could achieve a 5% reduction in the demand for gas and oil.

For example, they propose reducing the long procedures for granting permits for renewable energy projects to periods of between 6 and 12 months, which usually, as the German has explained, require between 6 and 9 years in the case of wind projects. They also propose to establish the obligation to install solar energy on the roofs of commercial and public buildings by 2025 as well as in new residential buildings by 2029 through a solar strategy that allows doubling capacity by 2025 and installing 600 GW by 2030, accelerate the implementation of green hydrogen and facilitating the import of 10 million tons via the Mediterranean, a new biomethane plan as well as more LNG infrastructure. “It is ambitious but realistic,” said von der Leyen.

electricity market

The new energy package also includes the electricity market analysis requested by European leaders with short- and long-term measures to deal with soaring electricity prices. Once again, the European Commission turns a deaf ear to the request for Spain, France and Portugal of in-depth reform of the electricity market and the marginal price system that makes the price of gas, at record levels due to the impact of the war in Ukraine, determine the price of electricity, which prevents consumers from benefiting from lower prices. low renewables.

Brussels has not changed its position on the matter, although it admits that the situation is critical and that it is necessary to give a further twist. For the gas market, it suggests the possibility for Member States to temporarily extend the regulation of final consumer prices to a wide range of customers, including households and industry. It also proposes emergency liquidity measures to support the efficient functioning of commodity markets and to use the EU energy platform to aggregate gas demand, and ensure competitive prices through voluntary joint purchases.

Iberian exception

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As for the electricity market, he defends the use of the benefits “fallen from heaven & rdquor; of electricity companies to help consumers, proposes the temporary extension of regulated retail prices to cover small and medium-sized companies and for regions with limited interconnections, as is the case of the Iberian Peninsula, acknowledges the possibility of introducing subsidies to finance the costs of gas used in energy production, such as capping prices. An “Iberian exception & rdquor; which, according to sources from the Executive, could receive its final approval “very soon & rdquor ;.

As a novelty, however, and in the event of a total interruption of gas from Russia, Brussels admits that other “exceptional” measures may be necessary. And the first thing in a case like this would be for the Member States to update their contingency plans and adopt preventive measures of voluntary reduction, particularly the least affected, which could be accompanied by the setting of an “administrative cap & rdquor; in the price of gas at European level. “If introduced, this cap should be limited to the duration of the EU emergency and should not compromise the EU’s ability to attract alternative sources of gas supply by pipeline and LNG, and to reduce demand,” says the Commission. .

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