For decades now, crises have driven European integration and cooperation on various fronts. As the COVID-19 crisis has sparked tense debates and brought about new initiatives on finance and health, we must now do the same and face our deep dependency on imported, and most importantly Russian, fossil fuels. In the midst of a cruel war and an unfolding climate crisis, Europe has to answer a crucial question: how do we cut our energy ties with Russia, while at the same time accelerating our transition towards energy efficiency and a renewable energy system? Commentary by Green MEP Bas Eickhout.
As the atrocities in Ukraine continue, we cannot linger. We have called on both the European and Dutch parliaments for a complete ban on energy imports from Russia. We know that this will be painful and requires perseverance, solidarity and a total overhaul of our energy system, but we think Europe is able to face this challenge head on. As has been the case with the COVID-19 crisis, we have to break through legislative and financial taboos. The coming months will be key for developing the European Commission’s REPowerEU plan. Here, I outline some initial ideas.
Looking back, this is not the first time we have tried to cut our energy demand and diversify supply. The generation of my parents still remembers the speech of Dutch Prime Minister Joop den Uyl regarding the 1970s oil crisis. On national television, he stated that ‘the world before the oil crisis will not return’. Den Uyl and the Club of Rome, which had just published its milestone report Limits to Growth, were, however, not able to avert the climate catastrophe. This moment of thrift, including car-free Sundays and lower speed limits, was short-lived. Since then, Dutch oil and gas demand has risen and with it, the associated imports. We cannot afford to do the same now.
Firstly, let’s talk numbers. Europe imports 40% of its gas from Russia, or about 155 billion cubic meters (bmc). Russia also accounts for 27% of oil imports and 46% of coal imports. While this may sound like coal is the biggest challenge, it is not. Coal imports are “only” worth four billion euros a year, while at current prices, the EU is buying oil and gas for hundreds of billions a year; and as a consequence, funding Putin’s war. The European Commission has already proposed a ban on Russian coal, as it is relatively easy to replace. This leaves oil and gas to discuss.
Over 70% of Russia’s oil product exports, its real cash cow, go to the European and US markets and are therefore vulnerable to sanctions. The fact that a large share of Europe’s crude oil imports arrive by ship rather than pipeline means that replacing Russian oil will be easier than replacing Russian gas. Joining the US, UK and Canada in their oil sanctions must therefore be part of the next package of sanctions. An analysis by Bruegel concludes that Europe can manage this, but it will require significant coordination, and logistical problems such as east-west infrastructure will have to be addressed.
Since it will be difficult for Europe to instantly replace Russian oil, we should work on rapid demand reduction, both in the short- and medium- to long-term. The International Energy Agency (IEA) has already published a 10-point plan to cut oil use, partly in line with the 1970s, including short-term measures like speed reductions, car-free Sundays and cheap public transport. While even in a country like Germany there is support to take action, for instance by reducing speed limits on highways, no government has yet presented a coordinated attempt to cut back demand for Russian oil. And while Den Uyl did not manage to reduce oil demand in the medium- to long-term, we now have the tools to do so. We need to up our ambition on the EU’s Fit for 55 climate package, for example by phasing out new cars with an internal combustion engine by 2030, instead of 2035.
Sanctioning Russian oil may be costly, but it is feasible. The tougher challenge when cutting Russian energy supplies is gas. The European Commission has already put forward plans to slash dependency on Russian gas imports by two-thirds before the end of the year and to fully decouple from Russian imports by 2030 at the latest, relying heavily on new liquefied natural gas (LNG) imports. This has created political momentum for the expansion of gas import capacity in Europe, with 15 additional gas import and transmission projects having been proposed since the beginning of the war.
This is not the way to go. These initiatives create a gas lock-in with new LNG dependencies for at least a decade, while it is clear that new fossil fuel investments are, according to UN Secretary-General António Guterres, ‘economic madness’, not only would there be a big risk of stranded assets, but also because we do not need them. Several think tanks calculate that the EU can stop Russian gas imports by 2025 with energy efficiency and clean energy solutions, without new gas import infrastructure. Bruegel shows that it should even be possible to already replace Russian gas by next winter. Next to record renewable deployment and demand reduction, we do need LNG as a very expensive, and unfortunately polluting, temporary solution for the shortest possible time.
All of this would come with negative trade-offs. One challenge is to get LNG to Europe without overpaying for it and distribute the costs fairly over EU countries. This would also spark the debate on increasing production of the major Dutch Groningen gas field, which is a very last resort that we do not want to be forced to turn to. At the same time, EU Member States need to massively increase their renewable deployment and energy savings programmes. This will require better coordination and upfront investments, but will save hundreds of billions of euros on energy costs in the longer term.
Next to increased ambition in the EU’s Fit for 55 package, we will need to have a fundamental discussion on our energy governance and financial legislation. We therefore need to think about new European rules on financing green investments and fiscal space for this in the EU Stability and Growth Pact, as well as in additional European funds. With these investments, we will have to build a truly European energy grid powered by renewables. The concept of a European Energy Union should be back on the table, and the lead in coordination and planning of the necessary infrastructure should be taken by the European Commission to make this Union a reality.
In the short-term, it may not be possible to remove all the hard infrastructure barriers and energy supply bottlenecks. We probably need exceptional measures to reduce demand. This will have an impact on citizens and our economy, but if we demonstrate solidarity within and between EU Member States, we will be able to shoulder this. If we want to respond credibly to Putin’s war, we have to wage a war on Russian energy, and act accordingly.