EU risks prolonging dependence on fossil gas rather than decisively moving towards alternatives

A new report by the Heinrich-Böll-Stiftung European Union and Environmental Action Germany (DUH) finds that current EU energy supply policies run the risk of prolonging dependence on fossil gas rather than decisively moving towards alternatives, particularly in the heating sector.

The EU’s dependency on Russian energy imports has granted Putin’s regime tremendous power to blackmail and destabilise Europe and continues to finance Russia’s war machine against Ukraine. Europe needs to double down on its fossil gas phase out to stop this dependency and to transition towards a climate-neutral future. As climate security and energy security have become two sides of the same coin, renewables, energy efficiency, green hydrogen, heat pumps and other non-fossil options must fuel the EU’s future. However, also as a response to Russia’s war of aggression against Ukraine, the EU is pushing for a wave of new fossil gas import projects, many of which will likely be unnecessary given declining EU gas demand.

Decision-makers should thus take a much more active approach to phasing down fossil gas use as soon as feasible while building up a sustainable, carbon-free energy system.

The report recommends:

• On phasing out Russian gas supply: Accelerating the energy transition is the best way to reduce dependence on Russian fossil gas imports. EU Member States should practice solidarity in distributing limited fossil gas supplies if bottlenecks cause shortages in countries that are particularly dependent on Russian gas.
• On investments: The upcoming investment cycle should be used very carefully to avoid perpetuating future gas consumption and carbon lock-in. All new EU-funded infrastructure projects, and in particular PCI projects, should respect the Do No Significant Harm criteria as defined in the Taxonomy Regulation and be subject to a sustainability assessment.
• On hydrogen: Green hydrogen will be a scarce commodity and should be limited to applications where no viable decarbonisation alternatives exist. This includes high-temperature industrial processes, shipping, aviation, and the substitution of fossil-based chemicals. The EU should pursue a variety of hydrogen production avenues in parallel to avoid relying too strongly on any one exporter or drawing massive amounts of hydrogen and renewable power that might hamper the local energy transition in partner countries. Public support should only be available to green hydrogen projects. Support schemes for electrolysers should aim at incentivising hydrogen production at times of high renewable energy generation. Robust criteria for renewable hydrogen should be established at the EU level to ensure that hydrogen electrolysis does not hamper the energy transition.
• On renovation and heating: A full coal-to-gas switch must be prevented in as many district heating systems as possible. Deep energy renovations of European buildings must be massively scaled up in order to reduce the energy and gas demand of the EU’s old and inefficient building stock. The deployment of renewable energy production and heat storage must be accelerated to enable the electrification of the heating sector
• On methane emissions: In the medium term, the environmental costs of methane emissions should be fully included in the price of all gases used as energy sources via a methane charge. The methane emissions of imported gases should be priced at the EU border, applying the same methane price as for EU-produced gases to ensure compatibility with WTO rules. Policies with an impact on energy prices, such as carbon and methane pricing or infrastructure development financed via grid charges, should be accompanied by social policies compensating energy-poor households and keeping energy affordable.

Eva van de Rakt, Director of the Heinrich-Böll-Stiftung European Union office in Brussels, said: “The findings of our report support a clear way forward: We have to radically phase-out Russian gas imports in the short term to end the dependence on Putin's autocratic regime and to stop financing Russia’s war of aggression against Ukraine. European energy and climate security must go hand in hand and cannot rely on fossil gas any longer. In this week’s vote, the two European Parliament Committees in charge of the EU Taxonomy rejected the outlook of an EU sustainable finance standard that includes fossil gas and nuclear energy. The signal is unambiguous: the EU must avoid further infrastructure lock-in with investments in fossil and nuclear energy assets. Greenwashing transparency labels instead of using the next investment cycle wisely is dangerously undermining Europe’s energy transition. The EU institutions need to craft a decarbonisation agenda for gas end-use sectors which addresses both, an ambitious reduction of greenhouse gas emissions, as well as a socially just and fair transition taking the different realities of all EU Members States into consideration. Furthermore, it is the EU’s responsibility to strengthen its partnerships and energy cooperation in the European neighbourhood, especially with regard to Ukraine’s recovery.”

Sascha Müller-Kraenner, CEO of Environmental Action Germany (DUH), said: "Our report shows that we simply cannot manage the energy transition without having an honest debate about the future role of fossil gas in our energy system. Fossil gas is neither clean, nor a transition fuel. It is a necessary evil that we need to phase out as soon as we can without endangering security of supply. Putin's invasion of Ukraine does not change this basic reality. The only way to become independent from Russian gas supplies without sacrificing the climate is to massively speed up the energy transition. The EU institutions are currently working on a raft of measures, including some welcome changes like higher climate targets, as well as the accelerated deployment of renewables and energy efficiency. However, the Expert Group has also identified the serious risk that a massive build-up of new gas infrastructure along with gas-friendly regulation will lock the EU into using more fossil gas, and for longer, than we can afford. We call on European decision-makers not to fall into this trap and to fundamentally revise the current approach to regulating gas markets and managing the energy transition."

ENDS

The final report is available here.

To attend the report launch event on Thursday, 16 June at 9:00-11:00 CEST at the Press Club Brussels Europe (Rue Froissart 95), please register here.

For media requests, please contact:

• Joan Lanfranco (he/him), Head of Communications and Outreach, Heinrich-Böll-Stiftung European Union, Joan.Lanfranco@eu.boell.org, +32475741682
• Thomas Grafe, Press and Communications Officer, Environmental Action Germany (DUH), grafe@duh.de, +49 30 2400867 20

Note: This report is based on the discussions of the Expert Group on the Future Role of Gas in Europe convened by the Heinrich-Böll-Stiftung European Union and Environmental Action Germany (DUH) from 2020 until 2022.