A 10-Point Plan to Reduce the European Union’s Reliance on Russian Natural Gas

10-Point Plan to Reduce the European Union’s Reliance on Russian Natural Gas

Introduction

Russia's invasion of Ukraine has highlighted the European Union's dependence on Russian natural gas. In 2021, the EU imported approximately 155 billion cubic meters (bcm) of natural gas from Russia, accounting for nearly 45% of its gas imports and 40% of its total gas consumption.

Key Data Points

• Current Russian Gas Imports: 155 bcm (around 45% of gas imports and 40% of total gas consumption).
• Potential Reductions:
  • First Scenario: Over 50 bcm reduction within one year (a decrease of over one-third).
  • Second Scenario: Over 80 bcm reduction within one year (well over half).

10-Point Plan

1. No New Contracts with Russia:

   • Contracts Expiring: Long-term contracts with Gazprom are set to expire by the end of 2022, covering around 12% of their gas supplies to the EU in 2021.
   • Impact: Reduces contractual minimum take-or-pay levels and diversifies supply.

2. Replace Russian Supplies with Alternative Sources:

   • EU Production and Non-Russian Pipeline Imports: Increase by up to 10 bcm from 2021.
   • LNG Imports: The EU could increase near-term LNG imports by 20 bcm, considering ample access to regasification capacity.
   • Impact: Around 30 bcm in additional gas supply from non-Russian sources.

3. Introduce Minimum Gas Storage Obligations:

   • Role of Storage: Gas storage helps meet seasonal demand swings and provides insurance against unexpected events.
   • Value: Greater importance during geopolitical tensions.
   • Impact: Enhances market resilience.

4. Accelerate Clean and Efficient Technologies:

   • Investment: Critical to reducing gas demand over time.
   • Timeframe: Rapid deployment will take time to make a significant impact.

5. Strengthen International Cooperation:

   • Alternative Pipelines and LNG Exporters: Collaboration with other major gas importers and consumers.
   • Communication: Clear dialogue between governments, industry, and consumers.

6. Enhance Dialogue with LNG Exporters:

   • Procurement: Facilitate timely procurement through enhanced dialogue and increased transparency.
   • Capacity Utilization: Efficient use of regasification terminal capacities.

7. Reduce Methane Leaks:

   • Europe and Non-European Suppliers: Target both European and non-European suppliers to reduce methane leaks.
   • Impact: Vital for meeting emissions reduction targets.

8. Scale Up Biogas and Biomethane Supply:

   • Short-Term Limitations: Limited potential due to lead times for new projects.
   • Medium-Term Upside: Promising sector for low-carbon gas production.

9. Production of Low-Carbon Hydrogen:

   • Electrolysis: Dependence on new electrolyser projects and low-carbon generation.
   • Impact: Crucial for meeting emissions reduction targets.

10. Address Geopolitical Tensions:

    • Market Balances: Consider multiple links between EU policy choices and global market balances.
    • International Dialogue: Strengthen international cooperation to address supply disruptions.

Conclusion

Reducing reliance on Russian natural gas requires a concerted and sustained policy effort across multiple sectors, alongside strong international dialogue. While immediate actions can significantly reduce imports, longer-term strategies focused on clean and efficient technologies are essential for achieving net-zero goals.