As the possibility of Russia’s complete cutoff grows, European Union countries have reached a political deal to reduce their gas consumption by 15% until next winter.
The Czech presidency of the EU posted on Twitter that energy ministers met in Brussels and gave their approval to a proposal to reduce their gas consumption over the next month. In an emergency situation, such as severe disruptions to Russian flows, the 15% target is made mandatory.
However, there are some exceptions for countries that are particularly vulnerable or integral to the network.
🔋 #TTE Energy | 🔴 Press conference with Minister @JozefSikela, Commissioner @KadriSimson and Minister @G_Galushchenko.
🔋 #TTE Energetika | 🔴 Tisková konference ministra @JozefSikela, komisařky @KadriSimson a ministra @G_Galushchenko. https://t.co/lGkhiRYTWK
— EU2022_CZ (@EU2022_CZ) July 26, 2022
The EU’s decision to reduce gas usage was opposed by Hungary, Foreign Minister Peter Szijjarto stated in a statement. Viktor Orban, Prime Minister, called the EU’s move “alarming” as well as “another step towards a war economy” via his Facebook page.
Kadri SIMSON, the energy commissioner, stated that the most important outcome was that we will save gas now. The impact on GDP will be much smaller if we save now, and not wait until Russia makes us do it.
Simson stated that work continues to investigate “different options for designing a gas price limit, in particular in case of market disruptions and rationing scarce quantities of gas.”
The rapid pace of the agreement is a result of Russia’s rapidly declining gas flows. The Nord Stream 1 pipeline supplies are expected to fall to 20% capacity by Wednesday. Gazprom PJSC stated that one turbine needs to be maintained and will be removed from service.
This has made it less likely that EU countries can meet their 80% gas storage target. It also raises the stakes for reducing gas demand. The rules will be incorporated into EU law within the next few days following the agreement.
Sven Giegold (deputy German economy minister) said that the new rules were “an unprecedented step forward in European solidarity.” “Member countries that don’t import Russian gas are supporting the new rules and have pledged to reduce their consumption. This is unprecedented.
Concerns about Cuts
A number of countries, including Spain, Hungary, Poland and Poland raised concerns about the meeting’s reduction goals in the lead-up. They cited demand cuts already made, lack of gas connections to other nations, and the fact energy decisions are often a national matter.
In an effort to get nations to join the EU, the Czech Republic, which is the rotating presidency of the EU, proposed several changes to the plan by the Commission last week.
Bloomberg saw a draft of the revisions, which included a provision that would make it mandatory for five countries to request that a 15% demand reduction target be made mandatory. If there is a high likelihood of shortage, the commission could propose an emergency measure. To take effect, both scenarios would require the support of the majority members.
Other changes included taking into consideration the country’s gas storage and allowing for the exclusion of certain key industries. Also, the rules would only be in place for one year rather than the two originally proposed. Based on interconnections with other countries, such as Ireland or island nations, member states could request a lower reduction in the mandatory reduction.
The EU’s gas supply to Russia could be halted if winter is severe and the region does not take necessary measures to conserve energy.
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