Three questions for the EU about gas rationing

European leaders announced this week that sanctions on Russia will extend until January 2023 over its incursion into Ukraine. Russia announced further cuts to its gas flows to Europe, particularly through the Nord Stream 1 pipeline, connected to Germany.

In order to protect the bloc against shortages, European Union governments have committed to rationing natural gas this winter. Energy ministers on Tuesday agreed to set a voluntary target for EU countries to cut down gas consumption by 15 percent by next March - compared with the average use for the last five years. 

EU Commission President Ursula von der Leyen called it a “decisive step” against further disruption to gas supply, which European countries claim is blackmail from the Kremlin.

The proposal for coordinated rationing, put forward by the European Commission last Wednesday, was quickly approved as the EU attempts to show a unified response. But a provision that would have given the Commission the power to impose mandatory targets if individual countries failed to achieve their own end of the bargain was scrapped. 

The decision on any mandatory action will be in the hands of member states as it will be down to the European Council – which includes the heads of state of the EU 27– to approve any proposal.

The plan was approved by all countries with the exception of Hungary.

Why would countries lectured about ‘frugality’ during the debt crisis now step in?

Germany, which is heavily reliant on Russian gas through the Nord Stream 1 pipeline, is set to face shortages this winter, alongside some countries in Eastern Europe.

But critics are already pointing out that during the 2010-12 sovereign debt crisis, southern European countries received no sympathy from Germany and other northern neighbours, forcing governments to implement austerity measures and cuts to public spending with huge consequences for society and the economy. 

Germany, on the other hand, made a political decision to rely on a cheap and steady supply of Russian gas. Before the war in Ukraine began, it has been building another pipeline, the Nord Stream 2, connecting it directly to Russia without cutting through Ukraine territory. Permissions to operate the pipeline were halted in February.

Teresa Ribera Rodriguez, Spain’s minister for the ecological transition, voiced her opposition to the rationing plan in an open letter to the European Commission last week.
“We share the final goal of the commission’s proposals: solidarity must be at the core of the EU response in order to ensure security of supply. However, the response cannot rely on imposing unfair sacrifices,” she wrote. 

“Unlike other countries, we Spaniards have not lived beyond our means from an energy perspective,” she said in a not-so-veiled scold, referring to northern countries’ attitude towards their southern neighbours during the debt crisis. Other southern European countries and the island nations also voiced their opposition.

Can the plan work without making it mandatory and with all the exceptions that exist?

Due to this opposition, the deal fell short of making the 15 percent cuts mandatory in case of an emergency, as originally proposed last week.

While the move has been broadly welcomed as a positive step, analysts have pointed out that the many exceptions contained in the deal make it unlikely to succeed. 

Countries exempt from it include the island states - Ireland, Greek Cypriot Adminstration and Malta - not connected to the EU’s pipelines and therefore unable to seek alternative supplies. The Baltic nations, not hooked to the EU’s electricity system and heavily reliant on gas for electricity, are also exempt from the target. Countries that exceed gas storage filling targets will also be among the exemptions.

Can the EU win the gas war with Russia? 

The agreement to ration supplies is an attempt to show the Europeans’ resolve to act in unison. However, critics say, it does not show real unity, and this is likely to be exploited by Russia.

Russia has denied attempting to exert pressure on the EU by using gas as leverage over its sanctions on Ukraine. However, the European Energy Agency (EEA) reports that due to the increase in gas prices, Russia’s revenue from European gas alone has increased by two times the average over the past several years, reaching $95 billion. The additional revenue could make it easier for Russia to shut the supply entirely – or severely limit it - to put pressure on the bloc.

Current gas storage levels across the bloc stand at 67 percent, with only three countries – Poland, Denmark and Sweden – above the 80 percent target.

As part of its sanctions package against Russia, the EU has agreed to embargo Russia’s oil and coal starting later this year. It has also set targets to wean itself off Russia’s natural gas, while refraining from cutting gas imports on which some member states are heavily reliant. 

But the last package of sanctions against Russia, approved last week, saw the removal of a ban on transactions between Russian state-owned and European companies, particularly insurance companies needed by Russia to sell its oil to third countries.

In addition, Canada decided last week to return a turbine belonging to the Nord Stream 1 pipeline it had received for maintenance from Gazprom – despite a ban on providing technical equipment to Russia.

Meanwhile, the cost of gas continues to skyrocket, compounding galloping inflation and a cost- of-living crisis across the continent and beyond.