MILAN, June 29 (Reuters Breakingviews) - The European Union’s gas headache hasn’t gone away. Despite strong progress in hiking liquefied natural gas (LNG) purchases, the bloc is some way off its self-imposed year-end target of cutting Russian gas imports by two-thirds, or about 100 billion cubic metres (bcm). That leaves key member states like Germany vulnerable to an economic shock should Russian President Vladimir Putin turn off the taps. They shouldn’t wait until the weather turns cold to implement robust energy-saving measures.
Brussels’ “REPowerEU” plan requires 50 bcm of additional LNG imports this year. During the first five months of 2022, the 27-nation bloc imported 54 bcm of LNG, Rystad Energy reckons. That’s up 18 bcm, or 50%, from the same period last year. The EU, which can import up to around 13 bcm of LNG per month, could in theory add another 20 bcm between now and the end of September, and hit its overall goal by year-end.
That looks like a stretch. Spain imports lots of LNG, but pipeline bottlenecks complicate getting it to EU neighbours. Meanwhile, about 11 bcm of EU imports this year are Russian LNG, making the true replacement target even bigger. Germany and Italy, the EU’s biggest Russian gas consumers, have filled storage facilities to 60% of capacity but may struggle to hit a critical EU goal of 90% by October.
That leaves the bloc at the mercy of brutal, Putin-prompted gas outages this winter. Hence the need to enforce energy-saving measures now to reduce demand and cool down fossil fuel prices. Relying on information campaigns to use less energy, as the EU has done so far, is unlikely to work. Rebates on petrol or cuts to energy bills avoid social unrest, but don’t encourage savings.
A better approach has been set by Italy, which mandated in May a reduction of air conditioning usage in public buildings. This alone should save Rome 4 bcm or 13% of its annual Russian gas imports. Milder Germany, where 50% of office buildings have nonetheless installed air conditioning, needs to follow the example.
REPowerEU already calls for households to turn down their thermostats by 1 degree Celsius, saving 10 bcm a year, and European politicians may prefer to wait for colder weather before pressing these sorts of intrusive measures. But tensions with Russia aren’t going away, and prices this winter could soar higher. The time to act is now.
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(The author is a Reuters Breakingviews columnist. The opinions expressed are her own.)
The European Union imported 54 billion cubic metres (bcm) of liquefied natural gas (LNG) between January and the end of May, up 18 bcm or a 50% increase over the same period last year, according to data from Rystad Energy.
Under its REPowerEU plan, the European Commission has pledged to import 50 bcm of additional LNG this year to reduce its dependency on Russian gas.
The bloc has a maximum LNG import capacity of around 13 bcm per month.
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