Gas Supply Situation In Europe Highlights The Importance Of Energy Diversification

The war in Ukraine has affected the flow of gas along the Nord Stream pipeline, and these effects are already reverberating across Europe. It has prompted countries such as Germany to call for less gas usage as it explores alternatives to Russian gas. As the cooler months approach, Europe continues to grapple with a potential energy crisis if a solution is not met, highlighting the importance of energy diversification initiatives and implementations.

Gazprom, the company running the pipeline, announced a supply reduction to “33 million cubic meters a day – half the amount it has been delivering since service resumed last week after 10 days of maintenance work,” Al Jazeera reports. Similarly, Italian energy major Eni said Gazprom had informed the group it would only deliver “approximately 27 million cubic meters” on Wednesday [in late July], down from around 34 million cubic meters in recent days. The pipeline accounts for about a third of Russian gas to Europe.

Several governments in Europe are accusing Moscow of using the gas supply as a war strategy tool. German government spokeswoman Christiane Hoffmann spoke of a “power play” by Moscow. However, Kremlin spokesman Dmitry Peskov blamed EU sanctions for the limited supply. 

Prior to the larger gas cuts, EU countries approved a weakened emergency plan to curb gas demand after striking compromise deals to limit cuts for some countries, hoping lower consumption will ease the impact in case Moscow stops supplies altogether.

The gas cuts come at a time of high inflation, an ongoing war in Ukraine, and concerns of an economic recession, which will particularly affect countries strongly reliant on Russian gas in the scenario gas flows stop. These events put more attention on the need for diverse energy sources, which is a critical component for energy security in Europe.

In an earlier report this year, the IEEFA (Institute for Energy Economics & Financial Analysis) found that “European policymakers have overemphasized building gas infrastructure instead of diversifying energy sources.” In the ongoing war, the EU has sought more gas flows from Azerbaijan to reduce reliance on Russian gas, which supports the IEEFA’s findings.

The findings not only emphasize the importance of energy diversification, but also point out the large extent to which Europe imports its gas. The report explains that “Imports accounted for more than 80% of the gas used by 27 European countries and the United Kingdom in 2020.” This is a significant quantity, which, in light of current geopolitical events, makes it much more important to begin a greater shift in energy diversification. Doing so “can lessen the risk of future energy crises,” and in this context, it can lessen already existing concerns about gas supply for the winter.

This is not a new problem. In 2006, Miloslav Ransdorf, then vice-chair of the Czech Parliament’s industry, research and energy committee, said that, “We need to invest in research to retain a diverse energy mix and reduce dependency on imports… We are facing the threat that our energy dependency in the EU will climb from today’s 55% to 70% in 2030.” In 2020, estimates highlighted by the IEEFA report support these comments.

Several countries have already called for lower gas usage. Klaus Mueller, head of Germany’s energy regulator, “praised consumers and industry for voluntarily reducing energy use, [going down] between 5 and 7 percent” from standard use. Germany is also exploring the use of existing liquefied natural gas for the upcoming winter, which would offset the use of Russian gas.

Reducing gas consumption alone can only go so far, which the EU has recognized. In response to current events, the European Commission announced the REPowerEU plan earlier this year. Its main objectives include ending Russian gas dependence, “energy savings, diversification of energy supplies, and accelerated roll-out of renewable energy to replace fossil fuels in homes, industry and power generation,” which include supporting vulnerable partners and strategic neighboring regions. It hopes to “strengthen economic growth, security, and climate action for Europe and our partners.” It is part of the broader European Green Deal strategy to become carbon neutral by 2050.

The urgency to diversify energy has been around for many years, though progress has been modest at best. The war in Ukraine is placing renewed urgency on the issue by highlighting the shortcomings of relying on imports. REPowerEU is a promising strategy on paper, meant to address current shortcomings and better prepare Europe for future scenarios related to energy security.

However, the bloc will also need to address potential obstacles along the way including consensus, agenda differences, the needs of neighbouring partners (i.e. aspiring EU candidates and non-EU members), resource allocation, and public opinion with these initiatives. If the EU and neighbouring partners are able to implement these initiatives and meaningfully collaborate, energy security becomes a greater possibility.