EU ministers agree on gas savings plan – with many exceptions

Russian President Vladimir Putin is pushing ahead with the European Union and especially Germany. On Monday, the state-owned Russian gas company Gazprom announced that it would only send a fifth of the maximum possible amount through the Nord Stream 1 pipeline from Wednesday. The reason for this is allegedly again a problem with a turbine. Moscow had completely stopped gas supplies just a few days ago for annual maintenance. After that, natural gas flowed again, but less than agreed. And the Kremlin now wants to reduce this amount again.

Germany would be hardest hit by a delivery stop

This back and forth unsurprisingly alarmed the EU countries.

Because a delivery stop would probably have considerable economic consequences for the economies that have already been affected by high inflation. The International Monetary Fund has calculatedthat the gross domestic product of Central and Eastern European countries could decrease by up to 6 percent in extreme cases without Russian natural gas.

On Tuesday, shortly before the summer break, the energy ministers of the 27 countries gathered in Brussels to discuss the Commission’s emergency plan.

“Winter is coming,” said Jozef Sikela, the Czech Minister of Industry and Trade before the meeting. He chaired the extraordinary session as his country holds the presidency of the Council, which rotates every six months. “We don’t know how cold the winter will be,” Sikela said. “But what we do know for sure is that Putin will continue his dirty games in using gas supplies for extortion.”

An agreement was reached around noon. However, this was preceded by intensive discussions in the past week. Because many member states were not at all happy with the proposal from the Commission led by President Ursula von der Leyen. The compromise that has now been reached is full of exceptions and has been changed considerably.

In principle, the member states are willing to voluntarily reduce the consumption of natural gas by 15 percent between August and the end of March compared to the average of the last five years. In an emergency, this savings target can be made mandatory.

However, the EU states wanted nothing to do with the expansion of power that the Commission had been aiming for. The “EU alert level” in terms of natural gas, and with it the compulsion to save, is therefore now being decided by the Council of Member States and not by the Commission.

The numerous exceptions mean that the original goal of reducing natural gas consumption by 45 billion cubic meters is probably out of reach. True, Sikela said that the compromise prepared by Prague would allow comparable savings. But the German Minister for Economic Affairs, Robert Habeck, said that one had to do the math again.

Germany is at great risk if no more natural gas flows from Russia. In 2021, the largest economy in the EU took over around a third of the 155 billion cubic meters of natural gas that flowed from Russia to the EU.

The two largest consumers of this gas in Germany are industry and households.

Industry needs natural gas primarily to generate heat in the manufacturing processes. This is then used, for example, for melting, forging and drying.

Households, in turn, use gas for heating, for example. According to the German Federal Association of Energy and Water Management, every second apartment in Germany is heated with natural gas.

That’s not the case everywhere. Many EU countries have little or no dependence on Russian natural gas. Either because they have very little gas in their energy mix at all, or because they get it from another source.

Spain and Portugal, for example, import a lot of liquefied natural gas (LNG). However, the Iberian Peninsula has only limited connections to the rest of the European natural gas network. The few lines that exist to France only have a small capacity. That’s why it doesn’t make sense for Spain to save natural gas for the benefit of central Europe, said Teresa Ribera Rodríguez, Spain’s minister for the ecological transition. She argued that the infrastructure should be improved.

Spain, Portugal and Italy, among others, are now apparently receiving a savings target reduced from 15 percent to 7 percent as desired, as long as certain conditions such as sufficiently used transfer capacities for the rest of Europe are met. The islands of Malta, Cyprus and Ireland, which are not connected to the European pipeline system and therefore cannot supply gas to other EU countries via pipes, are completely exempt from the obligatory savings targets.

Further corrections are possible for countries that need a particularly large amount of natural gas for electricity production in order to protect them from blackouts. The transmission of gas is also taken into account and the natural gas required in the food industry is deducted.

In other words, the compromise has only come about in a weakened form, thanks to numerous exceptions.

In the run-up, there was a lot of talk that the savings would ultimately only benefit Germany. And it is actually the case that Germany would have to reduce its consumption of natural gas by well over 15 percent if Russia stopped supplying all of it. If the others save something, then more is left for German companies and households.

But in Brussels, even the Greek minister emphasized that it was a European problem and not just a German one. But Habeck admitted that his country had made a “strategic mistake”. “People have relied too blindly on the cheap, ever-flowing Russian gas for too long,” he said. However, the Economics Minister emphasized that he supplies countries such as the Czech Republic and Austria and that other countries in Eastern Europe are also in a difficult situation.

This includes Hungary. That may be one of the reasons why Budapest once again steps out of line. So the Hungarian Foreign Minister traveled to Moscow a few days ago, to secure more natural gas for his country – evil tongues would say: to beg.

Step towards «war economy»?

The EU has taken a decisive step to counter the risk of Putin shutting down gas supplies altogether, writes Ursula von der Leyen. On Tuesday, the President of the EU Commission was satisfied that the Council of 27 EU member states approved the emergency natural gas savings plan presented just last week.

Her ideas met with some criticism. “We Spaniards, unlike other countries, have not lived beyond our means in terms of energy,” said Spanish Minister for Ecological Transition Teresa Ribera Rodriguez. at a press conference last week.

The tip was aimed at Germany, which in the past debt and financial crises had liked to urge the southern EU member states to be more economical and financially disciplined. Ribera Rodriguez once again criticized von der Leyen in Brussels for the original proposal not being the “most effective solidarity proposal”.

The adjusted proposal of the Czech Council Presidency is now better balanced, she said. Thanks to the exceptions also granted to Spain, Madrid no longer rejected the plan. According to Claude TurmesLuxembourg’s energy minister, only Hungary voted against.

Unsurprisingly, there were positive reactions from Germany, the largest importer of Russian natural gas in the EU. It was necessary for the EU states to go half a meter further than they would do out of national interest, said German Economics Minister Robert Habeck after the meeting in Brussels. He praised the “astonishing unity” that Europe had recently shown in the energy sector.

The Association of German Industry (BDI) was full of praise even before the meeting. Wolfgang Niedermark, member of the BDI management, described the EU emergency plan as an “important step for European solidarity”. Germany and Europe would face a long-term gas shortage. This crisis can only be solved together at European level.

In the past, the Italian finance minister used similar words whenever he had to defend an insufficient budget in Brussels.

However, Niedermark emphasizes that European solidarity for Germany also means “providing as much energy as possible, from all available sources”. He is also likely to allude to the controversial cessation of operation of the last three nuclear reactors in Germany, which is planned for this winter.

On the other hand, Sven Giegold said not a word about nuclear power. He used to be a member of the EU parliament for the Greens and is now State Secretary in the Federal Ministry of Economics in Habeck. States that have not made themselves dependent on Putin’s Russia would now help member states that had relied on cheap fossil gas for years, he said on the short message service Twitter. “Thank you to our neighbors!” he continued.

The reaction from Hungary on Tuesday was a little less enthusiastic. Brussels has taken another step towards the war economy, Zoltan Kovacs, spokesman for Hungarian Prime Minister Viktor Orban, wrote on Twitter. later added he said the decision was “completely unacceptable” and that implementation was “out of the question”.