EU to call on member states to ‘immediately’ slash gas usage

Brussels is preparing to tell EU members to cut gas consumption “immediately”, warning that without increased conservation the continent risks running short of the fuel this winter as Russia restricts supplies.

The European Commission will next week provide members with voluntary gas reduction targets, according to a draft paper seen by the Financial Times, which cautions that targets will be made mandatory in the event of severe disruption to supplies.

“Acting jointly now will be less disruptive and costly, facilitating solidarity and avoiding the need for unplanned and uncoordinated actions later in a possible crisis situation with gas reserves running low,” the document said.

The move comes as the International Energy Agency warned that efforts to diversify away from Russian gas were no longer enough on their own and that Europe faced energy rationing unless demand was restricted to allow storage facilities to be filled ahead of winter.

Russia has over the past month slashed capacity on the main pipeline to Germany and the IEA fears that further cuts cannot be ruled out. Fatih Birol, IEA executive director, said Europe was facing a “red alert” and that “significant additional reductions” were needed to “prepare Europe for a tough winter ahead”.

Ursula von der Leyen, European Commission president, signed a supply deal with Azerbaijan on Monday that will increase deliveries to Europe by 48 per cent this year and aims to double them by 2025, although Azeri imports make up only a sliver of the EU’s total.

The central Asian country is one of several, including Qatar, the US, Israel and Nigeria, being courted by the EU as it tries to secure alternatives to Russian supplies.

Italy is also on the cusp of boosting supplies from Algeria, with Italian energy major Eni and France’s TotalEnergies and Occidental set to sign a deal with Algeria’s Sonatrach on Tuesday for a new $4bn gas development project, which will eventually bring new supplies on stream.

But the IEA, which serves as the west’s energy watchdog, said on Monday that efforts to boost supplies were still falling short and the EU needed stricter measures, including restricting air conditioning demand and auctioning gas supplies to industry.

The commission’s draft paper did not include exact figures but these are expected to be finalised before the proposal’s final publication on Wednesday.

The latest documents are a revision of a plan leaked last week that recommends limiting central heating and cooling in buildings as well as exempting coal-fired power stations from emissions reductions targets.

EU diplomats and officials have been locked in talks over potential targets and how they would be implemented given the various energy mixes of the different member states.

One EU official said negotiations were ongoing over what penalties could be enforced if the targets were made mandatory and were not met.

Europe previously relied on Russia for about 40 per cent of its gas but since Russia’s invasion of Ukraine those supplies have been increasingly weaponised by Moscow in reaction to EU support for Kyiv.

Russia has already shut off supplies to the Baltic states, Finland, Poland and Bulgaria and reduced flows to Germany and Italy.

In the draft plans, the commission noted that in June gas flows from Russia to the EU had fallen to less than 30 per cent of the average between 2016 and 2021. Europe imported a total of 155bn cubic metres of gas from Russia in 2021 and consumes close to 400 bcm of gas in total in a normal year.

The leaked gas plan warned that continued cuts to Russian gas supplies could cause a drop in the EU’s GDP by up to 1.5 per cent, depending on the level of disruption. The European Commission declined to comment.

Von der Leyen said in a speech in Baku that the EU had “to diversify away from Russia and to turn to more reliable, trustworthy suppliers” and described Azerbaijan as a “crucial energy partner”.

The plan is for Azeri supplies to increase to 12 bcm this year, up from 8.1 bcm in 2021 and ultimately reach “at least” 20 bcm by 2027, according to a memorandum. The fuel would arrive in the EU through the Southern Gas Corridor pipeline, a joint project between Brussels and Baku that opened in 2018 and is mainly supplied by gasfields in the Caspian Sea.

But despite EU efforts to set up a joint gas purchasing effort similar to its co-ordinated buying of Covid vaccines, officials admitted it was competing in a tight market where countries already had long term contracts in place.

Additional reporting by Peggy Hollinger in London and Amy Kazmin in Rome