The plan focuses on reducing demand from businesses and public buildings rather than private homes. Among the proposed measures, the EU Commission is encouraging industry to switch to alternative energy sources — including coal where necessary — and introducing auction systems that compensate companies for reducing their gas consumption. The commission also hopes to pass a new law that would give it the power to force states to reduce demand for natural gas “when there is a substantial risk of severe gas shortages or extremely high gas demand,” it said in a press release. release.
By September, countries will have to update their national gas reduction plans to show how they will meet the new target. The measures come just a day before officials worry that Gazprom, Russia’s state gas company, may refuse to restart deliveries through the Nord Stream 1 pipeline. Nord Stream 1 has been shut down for the past 10 days for routine maintenance. European Commission President Ursula von der Leyen said on Wednesday that a complete cut-off of Russian gas was a “likely scenario”. “Russia is blackmailing us. Russia is using energy as a weapon,” he said at a news conference announcing the new plan. The pipeline is a vital artery connecting Russia’s vast natural gas reserves to the continent via Germany. It delivers 55 billion cubic meters of natural gas annually, or nearly 40% of the bloc’s total pipeline imports from Russia. Last month, Gazprom cut flows through the pipeline by 60 percent, blaming the West’s decision to shut down vital turbines because of sanctions against Russia over its invasion of Ukraine. Those turbines have since been allowed to travel to Germany from Canada, where they were being repaired, under immunity from sanctions, the Canadian government said last week. But Russia could still decide to keep the taps off. The country has already stopped delivering gas to several European countries and energy companies because they have refused Russia’s demands to pay for gas in rubles – a move that would put them in breach of European sanctions. On Tuesday, Russian President Vladimir Putin said during a visit to Iran that Gazprom would “fully fulfill its obligations” in supplying gas to Europe. But it warned deliveries could drop 20 percent next week if it doesn’t take delivery of the turbine, according to a Wall Street Journal report. Gazprom confirmed in a tweet on Wednesday that it had not yet received the necessary documentation from Siemens, the manufacturer of the turbine, to allow its delivery to Russia. Siemens told CNN it would not comment on Gazprom’s claims. Continued uncertainty over Europe’s natural gas supplies has pushed benchmark natural gas prices up about 85% since the spike in late February, according to the Intercontinental Exchange. On Wednesday, prices rose 5 percent to 161 euros ($165) per megawatt hour as the deadline for the pipeline to reopen loomed.

Germany in danger

Germany would be particularly vulnerable to reduced gas supplies. The region’s largest economy has long relied on Russian gas to power its homes and heavy industry. In June, the country activated the second of three stages of its emergency gas distribution program days after Russia cut flows through the Nord Stream 1 pipeline. Although it has managed to reduce Russia’s share of its imports from 55% to 35% since the start of the war, a dramatic cut could severely limit its ability to meet its natural gas reserves before winter, as well as push the country into recession. . On Monday, troubled German gas distribution company Uniper withdrew a 2 billion euro ($2.05 billion) credit facility with KfW bank due to the impact of Russian gas supply disruptions. Robert Habeck, Germany’s economy minister, said earlier this month that the country should “prepare for the worst” on Thursday, when the pipeline is due to come back online. Gas storage levels across the European Union are currently close to 65%, according to Gas Infrastructure Europe. That’s far more than the same period last year, but remains far from the 80 percent target it has set its member states to meet by November, Henning Gloystein, director of energy, climate and resources at the Eurasia Group, told CNN Business. “If [Nord Stream 1] remains out of service or only partially returns after maintenance, it will be difficult for Germany and the EU as a whole to achieve this goal, hence the possibility of further policy measures to reduce gas use,” Gloystein said.

A “dangerous” situation

The bloc is scrambling to secure alternative gas supplies to avoid a potentially devastating shortage this winter. But a crisis could come sooner than expected, depending on Russia’s next move. The International Monetary Fund said on Tuesday that a complete shutdown of Russia’s natural gas could shrink GDP in Hungary, Slovakia and the Czech Republic — countries particularly dependent on Moscow’s exports — by as much as 6 percent. “The point at which the crisis will bite deeper is looking closer and closer as we head into the summer and then fall, it’s increasingly a matter of ‘when’ rather than ‘if’ the crisis arrives,” said Vladimir Petrov, senior employee analyst at Rystad Energy, said in a note on Monday. Fatih Birol, executive director of the International Energy Agency, called the situation in Europe “dangerous” and said it should prepare for a “long, hard winter.” According to the IOC, even if European countries manage to fill their natural gas storage facilities to 90% of their capacity, they are likely to face supply disruptions early next year if Russia decides to cut off gas deliveries from October. The agency said earlier this week that Europe must find ways to save 12 billion cubic meters of natural gas – equal to about 3% of its annual consumption – over the next 12 weeks to avert disaster. He listed a number of steps countries could take, including burning more coal and oil. “That’s a big ask, but it doesn’t exaggerate the scale of what’s needed,” Birol said in a press statement on Monday. “It is categorically not enough to rely only on gas from non-Russian sources – these supplies are simply not available in the volumes needed to replace the missing deliveries from Russia,” he added. — Mark Thompson and Nadine Schmidt contributed reporting.