A few days ago, Russian President Vladimir Putin threatened to cut off gas supplies from his country to Europe, starting on 1er April. He demanded that his customers pay in rubles rather than in euros, without such a clause being provided for in the contracts.
Posted at 1:00 p.m.
We dare not imagine the catastrophic consequences of such a sudden cut in supply: it would be the industries in Europe that would bear the brunt of it. They should drastically reduce their consumption, to the benefit of domestic customers and essential services.
Such a cut, in whole or in part, says the German industry, would immediately lead to massive layoffs, and jolts in the supply chains, therefore shortages of certain products, with the key to a rise in prices.
No doubt: Europe, singled out for decades for its dependence on Russian gas, has understood the lesson.
She, who already had ambitious plans in terms of energy transition, intends to accelerate her efforts. A plan to this end, titled “Joint European Action for More Affordable, Secure and Sustainable Energy”, was unveiled on 8 March 2022.
PHOTO THILO SCHMUELGEN, REUTERS ARCHIVES
Workers at a steelworks in Mülheim, which depends on Russian gas to keep it running
An ambitious approach
Europe thus intends to get rid of two-thirds of its Russian gas supplies by the end of 2022. It is a Herculean task. Its gas imports from Russia were 155 billion cubic meters in 2021. They should therefore be reduced by some 100 billion cubic meters in just a few months.
In the short term, the priority is simple: end the year without a shortage and spend the next winter with reserves at maximum storage capacity.
The year 2022 has indeed opened in Europe with reserves at their lowest. These barely reached 25% of capacity. The objective is 90% for the next winter. This explains the continuation of gas imports over the next few months, even if the winter is over on the continent: we are in the process of replenishing stocks.
Still in the short term, this desire to get rid of imports from Russia as quickly as possible should lead to the temporary use of coal, or even the return of nuclear power in several countries. This is bound to inflame the ire of environmentalists, but for some time to come it is to be expected that security of supply will take precedence over the climate emergency in Europe.
This rapid transition will not be easy. And it will be expensive. The majority of Russian gas comes from pipelines. This means of transportation is, of course, less expensive than importing liquefied natural gas (LNG) from other countries. However, LNG imports could account for half of this objective of replacing Russian gas, i.e. 50 billion cubic meters1. But more import terminals in different countries, including Germany, will be needed to better distribute these additional acquisitions geographically, a long and costly process.
Europe will also have to compete with Asian countries heavily dependent on LNG imports, such as Japan, which will put upward pressure on prices.
There are also imports from other suppliers linked to Europe by gas pipelines, including Norway, the Netherlands, North Africa and Azerbaijan. But this should only count for 10% of the planned reduction of Russian gas.
As for renewable energies (wind, solar), they should replace this year 20% of electricity production from gas. Here too, it takes time to set up new infrastructures. The game is not won. In France, for example, wind power is facing strong challenges.
Finally, on the demand side, Europe is aiming for a reduction of almost 40 billion cubic meters, or around 10% of its consumption in 2021. However, the pandemic had led to a reduction of… 11 billion cubic meters in 2020. This is to say the ambition of the current plan.
We intend to achieve this with measures encouraging the lowering of thermostat settings, the installation of heat pumps and solar panels wherever possible.
To reduce its dependence on Russian gas so drastically in such a short period of time, Europe will therefore need everything to fall into place without too many problems, including mild weather next winter. In practice, on the ground, many unforeseen events, even a certain chaos, are to be expected.