Russia-Ukraine war-led energy crisis in Europe: Countries exploring ways to combat the issue

Published on May 31, 2023 by Shreya

The Russia-Ukraine conflict has created an energy crisis in Europe. As a result of Russia's unwarranted and unjustifiable action against Ukraine, fuel prices throughout the EU have increased, raising concerns about the security of the energy supply as well. The decision by Russia to halt gas exports to a number of EU members has worsened the issue.

• In 2023, the EU could run out of natural gas by approximately 30 bn cubic meters

To address the situation, several European countries have implemented various initiatives to reduce their dependence on Russian gas and to increase their energy security.

Following are some of the initiatives that European countries have taken in the past to combat energy crisis created by the Russia-Ukraine war:

1. Expansion of renewable energy: European countries have been increasing their investment in renewable energy sources to reduce their dependence on fossil fuels. This will help reduce the dependence on natural gas imports for domestic demand.

• On September 14, 2022, the EU backed a more aggressive renewable energy goal that called for 45% of final energy consumption to come from renewable sources by 2030. This is in line with RepowerEU's objective to reduce energy imports from Russia over time and accelerate the use of renewable energy sources

2. Energy storage: To increase energy security, some European countries are investing in energy storage technologies, such as batteries and pumped hydro storage, to help balance their electricity grids and ensure a stable supply of power.

• On June 27, 2022, the EU approved a new regulation on gas storage that the European Commission had proposed in March of that year. The regulations are designed to make sure that gas storage facilities owned by EU member states are filled before the winter months and can be shared with member states without storage facilities

3. Energy efficiency: Another approach to reducing energy demand and dependence on imported gas is to increase energy efficiency. This includes initiatives such as energy-efficient building standards and appliances, as well as promoting public transport and cycling.

• On September 14, 2022, the European parliament backed more aggressive energy efficiency goals than the Commission's initial proposal from July 2021. These goals call for a 40% decrease in final energy consumption and a 42.5% decrease in primary energy consumption, which translate into absolute upper limits of 740 Mtoe and 960 Mtoe, respectively. This is a tad more ambitious than the updated goals put forth by the Commission in its RepowerEU plan in May 2022.

4. Interconnections and infrastructure: Some European countries are investing in interconnections and infrastructure to increase their energy security. This includes building new pipelines, interconnectors and transmission lines to improve energy flows and increase supply options.

5. Diversification of energy sources and supply routes: Diversifying supply lines is essential for ensuring that Europeans have access to reliable and inexpensive energy supplies. This entails finding and constructing new channels that lessen the reliance of EU nations on a single natural gas supply and other energy resource provider.

• Compared to 41% of the EU's imports from Russia in August 2021, Russian gas makes up only 8% of all pipeline gas imported into the EU as of September 2022. The REPowerEU programme is helping the region to diversify its energy supply, primarily through:

  • Negotiating contracts for pipeline imports with other third countries

  • Investing in liquefied natural gas (LNG) purchases on a regular basis

  • Establishing strategic alliances with Kazakhstan, Namibia, and Egypt to provide a reliable and long-lasting supply of renewable hydrogen

  • Forging deals for the export of natural gas to Europe with Egypt and Israel

6. Adoption of joint purchases of gas and a solidarity mechanism: On November 24, 2022, the European council reached an agreement on the specifics of new measures aimed at securing and distributing gas supply throughout the EU. The new measures will help in the following:

• Improve solidarity in case of a real emergency and gas supply shortage

• Ensure a better coordination of joint gas purchases

• Limit volatility of gas and electricity prices

• Set reliable gas price benchmarks

7. Measures to reduce energy bills: On October 6, 2022, EU nations passed an emergency regulation to address the rising cost of energy and assist people and businesses who are most impacted by the energy crisis. Three emergency measures are included in the regulation:

• Lowering the amount of power used

• Restricting the earnings of electricity producers

• Obtaining a solidarity payment from fossil fuel companies

Further, In part adhering to the EU's guidance from the energy pricing toolbox given by the Commission in October 2021 and the EU state aid temporary crisis framework, EU countries are taking action at the national level to help individuals and businesses experiencing rising energy expenses.

Overall, the Russia-Ukraine war has increased the importance of diversifying Europe's sources of energy. This has led to several government initiatives for ensuring the transformation of European energy sector into a more sustainable, reliable and balanced environment

References:

• https://www.consilium.europa.eu/en/policies/eu-response-ukraine-invasion/impact-of-russia-s-invasion-of-ukraine-on-the-markets-eu-response/

• https://www.iea.org/topics/russias-war-on-ukraine

• https://www.europarl.europa.eu/factsheets/en/sheet/68/energy-policy-general-principles

• https://energy.ec.europa.eu/topics/energy-security/diversification-gas-supply-sources-and-routes_en

• https://commission.europa.eu/strategy-and-policy/priorities-2019-2024/european-green-deal

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