ourEconomy: Opinion

Forget Russia, blame the fossil gas industry for Europe’s energy supply crisis

Since 2014, Europe has become more dependent on fossil fuels from Russia. It didn’t have to be this way

Tara Connolly
18 February 2022, 12.00am
Russia has been exporting fossil gas to Europe since the late 1960s
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ITAR-TASS News Agency / Alamy Stock Photo

With the shadow of conflict in Ukraine threatening to turn the EU’s energy crisis into a full-blown catastrophe should Russia turn off the gas supply, it is worth reflecting on how we got here.

Who’s to blame for this state of precarity, why is our energy system so vulnerable, and how can we stop it from happening again?

Russia has been exporting fossil gas to Europe since the late 1960s. While discoveries of oil and gas in the North Sea and the Netherlands allowed some European countries to be largely self-sufficient in the 1970s, European gas production has been in steady decline since the early 2000s and is currently at historically low levels. (Today, Europe imports almost 90% of all the fossil gas it uses.)

Europe has long been the primary destination for Russian gas exports as a result of investment by Gazprom, Russia’s majority-state owned energy company, in a vast network of exporting pipelines into former Soviet countries, which in turn facilitated exports further into Western Europe.

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Shortly after Russia annexed Crimea in 2014, G7 energy ministers met in Rome to discuss how to wean Europe off Russian gas. Their plan was simple: replace it with imports from other countries.

It failed.

Fast forward eight years, and the EU is more dependent than ever on fossil gas imports from Russia. The overall volume of Russian imports increased steadily from 115 billion cubic metres in 2014 to 169 billion cubic metres in 2019, according to Eurostat data.

We aren’t any closer to the energy system that Europe needs – one in which unpredictable fossil gas prices can’t force millions into energy poverty, drive the highest rates of inflation since the creation of the euro, and blow holes in governments’ budgets in an effort to protect the worst affected.

Missed opportunities

This hasn’t been for a lack of opportunities to change course. At key moments – where the EU could have agreed stronger laws that would have accelerated a gas phase-out – the fossil gas industry made every effort to slow the path of progress.

The Russian invasion of Crimea wasn’t the only major issue on the political agenda in 2014. The EU was also in the process of agreeing its 2030 climate and energy goals. A ferocious row broke out over whether the EU should continue to set a trio of targets – that is, to cut carbon emissions, boost renewables and drive energy savings – or set a single target and allow Europe’s carbon market to drive emissions down.

The fossil gas industry, led by Shell, argued that Europe should scrap its renewable energy and energy savings targets altogether, claiming that they made the transition more costly. Crucially, from Shell’s point of view, removing these targets and instead setting a single, overall climate target would push coal out of the power market and allow for an expansion of fossil gas to replace it.

But it would do little to boost renewable energy or drive building renovations, both essential measures to cut Europe’s gas use. Meanwhile, climate organisations were asking for three targets for 2030 – including 45% of total energy coming from renewables and a 40% reduction in energy use (compared to projected energy use in 2030) – for precisely these reasons.

While the EU did eventually agree to set a renewable energy and energy savings target for 2030, both targets were set at a woefully low 27%. In fact, the 27% renewable energy target represented a slowdown in deployment compared to the 20% target that had been set for 2020. The EU also decided to scrap binding targets for renewable energy for each member country.

The EU set low-ball targets that missed the opportunity to cut gas use and replace fossil gas with renewables

These low targets, and the weakening of the governance system enforcing them, undoubtedly sent a very different signal to potential clean investors, compared to what NGOs were asking for. Instead of accelerating the expansion of renewables and energy savings, the EU set low-ball targets that missed the opportunity to cut gas use in buildings and replace fossil gas power plants with renewables.

This was clear to everyone involved at the time, because it was detailed in the European Commission’s own analysis backing up its decision. Its impact assessment noted that increasing the energy savings target to 40% would have led to a 40% drop in gas imports by 2030.

The Commission refused to model more ambitious targets for renewables and energy savings, but it is clear that they would have accelerated the phase-out of fossil gas. The study concluded: “The shares of natural gas decline as the scenarios get more ambitious.”

Lessons not learned

In 2022, the European Commission appears to still be committed to keeping money flowing into the gas industry and keeping our energy system dependent on gas in the long term.

It has caved in to the demands of the fossil gas lobby by proposing to categorise the fuel as a green investment under the Sustainable Taxonomy (a set of rules to guide green investments), and ducked the opportunity to set an end-date for a managed phase-out of gas in Europe.

Indeed, its proposal to reform the EU gas market – which will be finalised this year – would permit more investment in the fossil gas grid in the false hope that hydrogen can replace fossil gas, when we should be deciding what parts of the grid need to be shut down.

Other draft climate laws proposed by the Commission last year are riddled with gas-friendly loopholes, including failing to oblige governments to exclude fossil gas when building or significantly upgrading district heating systems.

It appears that the lessons of 2014 are not being learned in Brussels, and lawmakers are once again ducking the hard but necessary decisions that need to be taken to finally end the EU’s dependence on gas.

Europe’s low-income households can’t afford another winter of skyrocketing gas prices. The climate can’t afford more fossil gas locked in. And the EU can’t afford to keep acting on what the fossil gas industry wants. If it does, it will only have itself to blame.

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