Europe needs to wean itself off Russian gas. The Ukraine crisis has shown the folly of relying on Moscow for a large chunk of the continent’s 500 billion cubic metres (bcm) of annual supplies. Kicking the habit will take a concerted decade-long push.

Last year Russia piped about 150 bcm of gas to Europe. Shrinking that to zero over a decade means replacing 15 bcm a year. Yet Europe is also phasing out 100 bcm of coal-fired electricity on climate concerns, and its own production of gas is declining at 5 bcm a year. So Europe would need to make up an annual shortfall of 30 bcm, according to Bernstein analysts.

Renewable energy can fill some of the gap. If European countries keep building at the current rate, new wind and solar power projects will provide the equivalent of 11 bcm and 6.5 bcm, respectively. If the United States sends a third of its liquefied natural gas (LNG) to Europe, up from 20% last year, that’s a further 6.8 bcm. Delaying the planned phase-out of existing nuclear power stations would replace 4.8 bcm of gas demand. Finally, investing in building insulation and installing 2 million new electric heat pumps instead of gas boilers every year would save a further 4 bcm.

All this combined would provide 33 bcm of replacement power a year. But apart from cranking up wind and solar, which are already cheaper than fossil fuels, none of the other steps are straightforward. LNG suppliers ship to where prices are highest, and Europe’s facilities that turn the liquid fuel back into gas aren’t evenly distributed. Nuclear power is politically and environmentally contentious, and heat pumps require extensive subsidies.

Historically minded wonder if the United States can reprise the spirit of the 1940s, when it provided funds to rebuild Europe and mobilised an airlift to Berlin. For a start, America could put pressure on Qatar, Australia and its own private companies to divert LNG cargoes to Europe. It could also help finance subsidies for heat pumps, or bolster Europe’s inadequate gas storage facilities.

Domestic consumers could help too. If 500 million Europeans took a cold shower and turned the heating off one day a month, they would reduce gas consumption by 4 bcm annually, Bernstein reckons. Shaking Europe’s addiction to Russian gas will require everyone to pitch in.

CONTEXT NEWS
– Germany aims to speed up wind and solar energy projects, the country’s economy ministry said on Feb. 28, as the war in Ukraine underscored the need to reduce reliance on Russian gas.

– Berlin also announced plans to ensure the country’s gas storage facilities are full at the beginning of winter, irrespective of the interests of their operators, the ministry said.

– Economy Minister Robert Habeck plans to speed the passage of the Renewable Energy Sources Act through parliament so that it can come into force by July 1. The act would see Germany suspend cuts to subsidies for new solar panels on roofs this year and increase tenders for new solar projects to 20 gigawatts by 2028, from about 5 gigawatts now, and keeping them at that level until 2035, the ministry said.

– Germany would also boost tenders for onshore wind energy projects to 10 gigawatts annually by 2027, from about 2 gigawatts now, and keep them at that level through to 2035.

– UK natural gas futures for next-month delivery were trading at 254 pence per therm as of 0950 GMT on March 1, compared to 10-year highs of 322 pence and 336 pence recorded on Feb. 24 and Dec. 22, respectively.
Source: Reuters (Column by George Hay in London and Lisa Jucca in Milan. Editing by Peter Thal Larsen and Oliver Taslic. Graphic by Vincent Flasseur.)