The European Union agreed on Tuesday to ration natural gas this winter in order to protect themselves from further supply cuts by Russia as it pursues its invasion of Ukraine.
EU energy ministers approved a draft European law aimed at reducing gas demand by 15% from August to March. The legislation includes voluntary national steps to reduce gas consumption and, if insufficient savings are realized, a trigger for mandatory actions across the 27-member bloc.
“I understand that the decision was not easy, but I believe that in the end, everyone recognizes that this sacrifice is necessary.” “We have to share the pain, and we will,” Czech Industry Minister Jozef Sikela told reporters after chairing the meeting in Brussels. The move was welcomed by European Commission President Ursula von der Leyen, who said in a statement that “the EU has taken a decisive step to confront the threat of a full gas disruption by (Russian President Vladimir) Putin.”
The legislation was approved by the energy ministers a day after Russian energy corporation Gazprom announced a 20% reduction in gas flows through the Nord Stream 1 pipeline to Germany beginning Wednesday. According to Europe’s TTF benchmark, natural gas prices rose to their highest level since early March on Tuesday, and are now more than five times higher than a year ago.
Since Russia invaded Ukraine in late February and the West responded with economic sanctions, 12 EU countries have seen their Russian gas deliveries halted or reduced.
The Nord Stream 1 cutbacks, according to Gazprom, were caused by delays in receiving a repaired turbine for the pipeline. The turbine, which was repaired in Canada, has yet to be reinstalled, and another is expected to go offline because it requires immediate repairs, according to Kremlin spokesman Dmitry Peskov.
The EU’s 27 member nations are free to decide how best to meet the target of cutting 15% of their average annual gas use over the last five years under the ministerial agreement signed in less than a week.
France, for example, wants to save energy by lowering office thermostat temperatures in the winter and ensuring that air conditioners in public buildings and shops are used more efficiently, among other measures. Exemptions are granted to countries that may have specific vulnerabilities or are particularly vulnerable to the effects of certain cuts.
If the European Commission, the EU’s executive arm, continues to fear a supply shortage over the next eight months, it can ask members to consider triggering a mandatory system of cuts. Any five member countries could also force a vote if they declare a national gas supply alert.
The legislation is based on a commission proposal from July 20, which is eager to maintain a united EU front against a war that shows no signs of ending. It stated that coordinated rationing would allow the EU to get through the winter if Russia stopped all gas deliveries.
Although the EU has agreed to sanction Russian oil and coal beginning later this year, it has not sanctioned Russian natural gas because Germany, Italy, and some other member countries rely heavily on imported gas.
Disruptions in Russian energy trade with the EU are already driving inflation to record highs in Europe and threatening to send the continent into recession, just as the continent was recovering from a pandemic-induced slump.
The energy crisis is also resurrecting decades-old policy coordination tests. While the EU has gained centralized authority over monetary, trade, antitrust, and agricultural policies, national sovereignty over energy remains dominant.
As a result, the energy ministers decided to remove a provision from the draft gas-rationing law that would have given the European Commission the authority to decide on any shift from voluntary to mandatory actions. Instead, the ministers ensured that any decision on mandatory measures would be left to national governments.
Other elements of the original proposal, such as exemptions for island countries, were also watered down by the ministers.
Nonetheless, Tuesday’s agreement represents another watershed moment in EU policy integration and crisis management. Previous EU legislative initiatives in the energy sector frequently required months or years of negotiations among national governments.