The European Union is bracing for a worst-case scenario this winter, accusing Russia of potentially weaponizing energy.
With 12 EU countries subject to partial or complete interruptions of Russian gas, governments fear that the Kremlin will retaliate further in response to the sanctions by completely cutting off the supply.
The EU presented a new plan this week to gradually reduce gas demand to avoid shortages or blackouts this winter.
The objective is to reduce consumption by 15% from August to March. Here’s what you need to know about it.
Why a 15% reduction target?
The figure is based on a worst-case scenario calculated by the European Commission in which Russia completely cuts gas supplies before or during an unusually cold winter.
The EU would suffer from a shortage of up to 45 billion cubic meters (bcm) of gas, which represents 15% of what member states consume on average between August and March.
Gas is the main source of heating in the EU. It is also used for power generation to varying degrees.
The Commission argues that if member states take preventive action and start saving gas before Russia closes the taps, the disruption will be managed and the economic shock contained.
In the case of a normal winter, the difference would be 30 Gm3 of gas, or a reduction of 10%.
Is the discount voluntary or mandatory?
For now, reducing gas consumption will be voluntary.
Each government is committing – on paper – to reaching the 15% target by the end of March through methods such as temperature limits on air conditioning and heating, switching to alternative fuels and postponing the phasing out of nuclear energy.
Businesses, factories, public buildings and private households will all be asked to contribute to the collective enterprise, which means governments will have to mount public awareness campaigns to get people on board.
It is unclear how far Member States will be willing to go under a voluntary scheme, but unpredictable and soaring energy prices may act as a motivating factor.
In the event of a severe shortage or exceptionally high demand, the 15% reduction target will become mandatory under a so-called Union Alert, an unprecedented crisis system that could lead to painful sacrifices.
How will a Union Alert be triggered?
The initiative to declare a Union alert can be taken by the Commission itself or a group of five countries.
They will have to argue that the extreme fall in Russian gas supplies can no longer be compensated by voluntary means.
After that, the Council of the EU will be able to trigger the Union’s alert by a qualified majority vote (55% of Member States representing at least 65% of the EU population). No individual veto will be allowed.
If the Council approves this drastic decision, the 15% reduction target will immediately become mandatory. However, the timer will not start from zero: the calculation will take into account previous efforts made on a voluntary basis.
For example, if a country succeeded in reducing its gas consumption by 5% at the end of November and an EU alert is triggered at the beginning of December, the country will have to reduce its consumption by 10% until March to reach the 15 % Mark.
Member States will report to the Commission every two months, explaining the measures they are taking to comply with the mandatory target.
Could this lead to gas rationing in the EU?
Yes. If methods such as fuel switching and temperature limits are not enough to achieve the goal, some countries, such as those heavily dependent on Russian gas, may have to resort to gas rationing.
In this case, the government will intervene and regulate the distribution of gas. The EU has agreed to protect private households and essential services, such as schools and hospitals, from any rationing measures, so the burden will likely fall on the private sector.
Countries will have to decide which factories and services they allow to continue operating and which they close. Critical industries, such as food, health and defence, will be given top priority, followed by services that operate cross-border and ensure the smooth functioning of the single market.
Particular attention will also be paid to factories whose facilities can be permanently damaged if they ever stop working, such as glass, steel, ceramics, textiles and pharmaceuticals, and those that use molecules of gas directly in their production processes, like fertilizer and chemicals.
The dreaded scenario went from remote to possible within weeks.
Last month, Germany activated the second phase of its three-stage emergency plan, a prelude to rationing, as flows passing through Nord Stream 1 continued to decline at a worrying rate.
Are there any exemptions?
Three countries will be completely exempt from the Union’s alert system: Ireland, Malta and Cyprus. They are physically disconnected from the EU, so gas savings would not benefit other states.
Estonia, Latvia and Lithuania were also granted an exemption because, due to their Soviet heritage, they are still connected to the Russian power grid and could be left in the dark at any time. The exemption will only come into effect if Russia retaliates.
Along with those two opt-outs, the final deal includes a list of waivers to partially reduce the 15% target and bring it down to single-digit territory.
A derogation will apply to countries that are poorly connected to other member states and demonstrate that they export liquefied natural gas (LNG) at “full” capacity.
Spain and Portugal, who have long argued over the Iberian Peninsula unique energy landscapepushed for this change and will be among the first beneficiaries.
Another derogation will apply to countries that exceed the EU-wide gas storage target, which was recently fixed 80% on November 1. This is considered a “reward” for those who strive to store as much gasoline as possible before the winter season.
Last storage data shows that Denmark, Poland, Sweden and Portugal are already above the 80% mark, with the Czech Republic, France, Spain, Belgium and Italy coming close.
Countries that use gas molecules in critical industries and cannot replace them overnight will also be able to apply for a partial reprieve. In principle, any member state could benefit from the provision, but EU officials say its impact will be limited because only a few industrial sectors, such as fertilizers, use gas as a feedstock.
Member States that have increased their gas consumption by 8% in the last year will also be partially spared as the 15% reduction target is based on the average consumption of the last five years.
Experts from the Bruegel think tank estimate that Bulgaria, Greece, Poland and Slovakia will fall into this category.
Won’t so many exemptions make the plan useless?
The long list of exemptions and derogations casts serious doubts on the effectiveness of the Union’s alert system.
A senior EU official, speaking on condition of anonymity, admitted that the special arrangements mean that the final savings will be between 45 billion m3 (cold winter scenario) and 30 billion m3 (normal winter ), but without fully reaching the highest figure.
However, only one exemption – that of island countries – is automatic. The other derogations must be examined on a case-by-case basis by the Commission, which will then issue a commented opinion.
It remains to be seen what type of action Brussels will take if a member state applies an unjustified derogation or simply refuses to meet the mandatory 15% target.
Hungary is the only country to vote against the plan, calling it “unjustifiable, unnecessary and unworkable”. Budapest had previously declared a state of emergencyrestricting the export of energy supplies, a decision warned by Brussels which goes against the principle of solidarity and the rules of the single market.
The case shows how energy has become extremely sensitive for capitals, which are under enormous pressure from citizens to control soaring bills. EU officials are confident that “peer pressure” between states could help enforce the savings plan and prevent breaches.