Last week, the European Commission took a well-deserved victory lap around Brussels on the occasion of the one-year anniversary of the adoption of the REPowerEU plan, the rapidly-devised plan to tackle Europe's energy crisis and wean the continent off Russian gas by next winter.
"In the last 12 months, Europe has surpassed the ambitions in this plan, and we can say that we no longer have a dependency on Russian fossil fuels," a Commission spokesperson told journalists. "Europeans went above and beyond," the 15% energy use reduction asked by the EU, he said, and half of that saving came from European households.
It's a far cry from the predictions of a European energy disaster made at this time a year ago. As the full ramification of Russia’s invasion of Ukraine began to seep in last summer, panic set in within EU energy circles. Even immediately after the invasion, it was clear that the new Cold War between Europe and Russia would mean the loss of Russia's gas supply, which, at the time, made up 41% of the EU’s gas imports. Just two weeks after the invasion, Commission President Ursula von der Leyen put forward an emergency plan called REPowerEU to prepare for the 2022-2023 winter. Policymakers were preparing for the worst, and the strategy even contained a request for national gas rationing plans – shutting off segments of the industry during peak energy demand.
But in the end, the gas rationing wasn’t necessary. By August 2022, Russian gas had been reduced to 9% of EU imports while pipeline gas from other suppliers had been increased to 50% compared to 40% a year before. Imports of liquefied natural gas (LNG) by sea had doubled to 41% from 19% a year before. REPowerEU mandated countries to rapidly fill their gas storage tanks to 80% of capacity by 1 November. They managed to surpass this, reaching 95%. REPowerEU also set the goal of reducing gas use by 15% during this winter compared to the previous winter. In the end, the EU reduced its overall energy demand by 20%, according to the Commission. EU gas demand has fallen by 18% since then, according to the Commission – the steepest drop in history. It had already fallen by 13% by the end of 2022. There were no blackouts. Putin’s energy blackmail failed. Europe's energy crisis appeared under control
The reason is a combination of rapid policy action and luck. Mild winter temperatures meant less gas was needed to heat homes, and the high energy prices spurred consumers and businesses to turn down the thermostat. An exceptionally cold winter could have tipped the scales the other way, exhausting gas storage and necessitating the gas rationing plans to be put into action. Yet International Energy Agency (IEA) executive director Fatih Birol said in March it was not just a question of luck, and that even with milder temperatures Europe could have had an energy disaster if it had not acted as quickly as it did.
And some of the weather was not helpful. Low rainfall last summer led to a very poor year for hydropower and nuclear shut-downs, which actually meant that power generation was the only sector that saw an increase in gas use last year compared to 2021, albeit a very slight one. But two factors alleviated this: electricity demand fell by 3% compared to 2021, and the increasing deployment of renewables over the past five years meant that 11 billion cubic metres of natural gas in the power sector was avoided in 2022. According to the IEA, this was the single largest structural driver of reduced gas demand.
The lesson is clear: the uncharacteristically rapid adoption by the EU of emergency policies such as the gas rationing plan, gas storage mandate and gas price cap curbed Europe's energy crisis this past winter. Russia’s shocking and brutal invasion of Ukraine gave the necessary urgency to act fast. But now, amid all the back-slapping in Brussels and national capitals, there are concerns that the urgency has been lost to keep the momentum going and prepare for next winter, which could be the exceptionally cold doomsday scenario people feared. After all, even last year, policy experts warned that in terms of storage, it was the winter of 2023-2024 that would be the biggest concern, since the Russian gas that supplied the tanks for this past winter is no longer available to refill them now. Falling energy prices are also leading to a decreased sense of urgency around Europe's energy crisis.
“Even though prices have gone down a bit, they will still be volatile,” said Rheanna Johnston, a policy officer at the climate and energy think tank E3G, at an event in Brussels, in May 2023.
“Next winter will be challenging. If we have a hot summer with drought that will impact hydro and nuclear.”
The French Geological Survey BRGM has warned that France is on course to experience an even worse drought this summer than last, after a particularly dry winter.
There is concern that the energy-saving urge that helped so much this winter is fading. An analysis by non-government organisation (NGO) European Environmental Bureau (EEB) found that only half of EU countries have adopted the measures to reduce energy use that are required by REPowerEU. Some countries that were very dependent on Russian gas such as Germany and Italy have taken the most robust measures on gas savings. But dependent countries in Eastern Europe such as Poland and Lithuania have weak energy reduction measures in place, and Bulgaria, Romania and Latvia have not introduced any national measures to reduce gas and electricity consumption at all. To make matters worse, there has been no public evaluation or monitoring of current energy savings by the Commission, leaving NGOs to do it on their own.
“Reduced energy demand last winter led to lower energy prices and less emissions, which is great, but the question is how we got there,” says the EEB’s Davide Sabbadin. “Unusually mild temperatures and sustained high prices cannot replace good policy.”
“We need bolder action from EU states now, as the exceptionally favourable conditions for energy savings last year may not happen again this winter,” he warned. “The winter ahead could be more challenging and many uncertainties remain.”
[Link src="https://www.energymonitor.ai/all-newsletters/" title="Keep up with Energy Monitor: Subscribe to our weekly newsletter" font-size="20px"]There were two main drivers of this winter’s success: new LNG supply and demand reductions. The former has been successful so far but remains tenuous because European countries’ spot purchasing of LNG, negotiated quickly during the last year, makes them incredibly vulnerable to global market fluctuations. If the US cuts supply or China has a surge in demand, gas supplies to Europe could suddenly drop, or become unaffordable. The Commission has set up an EU Energy Platform which will this summer start coordinating EU demand for LNG. But it may not be effective in time to make a difference for the coming winter.
That means the 18% reduction in gas consumption needs to be maintained throughout the summer, in order to fill gas storage, and through the autumn and winter. If the demand reduction so far has been a temporary response to price rises, that could spell trouble for getting gas storage up to 95% again by this November. Falling prices over the summer may lead to a rebound effect.
Though Europe's energy crisis may be over in an acute sense, now comes the hard part. The EU and national governments are going to need to go beyond the emergency measures and put structures in place that ensure long-term lower gas consumption. Europe’s surging heat pump sales are a positive sign and could make a major difference, but this needs further policy support from governments. Money also needs to be made available for rapid and massive home renovation in the next months before winter comes – to fix the roof while the sun is shining. It is a point that EU Energy Commissioner Kadri Simson has been trying to impress upon national governments, according to her spokesperson.
He said: "The job is not finished, and our preparations for next winter must continue."
Europe could get lucky again with the weather next winter, or it could get very unlucky with a cold freeze. The assumption from policymakers needs to be the latter, and the only way to avoid an energy catastrophe in that scenario is the rapid deployment of green technologies. LNG imports alone will not be able to save the day if next winter is bad.
