Europe proposes mandatory gas rationing if Putin shuts off supply

If the Russian president Vladimir Putindefinitively closes the gas pipelines, all the countries of the European Union, including those less dependent on Russian hydrocarbons such as Spain, will be forced to ration energy consumption, according to the emergency plans prepared by the European Commission and which are expected to be made public this Wednesday. The proposal from Brussels, which will be transferred to an extraordinary council of EU energy ministers next week, causes resentment in the countries that will be impacted as a result of the errors in energy policy made by Germany, the partner that during the last years has increased its dependence on Russia despite continuous warnings from Brussels or Washington.

Firstly, it proposes a voluntary cut in consumption that should be applied from August 1 to March 31, 2023. Given the scenario that the Russian leader is closing the gas valve in response to the EU sanctions imposed on Russia for invading Ukraine. But the legislative project gives the community body the power to declare a general state of alert to impose, in such a case, a mandatory cut to each Member State.

The proposal specifies that the mandatory cut in consumption would come into force “on the first day of the month following the declaration of the alert and would end on March 31, 2023.” The draft, pending deliberation this Wednesday at the weekly meeting of the European Comission, does not yet specify the percentage of cut. But agency sources indicate that it is considered to set it at 15%, a figure that would seriously hit industrial production in almost all EU countries, regardless of whether they import more or less Russian gas. The cut would be made in relation to the average consumption of each country during the last five years.

“The argument in favor of this linear cut is that the reduction in consumption in all partners will free up export capacity in alternative suppliers to Russia,” says a source from the Commission. The closest example is that of Spain and Algeria: the reduction in Spanish consumption would allow another partner, Italy, to increase its imports from the Maghreb country, which in recent weeks has moved to sign contracts with the African country.

Some capitals, however, consider that the mandatory rationing of gas consumption by order of the Commission may involve interference in an eminently national policy such as energy. Poland already expressed its opposition to compulsory solidarity last week, considering that it could harm the energy security of some partners, and demanded that the measure be voluntary.

Community intervention will also force all countries to share the economic impact of a supply cut that, in principle, should essentially affect Germany, which has a high dependence on Russian gas that has signed cheap for years. All countries will pay for the mistakes of Berlin’s energy policya capital that during the euro crisis (2008-2012) categorically refused to mutualize the costs of the debt, considering that they were the result of fiscal policy errors made in countries such as Greece, Spain or Italy.

But the Commission, chaired by Ursula von der Leyenseems willing to ignore all these objections and launch an emergency plan that linearly distributes the suffering due to the foreseeable lack of gas supply when the threat of cuts managed by the Kremlin to pressure the EU for its support for kyiv hangs over the continent. Von der Leyen wants to invoke article 122 of the Treaty on the Functioning of the EU. This article allows the Council, at the proposal of the Commission, “to decide, in a spirit of solidarity between Member States, measures appropriate to the economic situation, in particular if serious difficulties arise in the supply of certain products, especially in the field of Energy”. The article makes it possible to wield exceptional measures such as coordinated energy rationing without precedent in the history of the community club.

The proposal also raises suspicions in the European Parliament, because the article invoked by the Commission allows parliamentary approval to be avoided and only requires that of the Member States. The socialist MEPs of the parliamentary committee for industry and energy have written to Von der Leyen, in a letter dated July 14, to demand a parliamentary and democratic scrutiny of the proposal according “to the sensitivity of the decisions that are They’re going to adopt.”

MEPs remind the President of the Commission that Parliament “has already shown its responsibility and ability to work with an urgent procedure”. The most recent test has been the approval in a matter of weeks of the legislative project to impose the accumulation of gas reserves up to 80% of the storage capacity before next November 1 and 90% as of the same date in the Next years.

Putin blames sanctions

While the Community Executive is already talking about cuts, the Russian president, Vladimir Putin, used the gas key again as a pressure lever. After a meeting in Tehran with the Iranian and Turkish leaders, the Russian president assured that Gazprom – the company that has a monopoly on gas pipelines that transport Russian gas – “has complied, complies and will fully comply” with its obligations as a supplier with the signed contracts . However, the head of the Kremlin then slipped that the capacity of the Nord Stream 1 gas pipeline (the largest link for the supply of Russian gas to Europe) could be further reduced due to the slow progress in the maintenance of the equipment and blamed it to the lack of replacement of the equipment and to the sanctions. “Our partners [comerciales] they are trying to pass their own mistakes on to Gazprom. This is baseless,” Putin said, as quoted by the Russian agency Interfax.

With the worst scenario looming on the horizon, the Brussels saving plan also proposes preventive measures such as limiting air conditioning to 25 degrees and heating to 19 and demands that Member States put subsidies on the table to compensate companies who decide to stop (or are forced to) due to a lack of gas supply.

In the draft of its proposal, the Commission explains in a very visual way the threat of Russian gas supply cuts with a graph that draws a big drop from a rebound in March, a few days after the large-scale invasion launched on Ukraine last February 24. In the last decade, progress has been made in projects that guarantee supply in countries that have already shown themselves to be more vulnerable to Russian gas cuts in other crises, such as Bulgaria and Poland with new connectors linking Greece and Bulgaria or Lithuania and Poland. and Finland and Estonia. Progress has also been made on the gas pipeline that transports gas from the Caspian Sea to Europe and, in recent weeks, several countries (and the European Commission itself) have rushed to sign contracts with other suppliers to diversify their supply (there are countries of the EU that have large agreements with other suppliers such as Norway, Algeria, Qatar, USA, UK, Nigeria and Libya).

However, natural gas accounts for 24% of the energy mix in the EU and oil, 35%. Russia has maintained its position as the EU’s leading supplier of all major primary energy commodities: natural gas, crude oil and coal.