The European Commission (EC) presented in early March its proposal to reduce Russia’s gas imports by two thirds per year and achieve the goal of cutting its dependence on Russian fossil fuels by 2030. On the day that marks one year After Russia’s invasion of Ukraine, it can be said that the European Union (EU) has managed to replace almost 75% of Russian gas imports in one year compared to pre-crisis levels.
This is shown by a new analysis from Zero Carbon Analytics. To get an idea, the Twenty-seven imported 155 billion cubic meters of gas from Russia in 2021 between pipeline shipments and ships loaded with liquefied natural gas (LNG). In addition, the document underlines that total gas demand fell by only 10% between January and September compared to the same period in 2021 and that by 2030 a further reduction of 43% is expected throughout the block.
Another point that stands out in the report is the new LNG capacity that is being developed in the Old Continent. The terminals being built could provide 65% more gas than Russia supplied at the end of last year. For example, Germany has built its first floating LNG terminal in just over six months. Spain leads in this field with almost 30% of the regasification capacity in Europe. The advantage of having regasification plants is having greater energy independence, since they allow LNG to be imported on ships from any country.
“Before its invasion of Ukraine, Russia was by far the world’s largest exporter of oil and natural gas to global markets. Since then, its position has declined considerably. Pipeline gas flows from Russia to Europe have plummeted by 80 % in just one year Exports of oil to world markets have only declined slightly so far, but much of it is selling at deep discounts and there are fewer and fewer buyers in advanced economies At the same time, cleaner alternatives to Russian fossil fuels are growing rapidly, as governments try to strengthen their energy security in the midst of the crisis”, says the executive director of the International Energy Agency (IEA), Fatih Birol.
Russian income falls
Under this scenario, Russian tax revenue from oil and gas fell by 46% from January 2022 to January 2023. Likewise, it is estimated that the EU sanctions Vladimir Putin 280 million euros a day. Russia will thus lose more than a trillion dollars in revenue from oil and gas exports by the end of the decade, according to the IEA. “A much bigger impact can be achieved by revising the oil price caps to levels closer to Russia’s production costs: the EU and the G7 became urgent to act in this regard to support Ukraine’s fight,” says the analyst of the Center for Research in Energy and Clean Air (CREA) Lauri Myllyvirta.
Myllyvirta also stresses that European energy policy must now work to reduce dependence on fossil fuels in general and achieve a rapid shift towards clean energy. “The rise of clean energy should allow for a complete ban on fossil fuel imports from Russia: the EU continues to import about €100 million worth of oil and gas from Russia a day, via pipelines and LNG,” he says. he.
In this sense, under the framework of REPowerEu, the EU intends to mobilize up to 300,000 million euros of investment, of which 10,000 million will be allocated to gas infrastructure, 2,000 million to oil and the rest to renewable energy. Specifically, 75,000 will be mobilized in the form of subsidies and 225,000 through loans.
On the other hand, the Zero Carbon Analytics analysis highlights that wind and solar generation in the EU increased by 13% in the months after the Russian invasion and that, thanks to this record increase in ‘green’ electricity production, the community bloc saved the equivalent of 11,000 million euros of imported fossil gas. In this sense, they accounted for 22% of the European energy mix in 2022, surpassing fossil gas for the first time (20%) and being far ahead of coal (16%), which has re-emerged in some countries. According to a study by Ember, fossil fuel production in Europe could fall by 20% this year.
Likewise, Zero Carbon Analytics highlights the use of heat pumps in Europe, with an increase in sales of 120% in Poland, 100% in Slovakia and Belgium, and 50% or more in Finland, the Czech Republic and Germany. The cost spiral has triggered the profits of the big oil companies as a result of the increase in energy bills that, according to a study published in Nature Energy, could push up to 141 million more people into extreme poverty worldwide.
