Social Governance

EU Unveils Plans to Cut Reliance on Russian Fossil Fuels

Published on: 19 May 2022 05:15 PM
by KnowESG
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The European Commission has announced a 210 billion euro ($220 billion) plan to wean Europe off Russian fossil fuels in five years and accelerate its transition to renewable energy. The decision comes as the EU rethinks its energy policies in the wake of Russia's invasion of Ukraine and concerns about supply shocks.

Moscow provides 40% of the EU's gas and 27% of its imported oil, and EU nations find it hard to reach an agreement on sanctions against the latter.

A ban on Russian coal is set to begin in August, and the EU has committed to limiting demand for Russian gas by two-thirds by the end of the year. Meanwhile, Hungary and other landlocked countries have raised concerns about the cost of moving to alternative energy sources in response to a possible EU oil embargo.

EU Commission President Ursula von der Leyen said: "We are taking our ambition to yet another level to make sure that we become independent from Russian fossil fuels as quickly as possible."

The initiatives include a mix of EU rules, non-binding plans, and suggestions to the EU's 27 member countries' governments, essentially in charge of their national energy policies.

Brussels estimates that they will require 210 billion euros in additional expenditures by 2027 and 300 billion euros ($314 billion) by 2030, on top of the investments already required to reach the EU's 2030 climate objective. Finally, it claimed that the investments would reduce Europe's reliance on imported fossil fuels.

RePowerEU (the package announced) will help us save more energy, accelerate the phasing out of fossil fuels and, most importantly, kick-start investments on a new scale,” von der Leyen said.

Renewable energy will receive 86 billion euros ($90 billion). Hydrogen infrastructure will receive 27 billion euros ($28 billion), power grids will receive 29 billion euros ($30 billion), and energy savings and heat pumps will receive 56 billion euros ($59 billion).

The Commission stated that some fossil fuel infrastructure investments would be required, including 10 billion euros ($10 billion) for a dozen gas and liquefied natural gas projects and up to two billion euros ($2.1 billion) for oil, aimed at landlocked Central and Eastern European countries that lack access to non-Russian supply.

These expenditures, according to campaigners, risk locking the EU into a long-term reliance on CO2-emitting gases, aggravating climate change and driving up energy prices. New gas infrastructure, according to the Commission, should be able to switch to carrying renewable hydrogen in the future.

Brussels wants countries to fund the measures with money from the EU's COVID-19 recovery fund, which has over 200 billion euros in unspent loans.

Over the following three years, the Commission will also sell extra carbon market permits from a reserve to collect 20 billion euros ($21 billion). According to some economists, this could lower carbon prices, undercutting the price signal for low-carbon energy.

To lead the charge, the Commission suggested a greater legally-binding objective of 45 per cent renewable energy by 2030, up from its existing aim of 40 per cent.

By 2030, the EU's renewable energy capacity would have more than doubled to 1,236 gigawatts (GW), bolstered by a regulation allowing for one-year licences for wind and solar projects. The EU has recommended phasing in obligations for countries to install solar panels on new buildings.

Another goal would reduce EU energy usage by 13% by 2030 compared to expected levels, replacing the existing proposal of 9%. The EU is working on legislation to speed up building renovations so that they consume less energy, and voluntary initiatives like turning down thermostats could reduce gas and oil demand by 5%.

The EU's strategy involves a short-term dash for non-Russian gas supplies to replace the 155 billion cubic metres (4,061 cubic feet) of gas Europe buys annually from Moscow. To meet climate targets, Europe's gas usage is predicted to drop 30% by 2030, but for now, countries rely on fuel to heat homes, power industries and generate electricity.

By mid-year, the EU hopes to establish a memorandum of understanding on LNG supply with Egypt and Israel and increase LNG supplies from countries such as Canada and Algeria. To negotiate better contract conditions, Brussels will also develop a plan for countries to buy gas together.

Source: Aljazeera