EU Seeks to Speed Clean Energy Shift and Curb Russian LNG

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(Bloomberg) — The European Union's executive branch will begin strengthening energy security and accelerating the transition away from fossil fuel imports, while grappling with the difficult task of limiting Russian liquefied natural gas supplies.

The European Commission is scheduled to outline on Wednesday its efforts to speed up the transition, according to EU diplomats familiar with the issue. This would begin work on a business plan that will be revealed later.

The main challenge is to reconcile the interests of the 27 EU member states, which have different energy sources, supply contracts from third countries, and strategies for deploying renewable energy sources.

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Another way would be to phase out supplies from Russia, the bloc's previous largest supplier before the war in Ukraine. While relations with Moscow have deteriorated, the EU has actually increased Russian LNG imports in recent years. Some officials are also keen to keep open the existing pipeline network through Ukraine.

Last month, EU energy ministers called on the Commission to present a roadmap to phase out Russian fossil fuels. They also supported the proposal by Germany and the Czech Republic to establish a high-level group of member states to guide the work.

One option for EU countries is to take advantage of the new law – which will come into force in January – to temporarily ban LNG deliveries from Russia and Belarus to protect their core security interests. Finland has already said it intends to use this clause to phase out remaining Russian imports. Other countries appear more cautious about the market and the impact on current LNG contracts.

However, some EU diplomats see the law as a starting point in a discussion about sanctions on Russian gas, a move that would provide a stronger regime and justification for ending deliveries from Moscow.

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Existing imports

Russia currently supplies about 18 billion cubic meters of LNG to European ports – particularly in France, Spain and Belgium – with about 1 billion cubic meters of it then re-exported, according to data from the European Union's energy regulator.

The European Union is now discussing imposing sanctions on major Russian LNG projects and banning the use of EU ports to re-export supplies to third countries. However, there is not enough support from member states to start talks on a complete ban on LNG imports.

Talks are also underway to keep Russian gas flowing to Europe via Ukraine when the transit agreement expires at the end of this year. One option is for EU companies to buy and pump gas from Azerbaijan into Russian pipelines heading to Europe.

European gas prices remain highly vulnerable to supply disruptions, and officials want to reduce any potential volatility before winter. The 2022 energy crisis, due in large part to a sharp decline in gas supplies via Russian pipelines, has pushed the European economy to the brink of recession.

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