On March 26, the European Commission (EC) was to come up with a roadmap to further phase out the use of Russian fossil fuels. The goal: no energy imports from Russia as of 2027. In early March, the Commission decided to postpone publication of the plan (again), this time without giving a new date.
The reasons are obvious. Global energy prices in Europe are still sky-high due to tightness in the market. The TTF gas benchmark is volatile due to global geopolitical and economic uncertainty. A hasty decision regarding remaining imports of Russian natural gas seems unwise in this context. Also, a lack of unity within the EU complicates the creation of a concrete plan.
Russia-minded EU countries such as Hungary and Slovakia have seen their energy costs rise sharply and do not see the need to further phase out Russian gas. Recently, peace talks between U.S. President Trump and his Ukrainian and Russian counterparts have further stoked this fire. Russian President Putin likes to see stepping up exports of natural gas through pipelines to Europe as part of these negotiations, as he pointed out in a March 13 speech in Moscow. Something that is on good terms with the aforementioned Russia-friendly countries, but also with a (as yet) small part of industry and politics in economically ailing Germany.
The EU's 'rehab program'
A few weeks after the Russian invasion, the EC published the REPowerEU program. The idea was to become independent of Russian fossil fuels as soon as possible. Before the Russian invasion of Ukraine, Europe was dependent on Russia for about 40% of its gas demand. This independence was to be achieved by diversifying imports, promoting energy efficiency and accelerating the energy transition. This led to a series of concrete measures, such as the creation of a platform for joint purchasing of non-Russian natural gas and increasing renewable energy and energy conservation targets.
Consequence: by 2024, Russia supplied only 14% of European gas demand, according to the IEA. However, in scaling back natural gas deliveries, Russia, not Europe, repeatedly proved to be the initiator. Russian state company Gazprom began supplying less gas even before the invasion, which was directly visible in the filling rate of Dutch gas storage facilities.
Then it was not Europe, but again Russia, that initiated the shutdown of gas supplies through Nord Stream 1. Gas deliveries were permanently stopped by Gazprom in August 2022, according to the Russian state-owned company due to "maintenance. Earlier that year in April 2022, Gazprom did the same to the Yamal-Europe pipeline. Poland politely thanked the Russian request that bills be paid in rubles from now on, upon which gas deliveries were stopped.
Sanctions without negative cost effects do not exist
Where Russia did not breach the contract, Europe continued to import gas. This despite the fine words and ambitions in the REPowerEU strategy. Pipeline gas via Ukraine continued to come this way until Jan. 1, 2025, until the beleaguered country itself put a stop to this. Meanwhile, supply via the only remaining Turkstream pipeline was ramped up to maximum capacity. The elimination of pipeline supplies from Russia was partially offset by liquefied natural gas (LNG) from that same country.
So all in all, becoming "independent" of Russian energy in recent years has not exactly been to Europe's credit. With the right policies, however, the EC could reduce the remaining share of Russian gas in the European energy mix to zero. While this could be done quite easily by banning LNG imports from Russia, high and volatile gas prices and the lack of unanimity make for both unwillingness and ignorance to actually put this into practice. Sanctions without negative cost effects do not exist.
Only risk spreading leads to lower costs
Europe has imported all the Russian natural gas it could reasonably import since the invasion. Its policy of gaining independence from Russia has so far proved to be for show. In this context, the possible return of Russian gas to the European energy mix over time must now be considered.
Even less Russian gas means in practice that the supply squeeze will last longer and even increase. An increase in global LNG capacity will eventually provide relief, but the question is how long this will take and to what extent this will be offset by growing global demand. Meanwhile, Europe will certainly continue to struggle with high energy prices in the coming years, with all the consequences this entails. Energy-intensive industry, crucial to the European economy and strategic dependency, is under severe pressure. High energy prices relative to the rest of the world play a key role in this.
In addition, further cutting gas imports from Russia will result in greater dependence on the U.S. While not of the same caliber as Russia, this dependence - in light of the recently developing geopolitical understanding - still seems unwise. A roadmap that completely restricts gas imports from Russia would lead to an uncomfortable dependence on the U.S. Something that Eurocommissioner Jørgensen and consorts are no doubt aware of by now.
Europe is in a dire situation regarding energy prices. Meanwhile, we can conclude that an undisputed and simple way to pull us out of the energy crisis simply does not exist. This for the obvious reason that otherwise it would have succeeded after three years. In the currently evolving new world order, a certain degree of dependence on unreliable trading partners seems to be a fact of life for Europe. Under the guise of diversification, then, is it not better to spread this dependence over two hostile states, rather than one?
This column was written in a personal capacity by Fabian Steenbergen.
