While the extension of the bloc’s 2022 emergency demand reduction was framed as a success, the impact has been severe
Europeans must maintain the reduced natural gas consumption levels imposed in the wake of sanctions targeting Russia’s energy sector, according to a draft proposal from the European Council published on Tuesday.
The proposal states that demand levels at least 15% below the average demand between April 2017 and March 2022 should be maintained on a voluntary basis for another year, despite claiming that same reduction level – or an even higher reduction rate of 18% – had successfully achieved many of the original proposal’s goals.
Despite the diversification of supply, lowered and stabilized prices, and higher storage reserves – as well as “benefiting the competitiveness of the EU economy” – that the Council claims have resulted from the cutbacks, they must continue another year, its recommendation insists, adding that this would have the added benefit of pushing the EU towards Net Zero carbon emissions.
Should Europeans or their leaders become unwilling to cut back on their fossil fuel consumption, the resolution allows the “voluntary” cutbacks to be mandated, eliminating any risk of scuttling the concept entirely with one or two holdouts as have threatened the bloc’s recent €50 billion military aid package to Ukraine.
Brussels recently confirmed a five-year pipeline gas transit agreement via Ukraine with Russia’s Gazprom would not be renewed when it expires at the end of March.
Despite passing 13 packages of sanctions since 2022 in an effort to punish Russia for its military operation in Ukraine, the EU still bought nearly €30 billion in oil, petroleum products and natural gas from the country last year.
At the same time, Germany, traditionally the EU’s strongest economy, is in crisis, with 15% of its companies in distress, consultants Alvarez & Marsal reported earlier this month. Many analysts blame high energy costs and predict the worst is yet to come, with a real estate crisis looming as companies that can no longer afford to pay for their office space are defaulting, among other secondary effects.
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