So that the EU is prepared to face another gas crisis, must be exceeded significant obstacleswarns the TCE, in a report published today.
Although the EU has taken some emergency measures to deal with Russia’s natural gas weaponization, the benefits of EU action are not always clear.
Several new challenges
The TCE also points out several new challenges that the Union will have to face to guarantee its gas supply in the long term.
They are like that the greater dependence on imported liquefied natural gas (LNG) and the need to decarbonize part of natural gas consumption.
The rapid phase-out of gas imports from Russia, which in 2021 represented 45% of EU gas imports, caused a supply crisis, which in turn led to a price crisis.
In August 2022, the wholesale price of natural gas peaked at 339 euros per megawatt hour (compared to 51 euros in August 2021).
Member States have started to subsidize gas and electricity prices (at a cost of around €390 billion in 2022 alone) in order to reduce the impact on households and businesses.
By the end of 2023, the EU had successfully switched to sources other than Russia for its natural gas supplies, and prices had stabilized, reaching pre-crisis levels by early 2024.
“The EU must not be complacent when it comes to the security of its supply”
“Given its dependence on foreign natural gas, the EU must not be complacent when it comes to the security of its supply. Furthermore, there are no guarantees of affordability for consumers in the event of a significant supply crisis in the future,” said Hoao Leão, EAC Member responsible for the audit.
During the crisis, the EU reached the target price to reduce gas demand by 15%, but the EAC it was not possible to determine whether this was due solely to the measures taken or to external factors (such as high gas prices and a warm winter).
Likewise, the EU-wide obligation to fill gas storage facilities was met and even exceeded the target price of 90%.
Also, the ECA was unable to assess whether capping gas prices in the EU worked; as prices have remained at a much lower level since it was enacted.
Among other measures taken is the launch of the AggregateEU platform to provide an alternative natural gas trading channel, including joint purchases.
Also in this case, the ECA was unable to determine whether this specific platform offered added value compared to pre-existing ones, because crisis-induced differences in gas prices between EU Member States had already significantly diminished when AggregateEU was put into operation.
Looking to the future, the TCE concludes that the EU needs to consolidate the framework of affordable gas prices.
It also warns that many Member States are still reluctant to sign bilateral solidarity agreements. Some would even consider cutting off gas supplies to neighboring countries in an emergency situation.
Finally, the EAC highlights poor progress in engagement, use and storage of carbon dioxide, which can also compromise long-term security of supply. Taking into account the EU’s climate objectives (in particular the target of net zero emissions by 2050), the need to reduce carbon dioxide emissions caused by natural gas consumption will be an increasingly important aspect of the security of supply landscape of the Union.
Today, the four commercial-scale carbon capture, utilization and storage projects operating in the EU can together capture up to 1.5 million tonnes of CO2 per year.
This is a drop in the ocean compared to the 450 million tonnes of CO2 that will have to be sequestered with this technology every year until 2050 to meet the EU’s climate targets.
Source: AMPE