EU needs to tackle Russia energy dependence

Europe needs to cut its reliance on Russian energy imports, the EU's high representative for foreign affairs Josep Borrell said in Brussels on 25 January.

Speaking against the background of the continuing crisis over Ukraine, Borrell said the EU "must reduce the outsized role that energy considerations play in EU-Russia relations". The Russian economy has become "more sanctions proof" since measures introduced in the wake of Moscow's annexation of Crimea in 2014, but "the EU has not yet correspondingly reduced its dependence on Moscow's natural gas and other energy imports", he added.

Borrell says the EU must tackle its overall reliance on oil and imports not just to protect the environment but for geopolitical reasons as well. "This means the development of renewables at home and greater diversification of routes and sources from abroad. This is about investing in the green transition but also in reducing our strategic dependencies," he said.

At a meeting late on 25 January, both French president Emmanuel Macron and German chancellor Olaf Scholz underlined the high price and consequences of any further Russian aggression against Ukraine. Scholz reaffirmed Germany's economic support for Ukraine, despite not authorising weapons exports to the country. "We feel particularly responsible for ensuring Ukraine remains a gas transit country," Scholz said. Macron is expected to talk by telephone with Russian president Vladimir Putin on 27 January.

EU foreign ministers met on 24 January to discuss potential sanctions should Moscow invade Ukraine. After the meeting, Borrell said the EU, together with the US, is "very well advanced in the preparation of responses to potential Russian aggression".

Russia has denied that it has any plans to invade its neighbour.

Energy engagement

Together with European Commission vice-president Frans Timmermans, Borrell is planning to launch a new EU strategy on "international energy engagement" at the end of April. The EU is also revising a wide range of energy-related legislation that will impact natural gas imports to the bloc.

Leading centre-right German conservative Peter Liese has been charged by the European Parliament to suggest changes to the law governing the EU's emissions trading system (ETS). He has proposed amendments to abolish free allowances that central and eastern European countries could use to switch from coal to natural gas power generation. He also wants stricter exclusion of gas power generation from the ETS Modernisation Fund, which is expected to generate some €14bn in 2021-30 depending on the carbon price.

Yesterday Liese blamed the rising cost of Russian gas rather than high CO2 allowances for driving up power prices. "That's a reason in favour of more renewables, efficiency. That will decrease our dependency on Russia," he said. "They want to keep their business model. [Russian president Vladimir] Putin and the oligarchs want Europe to be dependent on gas in 20 years. That's why they're manipulating the market now," Liese said.

EU energy regulator Acer is due to deliver a final report on gas and power markets by April, while the European Commission's competition directorate continues to investigate allegations of possible anti-competitive conduct by Russian state-controlled gas giant Gazprom. It comes as EU lawmakers consider changes to the bloc's gas market legislation. Last month the European Commission proposed 2050 as the cut-off point for long-term contracts for the supply of "unabated" natural gas. The European Parliament and EU states may decide to bring the timeline forward and introduce stricter conditions.

Forthcoming legislation is also expected to lead to tougher accounting of the CO2 content of Russian fertilizer and hydrogen exports to the EU. Both products are expected to be covered by the EU's proposed carbon border adjustment mechanism.

By Dafydd ab Iago