EU: Nations must cut gas demand; business lobby warns of consequences
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In response to the European Commission's released plans on cutting gas demand by 15% this winter, the EU business lobby warns that gas rationing would be "disastrous".
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Berlaymont Building of the European Commission
Today, Wednesday, the European Union (EU) presented emergency plans for countries to cut their gas use by 15% from August to March, in comparison with their average consumption in the same period during 2016-2021.
The EU warned that without significant cuts, they could struggle during winter for fuel in the event that Russia cuts off supply.
Read: Macron warns Europe of consequences next winter if it imposes embargo
Europe is racing to fill its gas storage before winter and find other alternatives in case Russia further restricts supplies in retaliation for European support for Ukraine.
The proposal would allow Brussels to make the target obligatory in a supply emergency if the EU announces a substantial risk of significant gas shortages.
A reinforced majority of EU countries will discuss the proposal on Friday before having to approve it at an emergency meeting of their energy ministers on July 26.
The plan has been resisted by some countries that feel their contingency plans do not need the EU's reinforcement.
Among those countries is Poland, which has filled its gas storage to 98% after Moscow cut its supply in April. Others have less gas storage, such as Hungary, which is at 47% full.
EU business lobby warns gas rationing would be 'disastrous'
In this context, the EU's main business lobby warned today that any decision to control economic activity for the purpose of cutting back on Europe's use of Russian gas would result in catastrophic effects.
Markus Beyrer, director general of Business Europe, said the forced curtailment of production "would have disastrous economic effects and often irreversible impact on businesses."
"It should be considered only as an option of very last resort," he added in a brief statement.
German target of reducing dependency on Russian gas unlikely: Moody's
The embargo on Russian coal and a far-reaching halt to oil deliveries has led many EU countries to ask whether a ban on natural gas imports should be rejected by the bloc. Several member states are reluctant to make the decision to suddenly stop importing Russia's natural gas. This includes Germany and Italy who say they are too reliant on gas to cope with a sudden stop of supplies.
In a report published by the rating agency Moody's, "Germany's reliance on Russian gas imports has already been halved to around 30% of imports now from around 60% in 2020 and further diversification of sources is underway, for instance through increased purchases of liquefied natural gas (LNG). However, the government's goal of reducing its reliance on Russian gas to 10% by 2024 appears ambitious."
Italy, on the other hand, is better equipped to deal with the energy crisis due to the existing pipelines to North Africa and liquefied gas terminals (LNG). Hence, the country could fully replace the Russian gas supplies by 2025.
Italy has cut its reliance on Russian gas imports to 25%, from about 40% at the start of the year, whereas Germany - the largest European economy - still imports roughly 35% of its gas needs from Russia.
The Ukraine war is causing major dilemmas to European nations as they are now entering into an energy crisis, and the sanctions against Moscow may result in the suspension of Russian gas supplies to the EU.
