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IEA (2022), A 10-Point Plan to Reduce the European Union's Reliance on Russian Natural Gas, IEA, Paris https://www.iea.org/reports/a-10-point-plan-to-reduce-the-european-unions-reliance-on-russian-natural-gas, License: CC BY 4.0

Measures implemented this year could bring down gas imports from Russia by over one-third, with additional temporary options to deepen these cuts to well over half while still lowering emissions.

Europe's reliance on imported natural gas from Russia has again been thrown into sharp relief by Russia's invasion of Ukraine on 24 February. In 2021, the European Union imported an average of over 380 million cubic metres (mcm) per day of gas by pipeline from Russia, or around 140 billion cubic metres (bcm) for the year as a whole. As well as that, around 15 bcm was delivered in the form of liquefied natural gas (LNG). The total 155 bcm imported from Russia accounted for around 45% of the EU's gas imports in 2021 and almost 40% of its total gas consumption.

Progress towards net zero ambitions in Europe will bring down gas use and imports over time, but today's crisis raises specific questions about imports from Russia and what policy makers and consumers can do to lower them. This IEA analysis proposes a series of immediate actions that could be taken to reduce reliance on Russian gas, while enhancing the near-term resilience of the EU gas network and minimising the hardships for vulnerable consumers.

A suite of measures in our 10-Point Plan, spanning gas supplies, the electricity system and end-use sectors1, could result in the EU's annual call on Russian gas imports falling by more than 50 bcm within one year – a reduction of over one-third. These figures take into account the need for additional refilling of European gas storage facilities in 2022 after low Russian supplies helped drive these storage levels to unusually low levels. The 10-Point Plan is consistent with the EU's climate ambitions and the European Green Deal and also points towards the outcomes achieved in the IEA Net Zero Emissions by 2050 Roadmap, in which the EU totally eliminates the need for Russian gas imports before 2030.

We also consider possibilities for Europe to go even further and faster to limit near-term reliance on Russian gas, although these would mean a slower near-term pace of EU emissions reductions. If Europe were to take these additional steps, then near-term Russian gas imports could be reduced by more than 80 bcm, or well over half.

The analysis highlights some trade-offs. Accelerating investment in clean and efficient technologies is at the heart of the solution, but even very rapid deployment will take time to make a major dent in demand for imported gas. The faster EU policy makers seek to move away from Russian gas supplies, the greater the potential implications in terms of economic costs and/or near-term emissions. Circumstances also vary widely across the EU, depending on geography and supply arrangements.

Reducing reliance on Russian gas will not be simple, requiring a concerted and sustained policy effort across multiple sectors, alongside strong international dialogue on energy markets and security. There are multiple links between Europe's policy choices and broader global market balances. Strengthened international cooperation with alternative pipeline and LNG exporters – and with other major gas importers and consumers – will be critical. Clear communication between governments, industry and consumers is also an essential element for successful implementation.

Impact: Taking advantage of expiring long-term contracts with Russia will reduce the contractual minimum take-or-pay levels for Russian imports and enable greater diversity of supply.

Impact: Around 30 bcm in additional gas supply from non-Russian sources.

Impact: Enhances the resilience of the gas system, although higher injection requirements to refill storage in 2022 will add to gas demand and prop up gas prices.

Impact: An additional 35 TWh of generation from new renewable projects over the next year, over and above the already anticipated growth from these sources, bringing down gas use by 6 bcm.

Impact: An additional 70 TWh of power generation from existing dispatchable low emissions sources, reducing gas use for electricity by 13 bcm.

Impact: Brings down energy bills for consumers even when natural gas prices remain high, making available up to EUR 200 billion to cushion impacts on vulnerable groups.4

Impact: Reduces gas use for heating by an additional 2 bcm in one year.

Impact: Reduces gas consumption for heat by close to an additional 2 bcm within a year, lowering energy bills, enhancing comfort and boosting industrial competitiveness.

Impact: Turning down the thermostat for buildings’ heating by just 1°C would reduce gas demand by some 10 bcm a year.

Impact: A major near-term push on innovation can, over time, loosen the strong links between natural gas supply and Europe's electricity security. Real-time electricity price signals can unlock more flexible demand, in turn reducing expensive and gas-intensive peak supply needs.

Other avenues are available to the EU if it wishes or needs to reduce reliance on Russian gas even more quickly – but with notable trade-offs.5 The main near-term option would involve switching away from gas use in the power sector via an increased call on Europe's coal-fired fleet or by using alternative fuels – primarily liquid fuels – within existing gas-fired power plants.

Given that these alternatives to gas use would raise the EU's emissions, they are not included in the 10-Point Plan described above. However, they could displace large volumes of gas relatively quickly. We estimate that a temporary shift from gas to coal- or oil-fired generation could reduce gas demand for power by some 28 bcm before there was an overall increase in the EU's energy-related emissions.

The larger share of this potential decrease in gas demand would be possible through gas-to-coal switching: an additional 120 TWh in coal-fired generation could cut gas demand by 22 bcm in one year. In addition to opportunities to run on biomethane, nearly a quarter of the EU's fleet of gas-fired power plants is capable of using alternative fuels – nearly all in the form of liquid fuels. Taking advantage of this capability could displace another 6 bcm of natural gas demand a year, depending on sufficient financial incentives to switch fuels and the availability of those fuels.

If this fuel-switching option were to be fully exercised in addition to the complete implementation of the 10-Point Plan described above, it would result in a total annual reduction in EU imports of gas from Russia of more than 80 bcm, or well over half, while still resulting in a modest decline in overall emissions.

We have not included additional near-term measures to curb industrial demand, because of the risk of wider knock-on effects on the European economy.

The EU has access to more than 200 bcm per year of regasification capacity, including the possibility to bring in gas via UK LNG terminals. However, there is limited interconnection capacity in some areas, notably from Spain to France, which constrains the use of Spanish regasification capacity for imports to other European countries.

Assuming gas prices of EUR 22/MMbtu and CO2 prices of EUR 90/tonne.

The amounts would depend on how the measures are designed, as well as on other factors affecting the overall profitability of the electricity companies.

We also examined the possibilities to bring down industrial use, especially for feedstocks. On the latter, there is limited scope to improve conversion yields, so a reduction in feedstock gas demand would in practice mean reduced chemical production, with important potential knock-on effects along value chains (e.g. in 2021, the food industry in some countries was disrupted because the supply of CO2 to food-packing companies was sourced from ammonia plants, which stopped production because of high natural gas prices).

We have not included additional near-term measures to curb industrial demand, because of the risk of wider knock-on effects on the European economy.

The EU has access to more than 200 bcm per year of regasification capacity, including the possibility to bring in gas via UK LNG terminals. However, there is limited interconnection capacity in some areas, notably from Spain to France, which constrains the use of Spanish regasification capacity for imports to other European countries.

Assuming gas prices of EUR 22/MMbtu and CO2 prices of EUR 90/tonne.

The amounts would depend on how the measures are designed, as well as on other factors affecting the overall profitability of the electricity companies.

We also examined the possibilities to bring down industrial use, especially for feedstocks. On the latter, there is limited scope to improve conversion yields, so a reduction in feedstock gas demand would in practice mean reduced chemical production, with important potential knock-on effects along value chains (e.g. in 2021, the food industry in some countries was disrupted because the supply of CO2 to food-packing companies was sourced from ammonia plants, which stopped production because of high natural gas prices).

Assessing the impacts of Russia's invasion of Ukraine on global oil and natural gas markets and energy security

Fuel report — February 2022

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