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European energy policy: soft withdrawal

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How will Europe’s energy supply become cheaper again, and independently of Russia? This was discussed at the EU summit. In the end, Olaf Scholz can be happy.

Chancellor Olaf Scholz in Brussels © Nicolas Economou/​NurPhoto/​imago images

When rumors circulated in the EU Council building on Friday afternoon that a dinner would soon be ordered for the summit participants, everyone knew there was a crisis. actually had Europe The heads of state and government want to end their summit. But then one pause follows another, the final document that has been prepared is reviewed again, fears already circulating outside the meeting room that the meeting will be adjourned without result. Then all of a sudden it happens very quickly: there is no food to announce an engagement over.

When Chancellor Olaf Scholz appeared before the press at 7:40 p.m., the lack of sleep of the last few days was barely noticeable. On the contrary, he seems quite happy. “The European Union is more united than ever,” says Scholz, and that is also good because Russia I did not expect this unit. It has about nine hours of bitter negotiations, or, as Hamburg’s Scholz puts it, “very, very serious discussions”, which revolved around a single issue that the EU has dealt with at various summits and hardly ever these days could be more urgent. : energy supply and its costs. The objective is to control prices again and become independent from Russian deliveries. But how quickly can this happen and at what cost?

Not all states are equally concerned about this issue. Although they have a common internal market, they share very different sources of energy. Similarly, Gazprom’s offices across Europe are unevenly distributed, but this is disproportionate to how badly a country suffers from rising prices. It’s complicated and opinions differ as to what action should be taken now and what dangers lie ahead. You could describe it like this: if you pull a thread in one corner of Europe, a stitch may come unraveled somewhere else. That is why the EU is reluctant even to modify.

The reason for the noise of the summit was that some countries -especially Spain, where prices are through the roof- did not want to take it anymore. They demanded that the EU finally intervene more strongly in the energy market, with measures such as a price cap. This time, Spanish Prime Minister Pedro Sánchez went so far as to storm out of the chamber and threaten to block the final declaration, a popular tool at such summits to force others to change course.

You delegate to the committee

Sánchez, says Scholz with a slight smile, “represented his country’s interests very successfully.” In fact, the term “price ceiling” can be found in the final declaration of the summit, not in the form of a specific project, but as part of a portfolio of possible measures that the Commission is asked to examine in order to determine their effectiveness. . In other words: the question is delegated, which means that it has been removed from the agenda for the time being.

That also explains why the Chancellor is in such a good mood that night. Because Germany had spoken out very vehemently against intervention in the market. Scholz explains it again: the danger is “that it doesn’t have a good effect in terms of market supply and it doesn’t have a lasting effect in terms of prices.” Instead, the federal government is also focusing on the expansion of renewables at a European level, in EU states finally moving away from all things fossil, as Scholz praises. By diversifying energy sources, he recently said, independence from Russia would come “almost automatically.”

Spain already gets a large proportion of its electricity from cheap renewables. The country’s electricity prices have been at record levels since last year. And Sánchez was also unable to decouple the price of electricity from the price of gas against the resistance of the federal government, among others, even if he raised the price of this resistance: the image that Germany in particular, once again, relentlessly defends the logic of the market compared to southern Europe.

After a hard fight, not only the concerns of Spain, but also those of Portugal, Greece and Italy have found their place in the final declaration. Member States must now be allowed to temporarily introduce a price cap, which is not actually allowed in the internal market. So Sánchez can announce a success. And the chancellor can safely return to Berlin. In principle, what he doesn’t want to walk away from remains the same: Tough interventions in the energy market will not be common policy for the time being, even if they are guaranteed to be an issue again at the next summit.

So it’s good to keep in mind that the states have decided on something else, which Scholz isn’t too happy about, but about which, in general, he can’t say anything. Like vaccines, the EU will buy gas together in the future, as Commission President Ursula von der Leyen announced, “voluntarily”, however, as the Chancellor also emphasizes. In the morning, von der Leyen was able to present a suitable agreement together with US President Joe Biden: in future, the US will deliver a significantly larger amount of LNG liquefied gas to Europe. According to the Commission, it should be 15 billion cubic meters this year, in addition to the already promised delivery volumes of 22 billion cubic meters. So a total of 37 billion. In the coming years, the delivery volume from the US will gradually increase.

The Commission President speaks of “at least” an additional 50 billion cubic meters per year by 2030. That sounds like a lot and it should be. However, it is not easy to find out exactly how much the EU can expect to receive from the US in the coming years. Because how certain is it that like in 2022 and 2021 there will also be a base volume of 22 billion cubic meters in the next eight years where the 50 billion will come to the top so it’s actually volumes “additional”? It is not clear how much the United States can deliver in a timely manner, reports the New York Times. Apparently, the capacities are almost exhausted and expanding the infrastructure accordingly could take years. Not to mention the climate impact of US fracked gas.

An embargo would be faster

So aren’t the US-Euro gas partnership plans much more than token politics? In any case, Brussels wants there to be no doubt that the delivery quantities already established will be maintained and that the LNG that has now been promised will be added. “The goal is to get to 22 plus 50 billion cubic meters, that is 72 billion, per year as quickly as possible,” a commission spokeswoman said when asked by ZEIT ONLINE.

But even that would be just under half of Russia’s current supply volumes, and there are still eight years to go until 2030. So the signs point to a soft withdrawal rather than Russian gas independence in the near future. In reality, that would be quite easy to achieve, and even quick, simply if EU countries stopped buying gas or oil from Russia. But such an import ban cannot be achieved with the federal government, although some member states, especially from Eastern Europe, had strongly urged it in the run-up to this summit. The last word has not been said here either: Slovenian Prime Minister Janez Janša believes that there will be an embargo, “later than we would have liked, but sooner than Putin wants”.

How to proceed will be a challenge, especially for the federal government, which is still finding it difficult to expect its citizens to spare this crisis. But that is something that cannot be pushed further and further down the agenda. Because finding alternative energy providers for Russia, i.e. securing supply, is not enough: demand must now be addressed in the same way, says a senior EU representative. Reducing them can hardly be a matter for the EU, but for its members.

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