Tony Blair Institute: How to end Europe’s energy dependency on Russia

Report suggests Middle East and American energy suppliers can play an important role in the switch

The port of Brunsbuettel in Germany is under consideration as a site for a new LNG terminal. AP

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Europe needs to look at replacing Russian energy supplies with alternatives, according to two reports which warn the transition could mean short-term hurt for long-term gains.

One report, by the Tony Blair Institute for Global Change, said that as long as Europe remains heavily reliant on Russian energy, it will be a weak spot for regional security. It suggests Middle East and American energy suppliers can play an important role in the switch.

A separate 10-point roadmap put forward by the International Energy Agency told European politicians to store more gas for rainy days, ramp up liquefied natural gas (LNG) imports and consider windfall taxes on power companies to fund the transition.

About 40 per cent of Europe’s gas imports and 25 per cent of its oil imports come from Russia.

The IEA report said contracts with Russian energy giant Gazprom should be allowed to expire at the end of this year and replaced with LNG deliveries and more pipeline imports from third parties such as Norway and Azerbaijan, while solar and wind energy production is increased.

Its proposals were broadly welcomed by senior European officials who said they would feed into discussion among the bloc’s 27 heads of government in the European Council next week.

The IEA wish list “contains a number of concrete avenues that one can take to reduce dependence on Russian gas,” said Kadri Simson, the EU’s commissioner for energy.

French Energy Minister Barbara Pompili, who is chairing European energy summits under her country’s six-month presidency of the EU, said the IEA suggestions “will contribute to the thinking” of the bloc’s 27 ministers.

France’s own measures “will certainly echo your plan,” she told IEA director-general Fatih Birol at a launch event for the proposals.

The Tony Blair report — Cutting the Cord: Ending Europe’s Dependency on Russia — lays out what it calls a credible path to reducing the reliance.

“Urgent action is needed,” the report says, adding that the Russian attack on Ukraine shows previous considerations of what was unthinkable needed to be looked at again.

“In the short term, implementing such a strategy would see a rise in inflation at a time when, emerging from the pandemic, it is already at a record high in many EU member states,” the report says.

“Making up for a Russian energy deficit would result in real economic costs, and European leaders would have to remain wary of the potential for price hikes that could strengthen populist movements across the continent.

“But this is still a discussion that leaders need to be having. While Europe faces an unprecedented threat to its postwar security, it must also work out the price it is willing to pay to preserve it.”

The report says it is “unlikely [President Vladimir] Putin would turn off the taps” but the war in Ukraine shows “we should prepare ourselves for all eventualities”.

It suggests that the EU could survive a two-month cut in the gas supply that comes through Ukraine from Russia.

In the medium term, it says countries needs to look at new suppliers, including in the Middle East and US, and at more nuclear involvement.

In the longer term, Europe needs to maintain and expand its nuclear-energy capacity, and accelerate the use of renewable energy grids.

The war in Ukraine “has made our dependence on Russian gas supply, and its risks, painfully clear,” Ms Simson said. “It must be a moment of awareness, a moment of awakening about our energy security.”

Updated: March 04, 2022, 3:07 PM
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