What will happen if Russia cuts off gas supplies to Europe?


(CNN Business) — If Russia stops gas supplies to Europe in retaliation for sanctions over its invasion of Ukraine, the region should still be able to weather the coming winter. But that won’t be easy or cheap.

That is the conclusion of a report published this Monday by Bruegel. The Brussels-based think tank warned to prepare “for a complete termination of all Russian gas flows to Europe.”

“If the European Union is forced or willing to bear the cost, it should be possible to replace Russian gas as early as next winter without devastating economic activity, freezing people, or cutting off electricity,” the report said. Bruegel researchers. “But on the ground, there will be dozens of regulations to review as well as routine procedures and operations, lots of money to spend quickly, and tough decisions to make.”

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Thanks to record imports of liquefied natural gas from countries such as the United States in recent months, Europe should be able to make it through the summer without serious energy shortages, even if Russia intentionally cuts off its gas supplies, or if key infrastructure is damaged. amidst the fighting in Ukraine.

Gas imports from Russia, in figures

However, Bruegel said the bloc must start thinking about how to replenish its inventories, which countries across Europe rely on to power and heat homes.

Europe imports around 40% of its natural gas from Russia. Germany, the bloc’s biggest economy, is particularly exposed: Russia supplies about half of its natural gas.

Austria, Hungary, Slovenia and Slovakia get around 60% of their natural gas from Russia, while Poland gets 80% from this source.

coal and climate

If Russian imports cease, Europe will have to cut gas demand by at least 400 terawatt-hours, or 10-15% of annual demand, according to Bruegel. The group said this is “possible” but would require policy changes. Some options are to increase the use of alternative fuels such as coal, delay the closure of nuclear power plants or reduce demand from industrial agents.

This scenario also assumes that the EU “can acquire unprecedented amounts of liquefied natural gas”.

Increased use of coal, in particular, would have major consequences for the climate. A major UN-backed report released Monday concludes that global warming is poised to transform life on Earth as we know it, with effects more disruptive and widespread than scientists expected 20 years ago.

Europe is starting to plan. On Sunday, German Chancellor Olaf Scholz, who made the decision to stop certification of the Nord Stream 2 gas pipeline from Russia last week, said the country will build two new liquefied natural gas terminals.

“We have to do more to protect [el] our country’s energy supply,” Scholz said.

Germany is also studying the possibility of extending the useful life of its three remaining nuclear power plants, which are scheduled to close this year.

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Bruegel said cost management, as well as coordination between governments and companies, will be a challenge as Europe tries to replenish its gas supply. Prices in Europe are below the all-time highs reached in December 2021, but remain high.

Adding some 70 terawatt-hours of gas to EU storage before next winter would cost at least 70 billion euros ($79 billion), up from 12 billion euros ($13.5 billion) in previous years, according to Bruegel. .



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