The EU's Gas Distribution Plan is about to be Cut

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When they meet in Brussels today, EU energy ministers will be under intense pressure to agree on a common plan to save gas before winter to shore up the bloc in case the Kremlin turns off the taps.

According to several EU diplomats and a Commission official, however, the initial sense of urgency in the EC's proposal for mandatory distribution of natural gas has waned. Instead, talks between EU ambassadors on Monday focused on preferences, exemptions and loopholes, with countries offering excuses for why they should not be subjected to a full 15 percent cut in gas consumption from August to March.

An initial show of force by opponents last week opened the door to new demands, even from capitals that initially supported the mandatory cuts, according to revised drafts seen by POLITICO.

"We know it's the winter package, but now we feel like Santa Claus is in town giving out presents, even [to countries that] haven't been the nicest in the last year," said a diplomat from an EU country, supporting the mandatory reduction of gas consumption.

According to a European Commission official, part of the problem lies in the fact that in the original plan to trigger emergency quotas, "all our scenarios were based on an interruption of Russian gas supplies from July."

It came as governments - not least Berlin - feared that the Nord Stream gas pipeline from Russia to Germany would not be switched back on after its annual maintenance earlier this month.

Flows through the pipeline have, however, partially resumed, although they will be reduced to 20% of capacity from Wednesday.

Kyiv was quick to say, "I warned you."

"All this is being done by Russia deliberately to make it as difficult as possible for Europeans to prepare for winter," Ukrainian President Volodymyr Zelensky said on Monday evening.

But the various concessions - plus the perceived need to protect the bloc from a possible supply shock from Russia - mean there is "generally cautious optimism that a deal can be reached tomorrow", a second EU diplomat said late on Monday.

A third diplomat also said a deal was likely on Tuesday as most countries agreed it was important to show "EU unity and solidarity" in the face of Russian threats.

The risk, however, is that any deal will be too fuzzy to achieve the main goal: saving the 45 billion cubic meters of natural gas needed to weather a colder-than-usual winter if supplies from Russia's Gazprom be discontinued.

"No one knows exactly what the shortfall will be in terms of volumes: whether it will be an average or very cold winter, whether there will be a maximum share of renewables or less wind," the Commission official said. "We always bet on the most conservative scenario because we wanted to be cautious, while the member states are betting on, I would say, an optimistic scenario."

Excuses, excuses

The first article of Brussels' emergency proposal to be scrapped was the most controversial: it gave the Commission the power to impose mandatory reductions in gas emissions on countries without their consent.

"This is something we cannot agree to," Polish climate minister Anna Moskwa said on Monday. "And not only us: Greece, Spain, Portugal, Cyprus, Malta are also against such decisions, and there are other countries that have objections to specific provisions of this document."

The reworked version of the proposal - put together by the Czechs, who are rotating Council presidents - instead calls on the Commission to propose an emergency trigger of mandatory quotas to be voted on by the parties.

The document would also exempt Cyprus, Malta and Ireland from spending cuts on the grounds that these island nations are not physically connected to the mainland, meaning they would not be able to send extra gas to their neighbors anyway.

The Commission official downplayed this concession, saying that each of the three islands consumes only between 1 and 2 billion cubic meters of gas per year.

Other countries oppose the need to reduce gas consumption by 15%.

A French energy ministry official stressed that "the 15% figure is only in case of a crisis, we cannot know for sure whether this emergency alert will be triggered at all or not", adding that France's national target of reducing overall consumption of energy by 10% over the next two years should be more than enough to cover gas economy requirements.

Paris also scored a victory in the text by adding a provision pledging that countries would make "maximum efforts to preserve all electricity generation capacity that does not rely on gas imports," which French ministry officials said would should have encouraged Germany to extend the life of its nuclear plants.

Bulgarian Prime Minister Kiril Petkov told POLITICO that binding gas cuts "definitely could be something that could be supported" by Sofia, but that in the event of a crisis they could "ask for some derogations for coal, just for this winter".

On Monday, Athens pointed out that because it uses most of its gas to generate electricity, cutting demand would only force it to consume more power from the mainland grid. This also led to an amendment allowing for a reduction in the savings target

The Iberian Peninsula will also receive a special reduction in the savings obligation to account for its limited ability to send gas to France due to the lack of gas interconnections between the countries.

EU members that have reduced their gas consumption at the start of 2022 - such as Denmark and the Netherlands - will be able to deduct these savings from the required winter quota and count any additional gas in underground storage above EU requirements as a contribution to the target for savings.

Industrialized countries such as Germany will be able to request that gas consumed by industries deemed critical "not be taken into account when determining the volume of the mandatory reduction". Several diplomats attributed this to the fact that the German economy is closely tied to that of neighboring countries.

During Monday's talks, which lasted until 9 p.m., there was apparently no official running stock or calculation to see whether the concessions would undermine the overall austerity target. However, "there was a consensus that they would still be sufficient to be effective," the third diplomat said.

But the haggling is causing the Commission to revise its expectations downwards.

"I don't have an exact figure yet, I expect the focus [on Tuesday] will be on volumes, but if we stay between 30 and 45 bcm, I think that's a good result," the Commission official said. "What will be historically important is whether there will be an agreement and a political signal that everyone should start reducing demand because we haven't got there yet."

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