EU gas rationing deal draws cheers but it won’t keep you warm this winter

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EU energy ministers on Tuesday reached agreement on what, just six days earlier, had been dismissed as unthinkable: mandatory, bloc-wide gas rationing in case of winter supply shortages.

“This was not a mission impossible,” cheered the Czech government, which currently helms the rotating presidency of the Council of the EU.

But the deal — meant to ensure countries save and share enough natural gas to protect themselves if the Kremlin completely halts deliveries — will only impose the bare minimum of binding cuts needed to weather a Russian shutoff.

It also leaves decision-making power squarely in the hands of national capitals — and a qualified majority of countries will be needed to activate the emergency trigger and force rationing.

For those reasons — not to mention a smorgasbord of carve-outs and exemptions — the deal may not actually succeed at its initial goal: ensuring the EU will be prepared to live without Russian gas this winter come what may.

Last week, the European Commission issued a dire winter and economic outlook, warning that a Russian shutoff was imminent and that countries should reduce gas consumption by 45 billion cubic meters (bcm) from August to March — equivalent to a bloc-wide gas cut of around 15 percent — if they hoped to avoid freezing populations and a 1.5 percent drop in GDP due to destroyed industry.

Tuesday’s deal, when accounting for all the loopholes, yields a gas savings target closer to 10 percent.

Yet ministers said quibbling over the calculations was beside the point.

“Today we achieved something very difficult: the pooling of everyone’s resources, which in reality responds to national needs, to enable a response of solidarity,” Spanish Minister of Ecological Transition Teresa Ribera told POLITICO.

“I believe politically that has much more value, even if it means we only save 30 bcm of gas instead of 45 bcm by forcing countries to go along kicking and screaming,” Ribera added. “Perfection in the form of an Excel sheet doesn’t exist.”

Ribera largely led the charge of an opposing bloc of southern EU countries unwilling to bend to a full 15 percent gas cut, as proposed by Brussels.

The final deal would see Spain and Portugal able to seek a gas cut obligation of just 7 percent, on the grounds that the Iberian Peninsula’s puny pipelines to neighboring France prevent it from sharing much gas.

Ireland, Malta and Cyprus will get a full pass, on the grounds they aren’t linked up to the Continent’s gas grid at all.

Greece and other countries heavily dependent on gas for electricity won’t have to cut down if it imperils domestic energy security.

Should Russia unplug the electricity systems of Lithuania, Latvia and Estonia — which are still synchronized with the Soviet-era power grid — they also would still be allowed to use gas freely to keep power plants running.

EU members holding extra gas in storage already can count it toward their target, and potentially save less going forward.

All other countries are expected to make “best efforts” to save around 15 percent voluntarily beginning in August — but French ministry officials were quick to say “the 15 percent figure is just in case of a crisis.”

Berlin said it was grateful for the joint show of strength.

“Today’s agreement is a strong signal to Putin’s Russia: Europe will not be divided or blackmailed,” German Vice Chancellor Robert Habeck said. “We are countering Putin’s attempt to unsettle us with European solidarity and unity — that is of enormous importance.”

When asked whether the cuts were enough, Habeck said, “No, because certain countries have been exempted … I haven’t yet seen an exact calculation of where we’ll arrive, but the amount will be smaller.”

“At the same time, the available amount will help enormously,” he added.

Missing math

Germany wasn’t the only country lost in the numbers.

Two Commission officials said that according to an assessment from Brussels, gas savings would exceed 30 bcm even if every country availed itself of the political exemptions.

By how much?

“More, truly much more,” one of the Commission officials insisted. “But I cannot say further.”

“Not easy to say, as there are no calculations we have seen,” said one EU diplomat.

“The Commission assessed we would reach 30 bcm in reductions, but no one knows and no one has counted it,” a second EU diplomat said.

“Thirty bcm is what would be needed for an average winter,” a second Commission official said. “Above that, we would be comfortable.”

That’s not the tune Brussels was singing last week.

The gap between supply and demand “would be around 30 bcm in an average winter, 45 bcm in a colder one, and even larger if the winter is exceptionally cold — and we assume that non-Russian [liquefied natural gas] and pipeline supply will remain high through the winter,” EU Energy Commissioner Kadri Simson said when unveiling the rationing proposal.

Those assumptions are already on thin ice: an outage at a major U.S. liquefied natural gas export facility will limit seaborne shipments for the rest of 2022, while Spain began exporting gas to Morocco for the first time in June, amid a spat between Rabat and gas-producing Algiers.

James Huckstepp, gas analytics manager for Europe, the Middle East and Africa at S&P Global Platts, said 30 bcm was “just about” enough to survive through winter months without Russian gas, “but it doesn’t leave room for below normal temperatures or non-Russian supply outages.”

Providing for all possible surprises would require something closer to 60 bcm or 70 bcm, or a bloc-wide gas consumption cut between 20 percent and 25 percent.

“The reason why the Commission started this proposal was to prepare for a hard winter, so I don’t know how particularly safe we should feel about being prepared for an average winter, especially if the Commission is not able to provide any numbers,” complained a third EU diplomat.

“I think the only country that will reduce anything based on this proposal is Germany,” acknowledged the second EU diplomat, in reference to the loopholes.

Already on Wednesday, flows through the Russia-to-Germany Nord Stream pipeline are set to drop to just 20 percent capacity, in what Simson on Tuesday called “a politically motivated step.”

There’s no guarantee if or when those flows might ramp back up to full volumes. The Kremlin’s excuse of a delayed gas turbine being out for maintenance has “no technical justification,” according to the German government, and five more turbines still need to be returned, meaning there’s ample room for more Russian surprises.

One thing is clear: On their own, Tuesday’s warm feelings of unity won’t be enough to heat households when winter comes.

“If it doesn’t smell like solidarity and it doesn’t look like solidarity, it probably isn’t solidarity,” the third EU diplomat said.

Karl Mathiesen, Leonie Kijewski, Victor Jack and Zia Weise contributed reporting.

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