The European Commission plans to eliminate the EU's reliance on fossil fuels from Russia in response to the country's invasion of Ukraine, unveiling a series of proposals March 8 to diversify the bloc's gas supply and "repower" Europe with renewable energy.

The plan, dubbed REPowerEU, includes reducing the EU's Russian gas demand by about two-thirds, or 100 billion cubic meters, before the end of 2022. Russia accounted for about 45% of the EU's total gas imports and close to 40% of its total gas consumption in 2021, according to the International Energy Agency.

The shortfall will be offset by higher LNG and pipeline flows from non-Russian suppliers, which the commission said can replace 60 Bcm of Russian gas imports within 12 months, and by increased production of biomethane and renewable hydrogen.

The EU's "Fit for 55" plan, under which it aims to reduce emissions by 55%, will already lower its total gas consumption by one-third, or about 100 Bcm, by 2030.

"It is abundantly clear that we are too dependent on Russia for our energy needs," Frans Timmermans, executive vice president of the European Commission, said during a press conference. "It is not a free market if there is a state actor willing to manipulate it."

The plan comes as businesses from multiple industries — including the power sector, oil and gas, banking and technology — scramble to reduce their exposure to Russia in light of the conflict in Ukraine.

The EU's proposals also include measures to help member-state governments tackle rising energy prices. A series of short- and medium-term interventions, unveiled in October 2021, have "now been used by almost every member state," EU Energy Commissioner Kadri Simson said.

But the measures, which included energy subsidies, tax reductions and safeguards to prevent disconnection from the grid, are "no longer sufficient," Simson said. In a series of further proposals, member states will now be allowed to set regulated prices for vulnerable consumers, households and micro-enterprises and will be able to introduce temporary taxes on windfall profits and use emissions trading revenues to ease pressure on consumers.

In preparation for next winter, gas storage facilities in the EU must be filled to 90% capacity, the commission said. Gas storage usually supplies 25%-30% of the gas the EU consumes in winter, the commission said.

This filling target, which must be met by Oct. 1 each year, will help the EU in the event of supply disruptions. Russia is threatening to cut gas supplies to Europe via the Nord Stream 1 pipeline in response to sanctions imposed over the invasion of Ukraine, Bloomberg News reported March 8, citing a televised speech from Russian Deputy Prime Minister Alexander Novak.

Nord Stream 1 accounts for about 60% of Russian gas imports to Europe, but the pipeline's weight has increased to 80% due to reduced flows through other pipelines, Jefferies analysts said in a March 8 note. The new Nord Stream 2 pipeline, which has yet to enter operation, saw its certification process halted by Germany before Russia's invasion of Ukraine.

'Overriding public interest'

The commission plans to publish a series of recommendations in May to speed permitting of renewables, and Simson said member states ought to be ready to change existing rules if they slow development timelines.

"We cannot talk about renewables revolution if getting a permit to build a wind park takes seven years," Simson said, adding that it is time to treat renewables projects "as being in the overriding public interest because they are."

Slow permitting continues to strain Europe's renewables build-out, with lobby group WindEurope warning Feb. 24 that the EU needs to rapidly ramp up its annual wind capacity additions from 11 GW in 2021 to 32 GW to meet its 40% renewable energy target by 2030.

"We are seeing development issues across Europe, a lot of administration burden at the moment, a lot of grid issues," Kareen Boutonnat, CEO for Europe and international at developer Lightsource BP Renewable Energy Investments Ltd., said March 8 at the Solar Finance and Investment Europe conference in London prior to the commission's announcement.

"I think to the extent that the EU commission wants to accelerate renewables and become more energy independent ... in the future, then there needs to be something ... to remove some of the roadblock of development," Boutonnat said.

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