EU Energy Dependence on Russia - what changed?

By Nurbolat Kambekov

The European Union’s overreliance on Russian energy suppliers has always been a topic of hot debate, and the Russian invasion of Ukraine intensified the conversations surrounding it. Experts have warned the EU of the looming energy crisis for years, as Russia was the largest supplier of petroleum products to the Union. Yet, despite quickly introduced sanction packages and spikes in gas prices, the European nations managed to reduce their dependency on Russian energy.

 Prior to the invasion, Russian gas made up nearly half of all gas imports in the EU. Similarly, about half of all coal imports came from Russian suppliers. Russia’s proximity and the established energy infrastructure made it harder for the EU to eliminate imports fully, however, according to Eurostat, the Russian share of total energy imports has dropped from 25.5% in the first quarter of 2022 to 15.1% in the third quarter of 2022. Europe got off to a good start in its efforts to establish energy independence, but what does the future hold for the continent?

 As soon as the war broke out, European politicians started discussing possible sanction packages. Up until this day, 10 sanction packages were developed and implemented. With more than 90% of total EU oil imports from Russia being affected by these sanctions, the EU has also managed to set a price cap on Russian petroleum products in agreement with the G7+ coalition. Furthermore, a complete ban on coal imports from Russia took effect earlier in 2022, while the investments in the Russian energy sector were prohibited.

What is the situation in the Netherlands?

In April 2022, the Netherlands set a goal of curbing energy imports from Russia. While the primary objective of the measure was to stop energy imports from Russia, the Dutch government has also considered cutting gas consumption. An important step in ensuring the implementation of the decision has been the expansion of the liquified natural gas terminal in Rotterdam. Coupled with the installation of the additional terminal in the port of Eemshaven, this would allow importing additional 8 billion cubic meters of LNG (Government of the Netherlands, 2023). It is important to note that LNG imports from Russia stayed at the same level, however the share has decreased due to additional LNG imports from other partners.

 Furthermore, in compliance with the decision of the European Union, the Netherlands has stopped importing Russian coal as the respective ban took effect in August 2022. Therefore, LNG is now the only energy product that is being imported from Russia to the Netherlands.

 It is estimated that crude oil sanctions alone cost the Russian government 160 million euros daily (Government of the Netherlands, 2023). In the grand scheme of things, these sums are being taken away from the war funding.

Attribution of gas imports to individual sources.

Source: Eurostat

What are the future threats of decoupling from Russian energy?

Political actions of the past year indicate Europe’s certainty in its political course, namely, achieving full independence from Russian energy. 10 sanction packages have been implemented since the start of the war in Ukraine. Ultimately, all 27 EU members supported these measures, but the effect from decoupling can vary throughout the continent. The share of Russian imports in gas alone illustrates a higher level of dependence among member states in Eastern Europe and Balkans - with some states importing gas only from Russia prior to the invasion.

 Moreover, experts highlight the need for a coordinated course of action concerning energy markets (McWilliams et al, 2023). This also implies compromises from member states, one of them being the controversial plan to boost production from Groningen gas fields as the way to mitigate the consequences of gas import ban.

 Finally, there is a clear need to further decrease consumption. Many European nations have managed to cut their energy consumption in 2022, however this shouldn’t be regarded as a temporary measure, but rather a continuous process. If implemented successfully, cuts in consumption would allow to avoid energy shortages in the future.

Aggregate EU and joint purchasing

AggregateEU exemplifies a concrete step taken towards ensuring energy independence. This initiative represents a joint purchasing and demand aggregation mechanism backed by the EU Energy Platform. Energy buyers and sellers are being matched during the tendering rounds held every 2 months. The mechanism ensures fair treatment of market participants and prevents market manipulation.

 While every EU member benefits from such a scheme, it is the small states that arguably benefit the most. The demand aggregation mechanism results in competitive pricing that otherwise wouldn’t be achieved with small volume contracts.

REPowerEU and energy independence

The war in Ukraine has shed light on multiple aspects of energy independence. Not only is it crucial to minimize the Russian presence in the energy sector, but there also needs to be a sustained effort towards using clean energy. REPowerEU is an initiative that was created in May 2022 and it aims to diversify the Union’s energy supply and strive to use clean energy sources. Multiple energy partnerships (including those with Egypt, Kazakhstan and Israel) were reached to secure a supply of natural gas and renewable hydrogen. Furthermore, a target of filling up the underground gas storage to 80% has been achieved and, as of August 2023 the gas storage is filled up to 90% of its total capacity.

All in all, measures taken under REPowerEU allowed to double the deployment of renewables and drastically decrease Russian presence in the energy sector. At the same time, the EU still finds itself in a somewhat vulnerable position as renewables and its own supplies of gas still don’t satisfy the internal energy demand. Considerable changes still need to be implemented to achieve self-sufficiency in the energy sector and renewable energy is a driving force for change.

 To find out more about EU’s energy dependence on Russia, make sure to check an earlier article on the matter by Sofia Bertolaja.