Monday, October 2, 2023

EU Unveils $220B Escape Route from Russian Fossil Fuels by 2027

May 18, 2022

Credit: Feydzhet Shabanov/AdobeStock

The European Commission on Wednesday unveiled a 210 billion euro [about $220 billion] plan for Europe to end its reliance on Russian fossil fuels by 2027, and to use the pivot away from Moscow to quicken its transition to green energy.

The invasion of Ukraine by Russia, Europe's top gas supplier, has prompted the European Union to rethink its energy policies amid sharpened concerns of supply shocks. Russia supplies 40% of the bloc's gas and 27% of its imported oil, and EU countries are struggling to agree sanctions on the latter.

To wean countries off those fuels, Brussels proposed a three-pronged plan: a switch to import more non-Russian gas, a faster rollout of renewable energy, and more effort to save energy.

The measures include a mix of EU laws, non-binding schemes, and recommendations to governments in the EU's 27 member countries, who are largely in charge of their national energy policies.

Taken together, Brussels expects them to require 210 billion euros in extra investments by 2027 and 300 billion euros by 2030 on top of those already needed to meet the bloc's 2030 climate target. Ultimately, it said the investments would slash Europe's fossil fuel import bill.

Those investments include 86 billion euros for renewable energy and 27 billion for hydrogen infrastructure, 29 billion euros for power grids and 56 billion euros for energy savings and heat pumps.

The Commission said some investments in fossil fuel infrastructure would be required - 10 billion euros for a dozen gas and liquefied natural gas projects, and up to 2 billion euros for oil, targeting land-locked Central and Eastern European countries that lack access to non-Russian supply.

Brussels wants countries to finance the measures using the EU's 800 billion euro COVID-19 recovery fund, and said it will also sell extra carbon market permits from a reserve over the next few years to raise 20 billion euros.

To spearhead the plans, the Commission proposed a higher legally-binding target to get 45% of EU energy from renewable sources by 2030, replacing its current 40% proposal.

That would see the EU more than double its renewable energy capacity to 1,236 gigawatts (GW) by 2030, and be aided by a law allowing simpler one-year permits for wind and solar projects. The EU also proposed phasing in obligations for countries to fit new buildings with solar panels.

Another target would cut EU energy consumption 13% by 2030 against expected levels, replacing its current 9% proposal. The EU is negotiating laws to renovate buildings faster to use less energy, and said voluntary actions such as driving less or turning down thermostats could cut gas and oil demand by 5%.

The legally-binding targets require approval from EU countries and lawmakers.

The EU plan includes a short-term dash for non-Russian gas supplies to replace the 155 billion cubic meters Europe buys from Moscow each year. Europe's gas demand is expected to drop 30% by 2030 to meet climate targets, but for now countries rely on the fuel to heat homes, power industry, and produce electricity.

Individual companies - not the EU - are responsible for buying gas, but Brussels will launch a scheme to allow countries to jointly buy gas. Experts have said this will be complex to launch and likely wouldn't help in a short-term energy crunch.

The EU said it wants to also produce 10 million tonnes of renewable hydrogen by 2030 and import another 10 million tonnes - which could be used to replace gas in industry, to avoid locking in years of emissions.

(Reporting by Kate AbnettEditing by John Chalmers and David Evans)

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