EU’s £178billion nightmare: Brussels forced to invest eye-watering sum to cut off Putin
UK 'hasn't invested enough' in domestic energy says Johnson
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With the energy crisis ripping its way across Europe and seeing prices and inflation rise at an alarming rate, the reliance on Russian gas and oil has come under intense scrutiny. The bloc must now take expensive steps to seek alternative sources of energy as the EU and other European nations emerge from the consequences of the Covid pandemic, with demand for energy on the rise.
Top of the agenda for the EU will be to raise renewable production targets, increase efforts in energy efficiency, prepare for scenarios including power cuts, consider rationing and in the worst-case scenario, place a Union-wide price cap on gas and electricity prices.
When it comes to renewable energy, plans are in place to target around 45 percent of supply coming from such sources, with 13 percent more concentration on energy efficiency being in place by 2030.
Other plans include the mandatory installation of solar panels on the roofs of homes, businesses and factories across the continent.
However, breaking away from Russian energy is far easier said than done according to reports in the Spanish press.
Although the EU has agreed to an embargo on Russian coal, member states require more time to implement the restrictions on the import of such goods.
The European Union relies on 40 percent of its natural gas from Russia, although, since the start of the invasion of Ukraine, this has been reduced to 26 percent, which still, therefore, accounts for 1 in 4 households and businesses relying on Putin for energy.
Third-party nations have stepped in to offer alternative supplies of gas.
Both Qatar and Iran have offered to supply the EU with gas, with Iran having the second-largest proven reserves of gas in the world, after Russia.
However, logistically, the offer may not be financially or practically possible due to a lack of installed infrastructure between West Asia and Europe, as already enjoyed by Russia and Europe.
Furthermore, the US has offered to ship LNG over to the EU, but once again, the flow and quantity of such imports are far from the figures currently being imported from Russia, with logistics once again proving to be the Achilles Heel in the project.
According to figures emanating from Brussels, the costs of removing Russia from the supply list will amount to £178bn.
A paper exploring the costs says: “The Commission’s analysis indicates that REPowerEU would imply an additional investment of €210 billion (£178bn) between now and 2027, on top of what is needed to reach the targets of the Fit for 55 proposals.”
However, Brussels insist the investment will pay off in the long run.
The report continues: The implementation of the Fit for 55 frameworks and the REPowerEU plan will save the EU €80 billion in gas import costs, €12 billion in oil and €1.7 billion in coal import costs, every year, until 2030.”
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The Commission proposes to use the resources at the disposal of the Next Generation program, and the community funds for the recovery from the pandemic.
And specifically, the billions that are available in the form of loans, since most countries, including Spain, have so far requested only the money that comes in the form of transfers (which do not count towards debt and deficit) but not credits.
A total cut-off of Russian gas has also been considered.
The first step is to update national contingency plans and outline “voluntary preventive reduction measures to be prepared in case an emergency arises.
“In a spirit of solidarity, less affected member states could reduce their gas demand for the benefit of the most affected member states.”
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In order for this to succeed, the paper continues: “To accompany these measures, an administrative cap on gas prices at the EU level might be necessary in response to a total supply disruption.
“If introduced, this cap should be limited to the duration of the EU emergency and should not compromise the EU’s ability to attract alternative sources of pipeline gas and LNG supply and to reduce demand.”
Additional reporting by Maria Ortega
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