Two years after Russia’s invasion of Ukraine in February 2022 and the rapid abandonment of Russian gas imports, gas supplies at affordable prices remain a challenge for the EU, according to the European Court of Auditors , which presented on Monday June 24 an audit on the “Security of gas supply in the EU”.
“Given its dependence on foreign gas, the EU can never let its guard down on the security of its supply, and there is no guarantee of prices accessible to consumers in the event of a major shortage,” declared the audit manager, João Leão.
Positive emergency measures
The EU has certainly taken emergency measures to tackle the supply crisis and soaring energy prices, such as setting a threshold allowing member states to subsidize energy bills households and SMEs, the cap on the price of gas, or even the objective of reducing gas demand by 15%.
“The EU framework helped Member States to deal with the crisis,” the Court also recognizes. “Certain EU policies and measures have had a positive impact on the security of its gas supply, notably by requiring or financing infrastructure that connects Member States’ gas networks, making bidirectional gas flows possible (e.g. example, both from west to east and from east to west) and by supporting the diversification of gas supplies,” she adds.
Effectiveness difficult or even impossible to assess
But “the EU still needs to resolve major problems to be fully ready to face a new gas crisis,” she warns. Especially since, for the moment, if the measures adopted have sent “a clear signal to the market”, their effectiveness remains difficult to assess. “The benefits of EU measures are not always obvious,” she judges.
This is the case of the objective of reducing gas demand by 15%: although it was achieved “thanks to the actions of the Member States”, other external factors played a role: the rise in gas prices – even reduced demand, as did mild winters. Ditto for the obligation to fill gas storage facilities: it made it possible to provide predictability, but “these filling levels of storage facilities correspond to the averages observed in the EU before the crisis”, notes the Court .
A price cap never activated
As for the capping of gas prices, triggered when prices exceed 180 euros/MWh, although it has made it possible to limit prices on the markets at the heart of the energy crisis, its effectiveness remains impossible to evaluate “since it does not has never been activated to date, despite the detection of certain risks likely to trigger its activation.
The AggregateEU platform, launched in April 2023 to enable joint gas purchases, has “aroused market interest, but the data is insufficient to allow conclusions to be drawn on its advantages”, observes the Court.
A laborious solidarity between States
The EU also relies heavily on solidarity between member states, “an essential principle which underpins the EU’s energy policy”. Thus, in the event of a serious gas emergency, where the market does not supply sufficient gas to satisfy the demand of customers protected under solidarity in a Member State (such as households and essential social services), Member States Neighbors should provide gas on demand to make up for this shortfall. A mechanism which must be regulated by a bilateral agreement between States.
However, of the forty agreements deemed necessary by the Commission, only eight had been concluded by January 2024. This does not fail to worry the Court: “Many Member States are still reluctant to sign solidarity agreements bilateral,” she notes. “Some of them would even consider interrupting supplies to a neighboring state in an emergency.”
A dangerous dependence on LNG
Furthermore, if the EU has managed to considerably reduce its imports of Russian gas, the Court is concerned about “the increased dependence on liquefied natural gas (LNG)”. In fact, LNG is “a product traded on the global market”, which “increases the risk of having structurally higher prices and increased volatility in the event of market tensions”, explains the Court.
Different elements which lead the Court to transmit three recommendations to the Commission: “First, complete its framework on the affordability of gas. Second, review and improve Member States’ coordination and reporting on security of gas supply. And finally, that the European Commission improves the transparency of information on infrastructure projects supported in the field of gas, electricity and hydrogen,” lists the head of the audit, João Leão.
2% Russian gas in Luxembourg
Luxembourg itself has seen its own situation evolve significantly since 2022. The country has significantly reduced its gas consumption, going beyond the -15% objective set by the EU. Furthermore, if, before the Russian invasion of Ukraine, 20% of gas imports came from Germany, one of the world’s largest importers of Russian-produced gas, they were only 0.2% in 2023, according to ILR figures.
Almost all imports now come from Belgium, these being mainly of Norwegian origin. Thus, while 13.8% of Luxembourg’s gas originally came from Russia in 2021, according to Bruegel’s estimates, “Luxembourg currently has a share of around 2% of Russian LNG in its gas volumes”, indicated in a response to a parliamentary question in October 2023 by the former Minister of Energy, Claude Turmes (déi Gréng).
