Finding the Reserves

To address the immediate oil price spike, countries globally have taken collective action to release strategic oil reserves. Agreeing to release a combined 61.7 million barrels (equivalent to 3% of total emergency reserves) – with the lion’s share coming from the US, Japan, South Korea and Germany. The US has also been urging the OPEC-member Gulf states to increase oil production to reduce price volatility, and has met with Venezuela in the hopes of replacing a shortfall in US domestic supply due to Russian sanctions.

Specific to the EU, the International Energy Agency (IEA) has put forward a 10-point plan10 outlining a path for the region to reduce its Russian gas dependency by more than 50 bcm over the coming year. It believes the path is consistent with the EU’s climate ambitions and the European Green Deal, and with additional steps that could see the EU completely eliminate the need for Russian gas imports by 2030. 

In looking to increasing regional security and self-sufficiency in the near-term while also remaining committed to investing in green energy, one of the key challenges for the EU will be in ramping up the pace at which the bloc can install the infrastructure needed to create sustainable alternatives to the status quo. 

Proposed solutions by the IEA include:

On the efforts to ramp up LNG imports for regasification, Spain has the largest port and operational capacity to do this, but the cost of creating viable gas pipe connections to other EU countries, remains a challenge. Spain has called on countries to share the cost of the infrastructure build-out, but even with cooperation, installing the necessary piping could take years to construct and would also need to be ‘future-proofed’, for example, to carry lower-emission or mixed gases such as biomethane or green hydrogen11. There is also a fuel-switching option, replacing gas with coal-fired power or alternative liquid fuels within the existing gas-fired power plants, but this approach risks derailing the EU’s emissions targets, certainly in the near term.

More generally, for countries within and beyond the borders of Europe to sustainably reduce their dependence on Russian oil and gas, any ramp up in fossil-fuel generated power in the near term, or redirection of existing global oil and gas supply, will need to be accompanied by policies to improve renewable technologies and alternative solutions to guarantee local societal security and global climate security.