European Union leaders want the bloc to use the reprieve of a warm summer to build up natural gas stores in preparation for winter and any additional volatility to energy markets triggered by the Russia-Ukraine war.
The European Commission made public its proposals on Wednesday, a day before the European Council convenes its meeting in Brussels, where President Joe Biden and heads of state will talk over how to respond to the Russian invasion. The White House has already previewed a “joint action on enhancing European energy security” between the United States and Europe, which Biden will announce Thursday, and all parties have committed in principle to displacing Russian gas from Europe’s economies.
The commission’s proposal would obligate EU states to reach a minimum of 80% of gas storage capacity by Nov. 1 of this year, and the level would rise to 90% in coming years.
The commission would have sought 90% storage this year but recognizes that “the specific situation of the current year” makes things difficult and is allowing flexibility “to ensure smooth phasing-in will be provided,” according to an official communication detailing its proposals.
Aside from new storage requirements, the commission is also proposing that members band together to purchase gas via a refilling task force as a means of wooing producers and keeping prices affordable.
“The EU should act jointly to harness its market power through negotiated partnerships with suppliers,” the commission said. A separate document said a task force would “reinforce the EU’s international outreach to suppliers to help secure well-priced imports.”
The effort on storage and collective buying tracks back months. Members including Spain, France, and Romania have been advocating storage requirements since at least last fall, when gas and electricity prices were already showing extreme volatility before Russia invaded.
Now, EU states are setting sights on a swifter phaseout of the Russian oil and gas on which they’re especially reliant. Leaders met in Versailles earlier this month and agreed to work toward that goal by deploying more renewable energy sources and bringing in more liquefied natural gas from friendly nations.
Jonathan Stern, a distinguished research fellow at Oxford University’s Institute for Energy Studies, said the commission’s proposal on storage doesn’t quite fix the most immediate problem of sourcing the gas itself.
“Storage is not the problem. The problem is, where’s the gas?” Stern told the Washington Examiner. “We’ve got lots of storage, but we haven’t got the gas to put into it.”
He said further that a strategy to fill gas stores quickly would complicate things by sending prices up, something the collective purchasing regime would theoretically try to address.
“If we start buying loads of gas to put into storage, and we will soon because the winter is pretty much over here — if we do that, then we’re just gonna keep the price really high.”
As for how the U.S. comes into play, the domestic oil and gas industry has been pitching itself as Europe’s alternative to Russia, and the Biden administration just approved the export of additional volumes of LNG from the Gulf Coast. LNG supplies to Europe have already been up in recent months and hit a record in January.
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Moreover, EU Commission President Ursula von der Leyen said Wednesday that she would engage with Biden about “how to prioritize LNG deliveries from the United States to the European Union in the coming months.”
“We are aiming at having a commitment for additional supplies for the next two winters,” she said.
