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THE LATEST MOVEMENT IN EUROPE: Members of the European Union took new steps to end their reliance on Russian energy this morning, as Germany and other countries warned of a potential cutoff of Russian gas supplies amid the war in Ukraine.
Though the EU had declined to advance any bloc-wide sanctions on Russian fossil fuels at an earlier meeting in Versailles, governments within the 27-nation bloc announced a bevy of individual proposals to diversify energy supplies.
Poland announced this morning that it is taking steps to cut off Russian oil imports by the end of 2022. The news comes one day after it said it would also ban all Russian coal imports as early as May.
Speaking at a news conference in Warsaw this morning, Polish Prime Minister Mateusz Morawiecki described Poland’s effort as “the most radical plan in Europe ” for reducing its dependence on Russian energy, and called on other EU governments to “walk away” as well.
But Poland, which shares a border with Ukraine and has taken in millions of Ukrainian refugees, has more options to decouple itself from Russian oil than some countries in the 27-nation bloc. Poland has expanded its liquified natural gas terminal in Swinoujscie to receive new deliveries from other exporters, including the U.S., Qatar, and Norway. It also stands to benefit from a new Baltic pipeline delivering supplies from Norway, which is slated to open by the end of the year.
Other EU countries, including Germany, rely much more heavily on Russia for gas supplies—putting them in a much more precarious position if the Kremlin moved to abruptly cut off its exports.
Germany’s government this morning declared an “early warning” of a possible gas supply emergency, cautioning residents that Russia could cut off its supply as a means of retaliation after the West rejected Russian President Vladimir Putin’s demand that “unfriendly” countries pay for their gas in rubles.
The Kremlin is expected to present more details on its proposed currency change as early as tomorrow.
German Economy Minister Robert Habeck described its declaration today as a “precautionary measure” — the first in a new, three-step process adopted by the country in response to Russia’s war in Ukraine. The first step is to establish a task force to begin closely monitoring the country’s gas storage.
The second warning level requires companies in the gas industry to help regulate supply, the AP reports, while the third level calls for “full state intervention” to ensure gas delivery to those with the highest level of need, such as hospitals and private households.
There have been “several comments from the Russian side that if [the payment by rubles] doesn’t happen, then the supplies will be stopped,” Habeck warned.
Germany’s gas storages are filled just to 25% capacity, Habeck added, calling on companies and households to begin reducing their gas consumption.
“The question [of] how long the gas will last basically depends on several factors [such as] consumption and weather,” Habeck said. “If there’s a lot of heating, then the storage facilities will be emptied.”
MORE ON WHAT OTHER COUNTRIES ARE DOING, BELOW…
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MORE ON EUROPEAN NATIONS MOVING TO END RELIANCE ON RUSSIAN ENERGY:
Austria also activated the first in its three-step emergency gas supply plan: Like Germany, this involves a heightened level of supply monitoring, but stops short of further measures such as rationing, which Austrian Chancellor Karl Nehammer said would only come into play in the event of an “immediate crisis” (Still, Austria currently imports 80% of its gas from Russia, putting it at a decidedly higher risk).
Bulgaria, which relies on Russia for a whopping 90% of its gas supply, convened an emergency government meeting this morning to discuss what measures could be taken in the event of an abrupt shutoff.
Though Bulgaria has some of the deepest ties to Russia in all of Europe, its new government has taken strides to adopt an agenda aligned with its fellow EU and NATO members, including reducing its dependence on Russian energy supplies.
The country is moving to ramp up LNG imports from Azerbaijan. Bulgaria is also weighing the possibility of using existing terminals in Greece and Turkey to bolster its supply in the short-term.
The Netherlands called on its citizens to use less gas — though it stopped short of activating its official gas crisis plan: That’s in addition to a public campaign launched by the Dutch government over the weekend calling on citizens to scale down their gas consumption.
“We are not going to initiate [the crisis] plan because we will only take that step when there is a real physical shortage or there is an acute threat that it will happen,” Tim van Dijk, economic affairs ministry spokesperson, told Reuters in a statement.
France, which gets around 20% of its gas from Russia, largely urged calm, even as the country’s finance minister, Bruno Le Maire, said in a radio interview today that France is preparing itself for “all possible scenarios” on Russian gas supplies.
And Italy, which gets roughly 40% of its supply from Russia, said it will wait until state-owned Russian gas giant Gazprom sends contract amendments to its gas operators before making a decision on imposing a “state of alert.” “Italy is monitoring developments before taking any decision,” a government source told Reuters. So far, suppliers said, Russian gas flow to the country remains “regular.”
BIDEN TO ACT ON DEFENSE PRODUCTION ACT CALLS: President Joe Biden is preparing to invoke the Defense Production Act to enable production of more critical minerals for EV batteries and other green tech, Bloomberg reported this morning. Action could reportedly come as soon as this week.
Lawmakers and interest groups left and right have been pushing Biden to use the DPA in the face of high energy prices, both as a means of deploying more green energy and displacing foreign mineral imports.
Democrats and green groups in particular have asked for Biden to use it to build more renewables and energy efficiency technologies.
“Using the DPA and your other executive powers in this manner won’t just help Ukraine, the rest of Europe, and the U.S. in the short term,” more than 200 environmental and other organizations wrote Biden earlier this month. Doing so will “preempt future crises sparked by oligarchs, strongmen, and the climate emergency, and position the U.S. to be a global leader in the just and renewable energy transition that will leave no worker behind.”
Republican lawmakers have made their own requests, and on mineral production in particular. Sens. Lisa Murkowski, Jim Risch, and Bill Cassidy, joined by Sen. Joe Manchin, told Biden the “time is now” to grow mineral production and asked for the DPA to be used.
Still some lawmakers’ DPA requests have asked for it to be used for enabling more oil and gas production.
INDUSTRY GROUPS SAY OFFSHORE PLAN NEEDED ON TIME: Industry groups are pressuring the Interior Department to speed up development of a five-year offshore leasing program for the Gulf of Mexico or else “jeopardize American energy security” for leaving potential oil and gas production on the table.
Interior has said it is actively developing the next five-year plan (the current plan expires this year), but it’s behind schedule, and a joint analysis put out by the American Petroleum Institute and National Ocean Industries Association yesterday says that could risk 500,000 barrels per day of production over the next two decades, relative to projections under an on-time plan.
Interior said in a statement more than three-quarters of offshore acreage that’s already been leased in the Gulf are unused and non-producing, while NOIA head Erik Milito said delay in issuing new leases under a new plan weakens “a key, proven national strategic energy asset.”
Milito has also emphasized to us before that offshore operators need additional acreage because most do not have oil.
Keeping it windy: The Biden administration is prioritizing offshore wind development, in contrast. The Bureau of Ocean Energy said this week it intends to issue nine environmental reviews of offshore wind projects next fiscal year and hold up to three lease sales in this fiscal year, as well as up to two sales in 2023.
The administration declined to join the American Petroleum Institute and Louisiana in appealing a federal judge’s ruling in January which vacated the single offshore lease sale it performed last year.
OIL HEADS ACCEPT HOUSE E&C INVITE, SPURN NATURAL RESOURCES: Executives with six large oil and gas companies will testify before the House Energy and Commerce Committee next month and respond to Democrats’ charges that the industry is price-gouging drivers.
BP, Chevron, Devon Energy Corporation, ExxonMobil Corporation, Pioneer Natural Resources, and Shell will all be represented at the April 6 hearing, which leadership titled, “Gouged at the Gas Station: Big Oil and America’s Pain at the Pump.”
Chairman Frank Pallone and Oversight Subcommittee Chair Diana DeGette said they want to know “why oil companies are content to watch Americans suffer so that their shareholders and executives can reap enormous profits.”
Industry groups have denied such characterizations.
Natural Resources hearing canceled: The news comes just one day after Devon Energy declined to participate in a hearing before the House Natural Resources Committee, joining two other oil companies, EOG and Occidental Petroleum, who also rebuffed the invite.
Natural Resources Chair Raul Grijalva criticized the executives and said it shows the industry’s ask for looser regulations “are nothing more than another age-old attempt to line their own pockets.”
Meanwhile, consumers are more concerned about the energy situation than they have been in the last decade: Nearly half of Americans, or 47%, say they worry “a great deal” about energy cost and availability, according to a new Gallup poll—double the percentage who said the same in 2020, and up from 37% in 2021.
US AND SINGAPORE TEAMING UP ON GREEN INFRASTRUCTURE: The Biden administration and the government of Singapore signed a new memorandum of understanding yesterday to “deepen cooperation” on development of green technologies.
The governments’ memo establishes that they’ll work together on green and sustainable infrastructure projects, including renewable energy, carbon capture, utilization, and storage, and hydrogen, according to a fact sheet put out by Singapore’s Ministry of Trade and Industry.
Biden said during remarks at a joint press conference with Prime Minister Lee Hsien Loong that the two governments would be “increasing our climate ambitions and working to decarbonize the shipping sector.” A joint statement from the two said part of the bilateral efforts would be to establish alternative bunkering infrastructure to fuel ships with low and zero-carbon fuels.
Industry expert draws attention to energy transition’s impact on human capital: Curt Morgan, the CEO of Vistra Corp., joined former FERC chairman and “Plugged In” host Neil Chatterjee on this week’s podcast to talk about the balance between quickly adopting cleaner energy sources—such as battery or solar—and ensuring that it is done so in a way to ensure displacement of workers and other human capital from closing plants is minimal.
Morgan, who announced last week that he will soon step down as the CEO of Vistra, also shared his wisdom for encouraging a positive work environment––even in a fast-changing industry—and outlined techniques to help promote diversity in the industry.
Listen to the full episode here.
The Rundown
Euractiv German court rules bulldozing homes for coal is legal
Wall Street Journal How high energy prices could help both the climate and the U.S.
Calendar
THURSDAY | MARCH 31
10:00 a.m. 366 Dirksen The Senate Energy and Natural Resources Committee will hold a hearing about domestic critical mineral supply chains.
