The EU continues to spend hundreds of millions of dollars per day on gas imports from Russia, even as European sanctions kick in and a growing list of Western energy companies cut their ties to Russian oil and gas producers.
Gas is Russian president Vladimir Putin’s most important source of financing, and cutting off imports would deal a devastating blow to his war effort. The trouble is, Russia supplies about 45% of Europe’s gas, which remains an indispensable fuel for electricity, building heat, and factories—and there are few good alternatives to replace it.
In the long term, European countries are likely to accelerate their construction of renewable energy sources and infrastructure to receive gas from other sources; the European Commission is expected to publish more details of that strategy next week.
But in the immediate term, there are a number of important steps that could reduce European reliance on Russian gas imports by one-third, according to a new report from the International Energy Agency.
Europe needs to find new sources of energy supply, and reduce demand
Step one is no more new contracts with Gazprom, the Russian state-owned oil company. According to IEA, contracts equal to about 12% of Gazprom’s European exports are set to expire by the end of 2022.
Other steps include securing alternative sources of energy: building more wind and solar, ramping up electricity production from existing nuclear plants, and boosting domestic gas production. Companies, governments, and individuals can also invest in energy efficiency in buildings and factories, replace gas boilers with electric heat pumps, and turn down building thermostats.
Even with these interventions, gas prices are likely to continue to rise. So the final step recommended by IEA is for governments to increase their spending on energy bills subsidies for low-income households. But it won’t be cheap: Offsetting the price spike would cost EU nations about $61 billion.