European plan of 210,000 million to disconnect from Russian energy

The eternal pending issue, such as reducing the European Union's energy dependency on Russia, is now becoming a reality.

Thomas Osborne
Thomas Osborne
18 May 2022 Wednesday 21:47
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European plan of 210,000 million to disconnect from Russian energy

The eternal pending issue, such as reducing the European Union's energy dependency on Russia, is now becoming a reality. Yesterday, the European Commission presented its long-awaited plan, in which it estimates the investment that the Twenty-seven must make to carry it out at 210,000 million euros.

It will be "difficult", but "not impossible", assured the vice-president of the European Commission, Frans Timmermans, yesterday. The ambitious plan of the Community Executive foresees acting on several fronts. On the one hand, an unprecedented deployment of renewables will be supported, with an investment of 86,000 million euros, and the percentage that these energies will represent in 2030 is raised from 40 to 45%. It also increases the energy efficiency objectives.

The president of the European Commission, Ursula von der Leyen, advocated doubling the goal of photovoltaic solar energy and that by 2030 it become "the main source of energy" in Europe. In addition, she proposed that from 2025 all public buildings install solar panels and from 2029 all new residential construction. "It's ambitious, but realistic," she defended.

The action plan also contains an increase in renewable hydrogen to reach 20 million tons, half imported; as well as the production of biomethane and a simplification of the regulations to build wind and solar farms, with permits that currently require up to nine years in some cases, to reduce the procedures to one year.

Despite the commitment to renewables, a diversification of gas suppliers is also proposed. Among the alternatives, liquefied natural gas from the United States – a country with which it already signed an agreement at the end of March to increase imports – stands out, along with the product from Egypt, Nigeria or Qatar.

The invasion of Ukraine not only accelerates the green transition of the European Union, but also brings back other more reviled energies, such as nuclear and coal. It is expected that the life of some nuclear plants will be extended or even that new ones will be built – a clear commitment by France, and also now by Belgium, which recently had to announce that it had to stop its plan to put an end to this type of Energy-. But the origin of the uranium is also in question, when a large majority of countries import it, precisely, from Russia.

All this will require millionaire financing of 210,000 million euros for the coming years. Most of it, up to 113,000 million, will be used to promote the penetration of renewable energies. Of these, 37,000 million will serve to promote the use of biomethane and another 27,000, to hydrogen infrastructures. To improve the electricity distribution networks, 29,000 million are planned, while 56,000 million will be invested in energy efficiency systems and 41,000 million, to promote the adaptation of the industry to reduce the consumption of fossil fuels.

Aid of up to 2,000 million euros is also contemplated to help build infrastructure for the countries most dependent on Russian oil, such as Hungary or Slovakia. They are landlocked countries that are currently vetoing the latest package of sanctions against Moscow, precisely because they contemplate an embargo on Russian oil. However, only Budapest has estimated in recent days that its infrastructure needs would be equivalent to 800 million euros.

And where will the money come from? Brussels hopes to mobilize up to 300,000 million euros, including the private investment that would accompany the projects. Although most would come from the subsidies and loans from the recovery fund created after the pandemic, which have not yet been requested by the member states. The anti-crisis reserve from the sale of emission trading rights, cohesion funds or the Common Agricultural Policy (CAP) will also be added. Countries will be able to transfer them to their national recovery plans.

The proposal includes the possibility that before the European Union ends its dependency, Moscow goes ahead and cuts off the tap. In this case, Brussels is open to putting a limit on gas prices and avoiding the escalation of prices that such a scenario would imply, in a "limited" way in time.

However, in the current situation of price volatility in which Russia has not completely cut off gas to Europe, the European Commission insists on voluntary joint purchase between countries, in addition to maintaining measures such as the tax on so-called lost profits from the sky, the profits from the design of a marginal market in which the most expensive energy (gas) sets the price of all technologies.

Likewise, Brussels expects citizens to make “small changes” in their lives, such as lowering the temperature of the heaters and increasing the temperature of the air conditioners. Consumption could be reduced by 5%, calculates the Commission.


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