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Global Economy

How the EU countries should save gas

Concerned about a possible gas shortage in autumn or winter, the EU Commission has officially proposed its European gas emergency plan to reduce gas demand. It contains a number of measures that could be used to react to a complete stop in supplies from Russia to the European Union. Commission President Ursula von der Leyen thinks such a scenario is likely. "We must prepare for a possible total disruption of Russian gas supplies," the German politician told a press conference in Brussels today. Twelve member states are already not being supplied with gas at all or only to a limited extent.

Update of national plans by the end of September

However, precautionary gas savings can cushion the consequences of a possible delivery stop, according to Vice President Frans Timmermans. "We can reduce potential GDP losses if we make pre-emptive cuts now." In addition to the expansion of gas supplies from other countries and the development of renewable energies, the EU Commission is therefore focusing on a significant reduction in gas consumption.

In the event of a gas emergency, the EU states should even be able to be forced to save on gas. Specifically, the Brussels authority suggested that binding reduction targets should be possible if not enough is saved. First, however, the countries should voluntarily do everything they can to reduce their consumption from August to the end of March by 15 percent compared to the average of the previous five years.

Member States are asked to update their national contingency plans by the end of September. The aim is to protect the supply of households and important consumers such as hospitals, but also of industries that are particularly important for supply chains and competitiveness in the EU. Governments are to report every two months on progress and how they intend to meet the target. To help them do this, the Commission recommends countries to take measures, principles and criteria for coordinated demand reduction.

Companies should save gas and switch

A number of details were already known in advance. The focus is primarily on industrial consumers. According to this, the European plan is based on three pillars. The first involves switching from gas to alternative fuels in industry and in the power and heat sectors to minimize constraints.

The second pillar is about reducing consumption in the economy using market instruments. For example, member states could introduce auction or bidding systems to motivate companies to give up gas with financial incentives, it says. The EU Commission is thus following the ideas of the Federal Government.

"Interruptible contracts", with which gas suppliers can stop the supply under certain conditions and in return grant a price reduction, as well as contractual barter transactions between industrial customers are also intended to create more flexibility. With state aid, companies could be promoted nationally when switching to other energy sources.

"Do we have to set the air conditioning to 20 degrees?"

The third pillar relates to private consumers and savings in heating and cooling. In addition to national campaigns to raise public awareness, the EU Commission is calling for a compulsory reduction in gas consumption in public buildings. A targeted reduction in heating and cooling capacity in commercial centers and offices is also conceivable. In addition, the member states are to set new temperature and hourly threshold values for heating with gas in households. However, the authority left it open how high these should be.

A draft of the plan also stipulated that public buildings, offices and commercial buildings should be heated to a maximum of 19 degrees and cooled down to no less than 25 degrees with air conditioning. These specifications are no longer included in the proposals now presented.

Timmermans emphasized that citizens can also take part in the efforts of their own accord. "Do we have to set the air conditioning to 20 degrees?" Setting them a little higher may mean less comfort. At the same time, however, it could help to significantly reduce gas consumption. "If we act now, we can decide how we act and keep our destiny in our own hands," said the Vice-President of the Commission.

Rules for possible switch-off order?

In the worst case that individual customers have to cut gas or have to switch off completely, the EU Commission wants to provide governments with guidelines for prioritizing sectors. She wasn't more specific today. According to the earlier draft, states should decide in advance the order in which they would force the industry to shut down in the event of a supply shortage.

The order should take into account the importance of a facility and how its closure would affect supply chains. In general, there are already uniform rules in the EU for the event of a gas emergency, which are anchored in the so-called SoS regulation. This regulates, for example, which customers should still be supplied with gas in an emergency. Households and essential social services are given special treatment as "protected consumers".

In the draft for the gas emergency plan, the EU Commission once again emphasized that households are "protected customers" under EU law. This means they would be the last to be affected by gas rationing. However, if electricity production is at risk, countries could put the supply of gas-fired power plants for electricity supply through certain protected consumers, it said.

Vote next Tuesday

In Germany, the Federal Network Agency is already preparing criteria for the case of necessary shutdowns due to a gas shortage – on the basis of the German gas emergency plan. Federal Economics Minister Robert Habeck (Greens) recently made it clear that in the event of a gas shortage, all consumers would have to make contributions to save energy. Exactly how this will be implemented is not yet clear.

However, whether the EU Commission's plan will soon become reality remains to be seen in the coming days. The EU states still have to approve the project. From Friday, diplomats from the EU countries are to discuss the proposal – with the aim that the energy ministers will approve the plans at a special meeting on July 26th.

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