EU countries should give companies, which often buy power with long-term contracts, financial incentives to reduce demand for natural gas as part of measures to curb use ahead of winter, according to a draft “reduction plan of gas demand’ produced by the European Commission and seen by the Financial Times. Countries are encouraged to switch to renewable energy sources or postpone the shutdown of nuclear power plants to reduce natural gas use. Coal-fired power plants restarting to compensate for cuts in Russian gas supplies could be exempted from industrial emissions targets under the plans. The Commission, the EU’s executive body, is proposing that member states limit heating in public buildings to 19 degrees Celsius and cooling to 25 degrees Celsius and launch information campaigns to promote ways to save energy. The EU is scrambling to find ways to reduce its dependence on Russian gas as part of its plans to try to hit Moscow economically as punishment for its invasion of Ukraine. Europe also fears Russia’s ability to rig natural gas, cutting supplies, in retaliation for Western support for Ukraine. The Commission said in the draft text that measures taken now could reduce the impact of a “sudden supply disruption by a third”. “There is no big game changer [the plan] but I think it will do well in any capital city,” said one EU diplomat. Until this year Russia supplied around 40 percent of the EU’s natural gas. But since mid-June, according to the Commission document, flows through Nord Stream 1, the largest pipeline from Russia to the EU, have decreased by 60%. Total flows from Russia are now less than 30 percent of the average between 2016 and 2021, according to the draft. In May, the EU asked member states to fill natural gas storage facilities to 80% of their capacity by November to have enough energy for the winter. However, Moscow’s recent moves to cut off supplies to the Baltic states, Finland, Poland and Bulgaria and reduce flows to Germany and Italy have left the countries unlikely to achieve this goal. Gas storage across the EU is now 62% full, according to figures from Gas Infrastructure Europe, but in some countries, such as Bulgaria and Croatia, the figure is only around 38%. The draft document also suggests that some industries could move their operations from areas where demand is tighter to areas where there is better energy supply and guides which countries should be prioritized for consumers in the event of severe gas cuts. It recognizes the supply chain impact of the closure of certain sectors, such as the chemical industry or the glass industry. Jori Ringman, director general of Cepi, the European body for the pulp and paper industry, said prioritizing certain sectors “is not a choice between protecting citizens and continuing industrial production . . . The disruption would affect paper packaging for food and pharmaceuticals, as well as the entire logistics of the EU, as well as basic hygiene products.” Final plans are expected to be released next week. Brussels also hopes to increase the amount EU countries can approve for state aid to boost investment in renewables and alternative fuels. The Commission appears to have taken many concerns of EU industry into account in its draft document, focusing on market incentives to reduce gas consumption and the wider implications for the European supply chain. “We’re glad to hear,” said an industry executive. Alexandre Affre, deputy director general of BusinessEurope, the employers’ federation, said: “Everything must be done to avoid forced production cuts. To avoid this, market incentives to reduce gas consumption between now and winter are very much needed.” The commission declined to comment. Additional reporting by Andy Bounds
