Europe plans to spend $221 billion to ditch Russia’s energy

May 18, 2022, 9:24 AM | Updated: Jun 8, 2022, 3:15 pm
REHDEN, GERMANY - MAY 12: A general view of the Astora underground natural gas storage facility on ...
REHDEN, GERMANY - MAY 12: A general view of the Astora underground natural gas storage facility on May 12, 2022 in Rehden, Germany. Russia has announced sanctions against dozens of western energy companies, including Gazprom Germania, of which Astora is a subsidiary. The German government runs Gazprom Germania as a trust after expropriating the company from Russian gas giant Gazprom following Russia's military invasion of Ukraine. Among conditions of Russia's sanctions is the requirement that western companies may not store Russian gas. The Rehden facility is Germany's biggest natural gas storage site. Germany is seeking to reduce its dependence on Russian energy imports of oil and gas as quickly as possible. (Photo by David Hecker/Getty Images)
(Photo by David Hecker/Getty Images)

(CNN) — The European Union has unveiled a €210 billion ($221 billion) plan to wean itself off Russian oil and gas.

Presenting its “REPowerEU” plan on Wednesday, the European Commission said it would attempt to slash consumption of Russian gas across the bloc by 66% by the end of this year — and break its dependence completely before 2027 — by saving energy, finding alternate sources and speeding up the transition to renewables.

“We are taking our ambition yet to another level to make sure that we become independent of Russian fossil fuels as quickly as possible,” EU Commission President Ursula von der Leyen said in a Wednesday press briefing.

Since Russia invaded Ukraine in late February, the bloc has sought to reduce its dependence on Russia’s vast energy exports. It agreed to ban Russian coal starting in August, and by last month had cut Russia’s share of EU natural gas imports to 26% from 40% last year.

The new plan goes further, aiming to quickly ramp up imports of liquefied natural gas from the United States and Canada, and increase flows of pipeline gas from Norway.

The European Commission has also set up a platform to enable countries to jointly purchase energy, with the aim of helping to bring down rocketing prices.

“When Europe acts together, it has more clout,” von der Leyen said of the joint procurement program. “This way we can secure energy imports we need without the competition between our member states.”

The plan also emphasizes energy-saving tactics as the “quickest and cheapest way” to address the crisis. Europe will encourage citizens and businesses to curtail their energy use — such as by switching off lights and using less air conditioning — and believes these steps could reduce its demand for oil and gas by 5% in the short term.

Longer term, the European Union will lift its target of having at least 40% of its energy coming from renewable sources to 45%. The bloc plans to dramatically cut down the amount of time it takes to get permits for new renewable energy projects.

Much of the €210 billion ($221 billion) in new investments envisaged between now and 2027 would be financed by drawing on the EU coronavirus recovery fund.

Parts of the plan are proposals for legislation — which would require approval by EU member states — while others are recommendations.

In addition to the coal ban, EU countries are working on an oil embargo. The European Commission said more time was needed for landlocked states that rely heavily on Russian oil delivered via pipelines to find alternate supplies.

Hungary — which got about 40% of its oil imports from Russia last year, according to the International Energy Agency — has so far balked at signing on.

Some member states have rapidly wound down their energy imports in recent weeks. Germany, Europe’s biggest economy, is particularly reliant on Russia’s gas, but has managed to cut Russia’s share of its imports from 55% to 35% since the invasion, Economy Minister Robert Habeck said last month.

The urgency to ditch Russian energy ratcheted up in April when the country cut off supplies to Poland and Bulgaria, making good on President Vladimir Putin’s earlier threat to suspend deliveries to “unfriendly” countries which refused to pay in rubles.

Finnish state-owned gas firm Gasum — which has also refused to pay in rubles, unlike some of Europe’s other energy companies — said on Wednesday that its Russian gas supplies could be cut off this weekend.

Wednesday’s plan set out how the bloc would respond if Russia turned off the taps completely. The Commission said it would work with member states to understand where demand for gas could be cut, and which countries could curtail their consumption for the benefit of others.

“Untying Europe from its largest energy supplier it going to be difficult,” Kadri Simson, European commissioner for energy, said at a news conference. “But the economic benefits of ending our dependency will be much greater than the short-term cost of REPowerEU.”

 Robert North contributed reporting.

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Europe plans to spend $221 billion to ditch Russia’s energy