Monday, August 15

Brussels lowers its proposal to ration gas in an emergency after pressure from countries like Spain

The European Commission wanted special powers to decree alerts that would carry with them mandatory reductions in gas consumption in the member states. If the Russian president, Vladimir Putin, cut off gas, Brussels could decree the obligation to reduce consumption by 15% in the 27.

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But there are countries, like Spain, Greece, Ireland, Portugal and Malta, for example, that reacted very badly from the first minute. The Spanish government has argued that, given Spain’s energy insularity and low dependence on Russia, it is of little use to reduce consumption to compensate for what would stop reaching countries like Germany. And, furthermore, that 15% cut would affect the industrial fabric more acutely than Germany.

The proposal of the European Commission, from last Wednesday, has evolved until this Monday, the day before Tuesday’s meeting. And you will still be able to evolve until the last minute.

At the moment, according to Spanish government sources, Brussels is softening the most forceful parts of its proposal. Thus, for example, the conclusion is that the 15% reduction, which remains a voluntary target between August 1 and March 31, 2023, has many exceptions, so it would no longer be linear for the 27 directly, but it depends on the circumstances of each country.

In addition, Brussels seems to assume that it will not have special powers to declare the energy alert, but that it will have to go through a qualified majority of the countries, something on which it seems that there may be consensus. The proposal now is that there are five Member States (instead of just the Commission) that can request the declaration of the state of alert that would trigger the obligation to cut gas consumption.

In any case, whether requested by the European Commission or at the initiative of five member states, the alert declaration could only be adopted with the support of a qualified majority of countries, the sources indicated.

Now, the debate will be, among other things, on how to translate the exceptions on paper, because each country demands one thing based on its energy reality. What the countries want is for the reduction to be based on the circumstances of each one, for there to be an obligation to reduce further if there is no more interconnection capacity or if there is sufficient storage. That is, the reduction percentages are different based on different rules. The Baltics, for example, have the problem that they are synchronized with the Russian market, not with the European one, and they have their own needs.

In other words, it would be a matter of moderating the reductions in exchange for commitments from the countries to increase energy transfers between Member States, in line with the Spanish proposals to increase supply.

According to El Pais, the European Commission’s draft includes the so-called Iberian exception. In the version published last Wednesday, the European Commission set a reduction of 5%, but that percentage is currently being discussed.

For the Spanish Ministry of Ecological Transition, the proposal is based on a premise that they do not share, and that is that the Community Government has made a calculation that 45 bcm will be needed (which is the basic measure for gas) and has made a division between the 27 member states that has given it the result that it will be necessary for each one to lower its demand by 15% in a mandatory way. But the Government argues that each State has a casuistry. In the case of Spain, they maintain that it is not efficient to act on demand –although a contingency plan is being worked on with which they aspire to achieve a certain limitation that they have not yet quantified– but that it is more favorable to act on supply.

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What does it mean? The Government wants its European partners to take into account that Spain is already showing solidarity, since 20% of the gas it receives directly or indirectly goes to other countries, especially France (approximately 10% through the gas pipeline ) and Portugal. This is a figure that exceeds double the average of the last five years. And Spain is willing to make this capacity available to the rest of the countries, which represents 5.6 bcm of the 45 that the EU has calculated will be needed in the next eight months.

This figure could increase if the Musel de Gijón were used as a logistics platform with a capacity of 8 bcm. Ships could be redirected to northern countries from that port. However, it is not yet operational and sources from the Ministry of Ecological Transition estimate that it will take five or six months. Something similar would happen with the Midcat gas pipeline, but the project is designed for future winters with the forecast that the energy crisis does not have an end on the horizon.

problems for the industry

Sources from the department of Ribera explain that 50% of gas consumption in Spain is destined for industry; 25% to the energy sector; and the other 25%, to SMEs and households, so the Brussels plan would have to be applied to industry since in no case is it contemplated that it affects families. Thus, they see very little room for reduction and, furthermore, they maintain that it would be a competitive disadvantage for the Spanish economy, which has done its homework in the energy sector, or at least more so than other countries that have maintained their dependence exclusively on Russian gas because at another time it was beneficial to them.

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