- Facing the risk of a complete cut-off from Russian gas supplies, the EU needs to update its plans for a possible emergency situation. The Commission has proposed a coordinated plan on July 20.
- The regional platform for Southeast Europe in Bulgaria for common gas supplies is in an advanced phase, and joint procurement is planned to start this year.
- It is Bulgaria's decision whether to start explorations for gas extraction on land and in the sea, for more renewable energy sources the country must revise its legislation and cut the red tape.
In the context of an unprecedented energy crisis in Europe, which began with the Covid-19 pandemic and escalated with the Russian invasion of Ukraine, all eyes have now turned to the European Commission. It has multiple challenges ahead - from ensuring the energy independence of the EU, to guaranteeing security, as well as dealing with the risks of energy poverty. Against this backdrop, EU Energy Commissioner Kadri Simson spoke to Capital weekly on the emergency measures planned by the Commission to alleviate the crisis, EU's upcoming common energy procurements and the role of renewable energy sources.
According to Ms Simson, the bloc aims to launch its first joint procurement for gas this year already. The unstable political situation in Bulgaria will hopefully not prevent the creation of the regional gas hub in the country, which, according to the European Commissioner, is the most advanced project in this direction at the moment. The European Commission also advises countries to strive for energy savings and greater energy efficiency and to diversify their energy sources, including by taking maximum advantage of their renewable energy potential. There is definitely great potential for such developments in Bulgaria, and Commissioner Simson has some hints on how to facilitate the regulatory framework in the country when implementing large-scale renewable projects.
Commissioner Simson, a dozen European Union countries have now been affected by gas supply cuts from Russia. What is the EU emergency plan? We have been preparing for this winter and a possible serious disruption since the beginning of the year. But seeing the recent developments, we must step it up.
First, we must use less energy, as it's impossible to fully replace the 155 bcm of gas we have been receiving from Russia every year. And we must continue to fill our gas storage to have a buffer for the coming winter. Second, we must replace gas with other sources of energy where possible. Third, we must continue our efforts to secure additional gas supplies from across the globe. In this context, both the Member states and the Commission need to update our plans for a possible emergency situation. On the Commission side, we will come out with a coordinated plan on 20 July [editor's note: the interview took place before the announcement of the plan].
Among other things, we will look at how to reduce demand preemptively and encourage fuel switching, ideally to renewables. In case there is a need for reduction to gas supply for the industry, it has to be done in a way that would have minimum impact on our economies. We will prepare guidance for the Member States on that as part of the upcoming package.
When will the first common purchases of gas and LNG take place? Which suppliers is the EU negotiating with?
We are aiming to purchase gas jointly already this year. To make this possible, we have set up the EU Energy Platform to pool demand from EU members, negotiate with partners and facilitate common purchases.
We have very close cooperation with the US. The recent statement by Presidents von der Leyen and Biden showed that LNG deliveries from the US to EU have nearly tripled. Two weeks ago, I was in Cairo to sign a trilateral agreement with Israel and Egypt to increase gas deliveries to Europe and we are working on a similar agreement with Azerbaijan we hope to sign by the end of July. We have also stepped up cooperation with Norway, which is already sending more gas to the EU, and are working with many other partners, including Algeria and Qatar.
Before we can buy gas together, we need to agree with Member States on the legal details. We are already working together with all Member States to make sure the infrastructure is ready to receive the supplies and that we can coordinate our needs. The regional platform for South Eastern Europe to help Bulgaria and neighboring countries is the most advanced project so far. We have started assessing the demand and agreed on ways to solve infrastructure bottlenecks.
What has been the progress in phasing out the EU's dependency on Russian fossil fuel, oil and coal imports so far? Some countries are quickly switching again to non-renewable energy sources (like nuclear and fossil fuels). How could it affect the green transition and what is the Commission's position on that?
We have already put in place sanctions against coal and oil imports from Russia. When it comes to coal, the sanctions will kick in in August and that will of course mean that no coal will be imported from Russia. Sanctions on seaborne crude oil and petroleum products are not yet applied, but the imports have decreased regardless, as some countries and companies have already decided not to buy from Russia. By next year, we will have effectively cut around 90 percent of Russian oil imports. As you know, a temporary exemption was made to pipeline oil supply to certain countries, including Bulgaria.
Gas is the most difficult energy source to replace and that's why our REPowerEU plan puts so much focus on reducing the dependence on Russian gas - through energy savings, more renewables and diversification of supply. Today, the Russian gas deliveries to the EU are half of what they were a year ago and so far, our gas system has been able to absorb this impact - mostly thanks to record-level LNG deliveries.
In a situation where we need to reduce gas consumption quickly, replacing it with other fuels is one way to do it. Renewables are of course the best option, but some Member States have also announced that they will use more coal this winter than initially planned. This is a short-term measure and must be seen in the context of today's exceptional situation. Our climate goals for 2030 and 2050 remain firmly in place.
Should Bulgaria start real explorations and eventually extractions for natural gas on land and from the Black Sea shelf? There is now a moratorium on such projects, but available data suggest that there is potential. Moreover, both Romania and Turkey have gas fields.
This is a choice for Bulgaria to make, it is the prerogative of the Member States to decide on their energy mix. We are currently facing a shortage of gas, and the REPowerEU plan recognises that domestic sources can play a role in replacing it. But we have to keep in mind that the phase-out of Russian gas needs to happen during this decade and for any projects to improve our security of supply in this context, they have to be aligned with this timeline.
In the longer run, our focus in the EU is on renewables. Under the European Green Deal, we have together committed to cut our emissions by at least 55% by 2030, and to make the EU climate-neutral by 2050. For this to be achieved, Bulgaria - as well as other Member States - will need to invest heavily in its renewable energy production.
There has already been criticism expressed from NGOs that RepowerEU is too focused on replacing natural gas and oil with imported ones from third countries instead of giving a real boost to the green energy sources. Do you agree with them?
No, I don't. The REPowerEu plan is not about replacing every cubic meter of gas we receive or used to receive from Russia. Quite to the contrary, we plan to cover most of this volume by energy savings and renewables. While we are also looking for alternative supplies, we are certainly not increasing our overall gas consumption as we are phasing out Russian gas.
The Green Deal has been the priority of this Commission since the beginning of its mandate in 2019 and this has not changed. Russia's war against Ukraine has made the case for the green transition even stronger: it is the only way to simultaneously ensure affordable, sustainable and secure energy. With the REPowerEU Package, we have proposed a much more ambitious target for renewables in our energy mix than we have at the moment - increasing it from 32 percent to 45 percent. We have also advised Member States to develop national REPowerEU plans to speed up this transition and have made funding available for that.
Will RepowerEU also support nuclear projects? Could you give a few examples of prospective energy projects in Bulgaria to be supported by RepowerEU?
The REPowerEU plan recognises that nuclear energy can play a role in reducing our dependence on Russian gas. But when we are thinking about building new nuclear plants, it is clear that this will not be relevant for our aim to end the dependency as soon as possible - and certainly well before 2030. These projects would simply take too long. However, one topic that we are working on in the context of REPowerEU is securing alternative supplies for these Member States, which are dependent on Russian nuclear fuel.
When it comes to the renewable and energy efficiency projects that are the most important part of the REPowerEU investments, these will be decided by Bulgaria itself and proposed to the Commission for approval. The process is the same as with the Recovery and Resilience Plans in general - as the Member States know best where investments are most needed and would be most effective. In terms of gas projects, ENTSO-G has assessed the additional needs we have as we are ending the use of Russian gas. One project identified in this context is the second phase of the Bulgaria-Greece interconnector that could reduce the dependence of the entire region by increasing flows from TAP and Greek LNG terminals.
The issue of offshore wind farms is controversial in Bulgaria and the country does not even have a regulatory framework for them, mostly for environmental reasons. At the same time, there is interest in offshore wind farm development from investors here and in Romania. Is it possible for such projects to happen?
In 2020, the Commission published the Offshore Renewable Energy Strategy, where the Black Sea was highlighted as a sea basin with enormous underutilized potential. I firmly believe that it's possible to get these projects going in Bulgaria as well. There is enormous potential for wind - both bottom-fixed and floating when it comes to wind offshore - and solar energy in Bulgaria - as well as other renewable sources. The necessary steps for projects to happen would range from recognising offshore wind as a priority in strategic documents such as the Maritime Spatial Plan and the update of the National Energy and Climate Plan, to developing a dedicated regulatory framework to support this emerging sector. Learning from the experiences of other countries or regions where projects are already operational can help.
But I also want to acknowledge that delays in granting permissions for renewable projects is a phenomenon we have seen in most Member States and we are addressing this also from the side of the Commission. We have recently published recommendations on how best to address these issues, based on best practices from across the EU. We also proposed dedicated 'go-to' areas for renewables, which Member States could put in place. This would create shortened and simplified permitting processes in areas with lower environmental risks. To help quickly identify such areas, the Commission is making available datasets on environmentally sensitive areas as part of its digital mapping tool for geographic data related to energy, industry and infrastructure.
The Commission is expected to announce a new plan to save energy. Could you reveal the direction of the measures already? For example Germany has already mentioned that it could legally oblige final consumers to use less energy in autumn; Danes are urged to take shorter showers etc. Do you foresee similar actions at EU level?
Energy savings and efficiency are extremely important for reducing our dependence on Russian gas and for mitigating the risks in case the gas supply is cut further before or during this heating season. Replacing the entire amount of Russian gas is simply not possible in the short term, so cutting consumption must be part of our strategy.
We have already come out with the EU Save Energy Communication, which was part of the REPowerEU plan. It looks at short-term behavioral changes that could cut gas and oil demand by 5 percent. It also encourages awareness campaigns and fiscal measures to support energy savings. As an International Energy Agency analysis showed, turning down the thermostat by one degree across the EU would save 10bcm of gas per year - the volume of gas consumed by Austria. We will address energy savings also in our upcoming proposals in July, including demand reduction for industry.
How will Europe efficiently prevent energy poverty in Member States?
Energy poverty is a serious concern and especially now, in the context of exceptionally high energy prices. This is particularly true for the lower income households in the Member States, who spend a high share of their family budget on their energy bills.
Last October and again in March this year, the Commission outlined a range of measures which Member States can take in response to the high prices we are seeing. The October "Toolbox" included direct support, state aid and tax measures which would not distort the EU energy market. Since then, we have seen all Member States take action, including Bulgaria where households are protected through regulated prices and businesses are receiving compensation from the state. We have provided guidance to Member States on regulating prices for consumers in exceptional circumstances, as well as redistributing revenues from high-energy sector profits and emissions trading to consumers.
It is important that Member States continue to use all the tools at their disposal, including EU financing, to address the root causes of energy poverty. The implementation of the Bulgarian recovery and resilience plan will play an important part in that respect, as it foresees the definition of energy poverty and targeted investment in energy efficiency and renewables for households and residential buildings. I cannot emphasize enough the role of energy efficiency, as it cuts energy bills (for example thanks to renovation or more efficient appliances), while also reducing energy consumption and CO2, as well as improving people's quality of life.