Germany unveiled targets to rapidly cut dependence on Russian energy and the US set out plans to redirect gas to Europe as western allies stepped up efforts to reshape global energy markets and punish Moscow for the Ukraine war.
Berlin vowed to all but wean itself off Russian gas by mid-2024 and said it aimed to become “virtually independent” of Russian oil by the end of this year.
As Europe hunts for alternative suppliers, the US said it would aim to deliver at least 15bn cubic metres of additional liquefied natural gas to the EU this year along with other producers, an announcement that came on the second full day of US president Joe Biden’s trip to Europe.
The energy supply targets announced by Germany’s economy minister Robert Habeck underlined how Europe’s largest economy is becoming central to efforts to slash exposure to Russia despite worries about the knock-on effects on consumers.
Habeck said the country can be “independent of Russian gas by all but a small portion” by as early as the summer of 2024. A ministry document said it was possible to reduce Russian gas to only 10 per cent of consumption by that time.
The ministry said it would cut its reliance on Russian oil by half by the end of the summer and come close to ending its dependence by the end of 2022. It added that Germany also aims to end its need for Russian coal by the autumn of this year.
Last month Germany suspended the Kremlin-backed Nord Stream 2 pipeline before gas started flowing through it as part of international sanctions against Russia.
The US’s LNG commitment, which confirmed a report by the Financial Times on Thursday, did not specify how much of the additional volumes of gas would be directly from America or from other countries, highlighting the difficulty of rapidly ramping up capacity and diverting contracts in the energy market.
A senior Biden administration official said the US had in recent months both ramped up its LNG exports to Europe and arranged swaps with other countries, mostly in Asia, to shift shipments to the EU.
Over the longer term, once the EU had developed more LNG infrastructure to bring in US LNG, the goals could be met more directly from America. “The point here is to replace an unreliable supplier of LNG with a much more reliable and secure partner in the US,” the official said.
The EU is rushing to phase out its dependency on Russian gas, oil and coal as quickly as possible, with Brussels targeting a two-thirds reduction in Russian gas imports by the end of the year. The drive will be tough to achieve, however, especially when politicians are under intense pressure from voters to do whatever they can to bring down household energy bills.
On Friday Biden met Ursula von der Leyen, the EU Commission president, in Brussels, where EU leaders gathered for the second day of a summit to tussle over ways of mitigating the surge in energy prices. Different groups of member states are split over how deeply to intervene in gas and electricity markets in a bid to ease costs.
Officials suggested the new LNG volumes would rely heavily on cargoes getting diverted from other markets to the EU. However, the US said it expected further increases above the 15bn cubic metres target, according to a fact sheet released by the White House.
The EU last year received about 22bcm of LNG from the US, and was previously on track to receive a similar quantity in 2022. So the extra supply under Friday’s deal should mean the EU receiving around 37bcm this year from the US, said a senior commission official.
However, the intention is that this is a floor, not a ceiling. “Our aim is to go upwards as quickly as possible,” the commission official said, adding that given its control over permitting, the US government had “quite a lot of incentives in place” to encourage suppliers to ship more to Europe.
The White House said it and the EU would “undertake efforts to reduce the greenhouse gas intensity of all new LNG infrastructure and associated pipelines”.
“These steps will increase energy security, economic security and national security,” Biden said on Friday. “I know that eliminating Russian gas will have costs for Europe. But it’s not only the right thing to do from a moral standpoint, it’s going to put us on a much stronger strategic footing.”
Von der Leyen said the EU was “right on track now to diversify away from Russian gas and towards our friends and partners — reliable and trustworthy suppliers”.
She said the 15bn cubic metres pledged for 2022 would be sufficient to replace Russian LNG exports to Europe.
In Germany, Habeck said the country was in the final stages of negotiations to secure three floating storage regasification units — vessels that can turn LNG back into gas. The energy companies Uniper and RWE had options to use the units on behalf of the German government, he said. The ministry said the three units would provide 27bn cubic meters of gas a year.
Since Russia’s invasion of Ukraine, Habeck said, the government had reduced its dependency on Russian coal imports from 50 to 25 per cent, on oil imports from 35 to 25 per cent, and on gas from 55 to 40 per cent.
“There’s a lot of momentum in other places as well, so that’s something moving significantly,” he said. “It was always assumed it would take five-seven years [to halt dependency on Russian gas] but we expect it to be in ‘24, by as early as the summer.”
Habeck said the government was preparing itself for the possibility of Russia cutting supplies, stressing that “we must not let ourselves be blackmailed”.
This story has been amended to reflect the fact the German economy ministry incorrectly stated the unit of measurement for the capacity of regasification units
