Putin set for huge economic boost as EU to continue reliance on Russian energy in new deal

Putin given 'vast power' over European economies says expert

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The proposed measures were set out in part two of the EU’s climate change policy overhaul. As the bloc looks to reduce its reliance on fossil fuels to reach its 2050 net zero target, the role of gas has been an issue that has been dividing the EU for several months. Now, the bloc has put forward a plan to reform its gas markets, which seeks to integrate low-carbon gases like hydrogen into the network.

But the EU recognises that natural gas is still needed as part of the transition, accounting for around a quarter of the bloc’s energy.

Among other proposals, the Commission today announced a system to allow countries to jointly buy gas to form strategic reserves, with countries including Spain and France claiming this would help them to secure supply.

And experts from the European Commission have called natural gas a transition fuel, allowing some countries to begin their energy transition from coal to pure renewable energy.

But as prices have skyrocketed to record highs over the past few months as Europe has been scrambling to avert a crisis, this may not be the wisest move.

It comes after Russian President Vladimir Putin reportedly restricted the volumes of gas travelling into Europe in the hope the speed up the approval of Nord Stream 2 gas pipeline.

Nord Stream 2 will transit gas from Russia into Germany, bypassing Poland and Ukraine, and Mr Putin has been accused of using the pipeline as a geopolitical weapon as gas supplies to Europe got slashed by Gazprom, Russia’s state-owned conglomerate, while the company’s profits soared.

While Germany already suspended certification of the pipeline, the EU’s proposed changes to the gas market could hand more power back to Russia.

The Jacques Delors Energy Centre published a report that showed Gazprom is the only gas supplier to Europe that has export capacity.

And Europe’s dependence on gas from Russia increased from 30 to 41 percent in 2021, while at the same time gas prices soared as a result of Mr Putin’s squeeze.

Olexander Scherba, a chief advisor from Ukraine gas giant Naftogaz, told Express.co.uk earlier this month that Mr Putin has the potential to keep a firm grip on Europe’s energy.

It comes as tensions with Russia and Ukraine skyrocketed after 100,000 were reportedly spotted on the Russia-Ukraine border.

He warned that Russia can keep snubbing the West by cutting the supplies of gas travelling through its vast network of pipelines, some of which bypass Ukraine on their way into Europe.

He said: “In today’s situation, even with the Yamal-Europe pipeline (the major pipeline transiting gas from Russia to Europe), the Ukrainian gas transportation system is important and necessary.

“If Putin is reasonable, it is a huge factor of stability for the whole energy supply between Russia and Europe.

“Ukraine has the biggest gas storages and double the capacity as high as Nord Stream 2.

“This is something both Europe and Russia should stick to and sadly it’s not the case right now.

“Sadly, this is not the case right now and just throwing this transportation system under the bus would be a huge loss not only geopolitically but also economically for Europe.”

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But while the deal the EU has struck could keep reliance on Russian gas high, defenders of the new proposal argue gas supplies can be kept secure.

The new system would allow member states’ transmission system operators (TSO) to jointly buy strategic stocks of gas, which could be used in an emergency situation when supplies become extremely scarce.

Countries including Spain, Greece and Romania have argued this would help shore up supplies.

The bloc is also planning to diversify their energy sources by adding more low-carbon gases to the network and by adding nuclear to the EU taxonomy.

European Commission President Ursula von der Leyen said: “We need more renewables. They are cheaper, carbon-free and home-grown.

“We also need a stable source, nuclear, and during the transition, gas.
“This is why we will come forward with our taxonomy proposal.”

The EU taxonomy for sustainable activities is a system of classification that determines which investments are environmentally sustainable.

Adding nuclear to the EU taxonomy would mean that projects that are a part of nuclear investments would not have trouble gaining support from banks.

A bloc of European countries, including Czechia, France, Romania, Slovakia, Slovenia and Hungary signed a letter demanding that nuclear energy be recognised as a sustainable source.

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