The EU’s current energy plans will cost it $200 billion more than it expects by 2030, a think tank said on Wednesday.
The plans, which include cutting the bloc’s reliance on Russian gas, will add hugely to its energy bill as prices rise.
“Decades of over-reliance on fossil gas has made Europe incredibly vulnerable to volatile prices whilst empowering Putin,” Global Witness said.
The European Union’s plans to cut its decades-long reliance on Russian gas without switching to cleaner fuels will cost it $200 billion more than it currently expects by 2030, research by sustainability group Global Witness and think-tank Ember found.
Russia provides 40% of the EU’s natural gas, with some members relying on it for up to 100% of their needs. The European Commissions’s REPowerEu proposal contains a series of measures on energy storage and caps on prices and is ultimately aimed at cutting the bloc’s dependence on Russia for gas. But even that plan would still end up costing it around $200 billion more than it currently expects in eight years’ time, the two groups said.
“Decades of over-reliance on fossil gas has made Europe incredibly vulnerable to volatile prices whilst empowering Putin,” Tara Connelly, Senior Gas Campaigner at Global Witness said. “Our analysis now shows the Commission has massively underestimated the cost to consumers of continuing to rely on gas.”
According to US government data, the EU accounts for 89% of all Russia’s gas exports. In just the two months following Russia’s invasion of Ukraine, the EU paid $46 billion to Moscow for fuel in that time, according to a report by the Centre for Research on Energy and Clean Air.
“As fossil gas prices are set to remain high and volatile for years, failing to drastically reduce Europe’s gas dependency would expose the Union and its citizens to exorbitant and avoidable financial risk,” Global Witness said.
Global Witness and Ember said the billions of dollars the EU would spend on a fossil fuel like natural gas would be better spent on transitioning to cleaner and affordable renewable energy.
“As fossil gas prices are set to remain high and volatile for years, failing to drastically reduce Europe’s gas dependency would expose the Union and its citizens to exorbitant and avoidable financial risk,” Ember said in a statement.
The groups said focusing on energy savings and renewable energy like solar and wind would save the bloc $129.4 billion by 2030. They said the EU must increase its renewable energy target to at least 50% and energy savings target to 45% by that point.
“The devastating war in Ukraine has significantly increased the urgency for Europe to end its fossil gas addiction. Russia’s invasion has made the geopolitical, social and economic risks associated with dependence on imported fossil gas, particularly from Russia, even more obvious,” the groups said.
The EU plans to phase out imports of Russian crude oil over the coming six months, but has stressed the risks to its economy from cutting off Russian natural gas.
The two groups said every 1 euro per megawatt hour ($1.05/MWh) of additional gas use equates to a roughly $3 billion invoice to the EU. This year alone, benchmark European gas prices have risen by over 250% to around 95.37 euros ($105) per megawatt hour, having soared to as much as 345 euros ($364) in early March, after Russia’s initial invasion of Ukraine.