EU leaders pledged to bulk buy natural gas jointly and review the role of the fuel in setting electricity prices as part of plans to protect European consumers from spiralling energy costs.
The decision was made at a summit in Brussels as Germany unveiled targets rapidly to cut dependence on Russian energy, and the US set out plans to redirect gas to Europe. Western allies are stepping up efforts to reshape global energy markets and punish Moscow for the Ukraine war.
“Instead of outbidding each other and driving prices up we will pool our purchasing power,” said Ursula von der Leyen, the European Commission president.
However, analysts have questioned whether the 27-member bloc is big enough to dictate the international price of gas. The system will be voluntary.
The commission will also examine how to reform the electricity market, a key demand of several countries. Electricity prices are generally set by the price of gas, the most expensive fuel needed to meet demand.
It will bring forward proposals by May, which could also include measures such as price caps, opposed by Germany, the Netherlands and others.
Von der Leyen said Spain and Portugal could intervene to cut energy prices immediately after a fierce campaign by their governments.
Pedro Sánchez, Spain’s prime minister, fought successfully for the ability to cap prices, after at one point walking out of the summit room, triggering a half-hour pause. The two countries argue that they are largely cut off from the wider EU energy market with few interconnections to France, so their actions would not affect prices elsewhere.
“We can put in place exceptional measures to reduce prices for our consumers and companies,” Sánchez said.
As Europe hunts for alternative suppliers, the US said it would aim to deliver at least 15bn cubic metres (bcm) of additional liquefied natural gas to the EU this year along with other producers, an announcement that came on the second full day of a trip to Europe by Joe Biden, US president.
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.
The energy supply targets announced by Robert Habeck, Germany’s economy minister, underlined how Europe’s largest economy is becoming central to efforts to slash exposure to Russia despite worries over the knock-on effects on consumers.
Habeck said the country could 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 aimed to end its need for Russian coal by the autumn of this year.
Von der Leyen said the US LNG commitment, which confirmed a report by the Financial Times on Thursday, would reach 50 bcm annually within a few years.
The EU last year received about 22 bcm from the US.
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.
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“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.”
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 27 bcm 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.
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