How can renewables and energy efficiency improve gas security in selected Member States? - Towards2030-dialogue Issue Paper #1

This fact-finding paper seeks to identify recent trends in natural gas use and import dependencies in twelve rather vulnerable EU Member States and to analyse the potential to reduce insecurity of external gas supplies of these countries in the short and longer term up to 2030. In doing so, the potential contribution of renewa- bles and energy efficiency to reduce gas import dependency will be assessed.

The main findings of this assessment can be summarised as follows:

• Energy efficiency measures can reduce the gas demand of the assessed Member States on the eastern border of the EU by 14 % while resulting in average net savings of € 3.5 billion per year. For doing so, only a moderate policy intervention is required, meaning that all poli- cy measures currently implemented as well as their upcoming revisions are enforced and a selection of new policy measures is introduced.

• A strong deployment of renewables as anticipated in the alternative policy scenarios leads to increases in system costs and support expenditures at EU-28 level but for the assessed 12 Member States this may even lead to savings in support expenditures for renewables in range of € 2.0-2.1 billion per year in the period post 2020, which is mainly due to improved framework conditions (i.e. removal of non-economic barriers).

• The increase in renewables and energy efficiency comes along with benefits related to Eu- rope’s trade balance due to a (significantly) decreased demand for fossil fuels and related imports from abroad. Thus, natural gas demand can be reduced by more than 20% in the as- sessed countries, if a 30% target for renewables and energy efficiency by 2030 is aimed for.

• From the detailed gas market modelling we can conclude that it seems feasible to reduce Russian dependency on natural gas supply to a very low level without causing skyrocketing natural gas prices in any of the EU member countries. As most extreme case we analysed the scenario of increased renewables and energy efficiency combined with a “breaking up” poli- cy of long-term gas contracts, assuming that Russian long-term contracts and the related take-or-pay obligations are cancelled, and Russian gas is purchased on a short term base competing with other sources. In this scenario it is possible to reduce Russian gas imports to 79 TWh/year, which is 6.5% of the present level. This can be achieved on a market basis, through better interconnectivity and energy efficiency and renewable energy driven gas de- mand reduction.

• Security of supply benefits of the EU renewable and energy efficiency policies can only be achieved, if the infrastructure development policy of the EU is realised in a consistent man- ner – this concerns in particular the gas infrastructure but also the power grid.

• From a gas market perspective this means that the selected infrastructural projects of com- mon interest as well as the decisions on the reverse flow upgrades on the selected EU inter- connectors must be enforced, their accomplishment is a key factor in achieving the benefits quantified in this paper.

• There are important impacts not only on the 12 Member States as results show, but also on the whole EU. This means that there are important drivers for a general EU involvement, opening up opportunities to achieve a win-win situation for all European countries in the case of a coordinated intervention.