Ursula von der Leyen – 2022 Speech at REPowerEU: Outlook on EU Gas Supply in 2023
The speech made by Ursula von der Leyen, the President of the European Commission, on 12 December 2022.
Good afternoon,
I am very happy to welcome here Fatih Birol. We had a very good discussion on an energy outlook for Europe and how to deal with the unprecedented disruptions that have been caused by Russia’s atrocious war. Russia has indeed cut its pipeline supplies by 80% – if you compare September of this year to September of last year. We all know that these pipeline gas cuts have added unprecedented pressure on the global energy markets, with severe knock-on effects on Europe’s energy system. But I want to emphasise that despite these enormous cuts, we have been able to manage, we have been able to withstand the blackmail. We have acted, and we have acted successfully. Seven months ago, in May, we have presented our response to this Russian blackmail by putting on the table REPowerEU, our plan to reduce the demand for Russian gas by two-thirds before the end of this year. And we have underpinned this proposal with an investment plan of up to EUR 300 billion. In just a few months, we have turned the REPowerEU plan into many different legislative proposals and actions on the ground. And I think it is worth looking at that. Basically, we have taken ten different actions in the last ten months.
The first one is: we have enormously diversified away from Russian fossil fuels, away from Russian gas supplies towards other reliable, trustworthy suppliers. Second, we are saving energy. We have introduced, as you all know, the target to reduce gas demand by 15%. If we look at the data from early autumn, we are very well on track. It is good that we are saving energy and we have to keep on saving energy. The third point is: we are boosting the roll-out of renewables. If you look at the year 2022, we will have added almost 50 gigawatts of new capacity that is almost doubling the additional capacity of renewable energy, mostly from wind and solar. For us, this is very important because this is not only good for the planet, but we know that renewables are home-grown, they create good jobs here and they create independence and security of supply.
The fourth point is that, in this context of renewables, we have proposed to speed up drastically the permitting process for renewables. We know that many projects are basically ready to go if the permitting was there, so this has to be faster. Therefore, we have put a proposal on speeding up the permitting process on the table. The fifth point is that we have put in place a minimum gas storage obligation. Our storages are now filled by more than 90%, so we have overshot the target, that is very good, and we are well above the previous five-year average.
The sixth point is on solidarity. We have proposed default arrangements for the supply of gas between Member States where solidarity agreements are not yet in place to make sure that in an energy emergency, we can ensure that the gas is going and flowing where it is most needed. The seventh point is: we have set up a platform for the joint purchasing of gas, to increase our negotiation leverage and get better prices. I think it is unacceptable that different Member States are outbidding each other on the global market and thus driving up the prices. Therefore, it is important that we join forces for the negotiation on a global level.
The eighth point is: we have improved our infrastructure. We have four new interconnectors that became operational this year. It is the Baltic Pipe, it is the interconnector Poland-Lithuania, the interconnector between Bulgaria and Greece, and the gas interconnector between Poland and Slovakia. The ninth point I want to highlight is the fact that we have put out a legal framework that enables Member States to skim off the windfall profits, the super profits of energy-producing companies, to take this money and to support by that the vulnerable households and the vulnerable businesses in a targeted manner. And finally, the tenth point is: we proposed a market correction mechanism, also known as the price cap, to limit spikes in gas prices at TTF level.
Many of these measures have been adopted, some at record speed. And there are many examples that show that change is beginning – for example the massive and rapid uptake of heat pumps in Poland. The result of all these actions is that we are safe for this winter. Russia’s blackmail has failed. However, some of our proposals are still under discussion and they are essential for our energy preparedness. Therefore, I call on the Council to adopt them swiftly, because preparing for the next winter of 2023-2024, starts now. Now that we are turning our focus to the winter 2023-2024, I am very pleased, dear Fatih Birol, that we have worked on that so intensively together. One month ago, your message was very clear and you underpinned your message with figures. You said very clearly the coming winter will be even more challenging. And Europe needs to step up its efforts in several fields. You outlined the risks: It might be possible that Russia cuts the rest of the pipeline gas supply; China could lift the COVID-19 restrictions and thus go back to energy demand on the global market on pre-COVID-19 level; and of course, this year we benefitted from an extraordinary warm winter – this could also be different next year.
I know from your data that despite the actions that we have taken, we might still face a gap of up to 30 billion cubic metres of gas next year. The actions that we have set in motion will help cover part of this, but more is needed. Here, I want to look at a few priorities we need to focus on. The first one is of course the LNG supply. I am confident that we will secure similar volumes of LNG next year as we had this year. This year, we had up to 130 billion cubic metres of LNG. For this, we of course have to further intensify our outreach to our international partners.
My second point is: It is now time that we make joint purchasing a reality. We have the Energy Platform in place, now we have to operationalise the joint purchasing mechanism. Every day of delay comes with a price tag. We have discussions with Member States, partner countries and their companies that are ongoing. This evening, I will discuss this with the Norwegian Prime Minister, for example. We can launch the first tender for demand aggregation by the end of March. But for that, we need to have an agreement on the Emergency Regulation we proposed on 18 October, and we need it now.
And my final point is that the greatest potential for energy in the European Union is in our own hands. We must scale up and accelerate the deployment of renewables. We must go big and we must be fast. With the right policies in place, we can even double the capacity of renewable energy that we will add to the market next year. And the case has never been stronger. In 2022, we had record additions of wind and solar capacity in the European Union. And we expect renewable capacity to rise even further in the coming year, replacing around 12 billion cubic metres of gas. And you are showing us with your additional measures that we can add an additional 7.5 billion cubic metres. So, if you look at the overall scope: efficiency, savings, joint purchasing, renewables – this might be the mixture we need to make up for the missing gas next year. We have taken the action that is necessary. Our proposals are now on the table.
My last comment is on the bigger picture. Because if we look at the bigger picture, we also see that we need an increase in public investments in the energy transition. Mostly to ensure the competitiveness of our European industry in the energy transition, we need additional public investments at national level and at European level. You know that in the short term, we will propose to boost REPowerEU. REPowerEU is our vehicle, the framework for investment in clean tech. And this is one part of our response to the US Inflation Reduction Act. But we also know that in the mid-term, we have to step up. There, we will work on setting up a sovereignty fund to make sure that Europe continues to be the global leader in clean tech. Where we have to help our industry is now, in this high energy price environment, to bridge the transition to green, clean energy that is affordable and secure. Therefore, this funding is necessary.
Our work has been good this year, we see the progress, we have come quite a long way. But we know that we are not done with our work until families and businesses in the European Union have access to energy that is affordable, that is secure and that is clean.
Thank you so much.
