Hungary and Serbia have announced their intentions to continue buying gas from Russia, rejecting the position taken by most of the EU, which wants to greatly reduce its reliance on Russian hydrocarbons. At the same time, the EU has spent more than 30 billion euros on Russian fuel since the invasion of Ukraine, while giving Ukraine 1 billion euros in aid during that period.
Hungary Opts Out of EU’s Pact to Buy Non-Russian Gas
Hungary has declined to join its European neighbors in an arrangement to source gas jointly from other suppliers as the continent seeks to reduce its reliance on Russian gas.
The Central European country said it will meet Russia’s demand for payment for its gas to be made in rubles, if necessary. Hungary’s government explained that contractual arrangements for gas imports were made on a bilateral level and were not subject to EU-wide regulations.
Many member countries of the European Union have expressed a strong desire to impose sanctions on Russian oil and gas imports in retaliation for its attack on Ukraine but continue to rely on gas supplies from Russia, which typically provides about 40% of the bloc’s gas imports.
The EU does seem likely, however, to ban coal imports from Russia.
To facilitate efforts to eliminate Russian supplies, the EU has already launched a platform which will coordinate the joint purchase of gas and liquefied natural gas for its member countries; it aims to end its purchases of all Russian fuels within the next five years.
The EU expects that the size of the bloc, as well as its stability, will enable it to purchase fuels at more attractive prices for its members. It hopes the arrangement will provide a stronger foundation to enable the continent to wean itself off of Russian gas and oil. The platform is also expected to boost the EU’s use of renewable energy.
However, joining the platform is left to each country’s discretion, so Hungary and any other country can opt out and make their own, alternative arrangements if they prefer.
Serbia has indicated that it intends to continue buying from Russia and wants to begin talks on renewing its contract for Russian gas, whereas Poland has said that its contract with Gazprom is binding and will run until year-end.
Austrian energy officials had looked into the question of meeting the Russian demand for payment in rubles, but seem unlikely to do so. Russia is threatening to stop sending gas to European countries unless they pay in rubles, in response to those countries joining in the general condemnation of its attack on Ukraine.
Russia Getting Billions More From EU Than Ukraine
The European Union has given Russia more than 30 times as much money as it has to Ukraine since the end of February, because of its reliance on Russia for oil, gas, and coal.
One of Europe’s top diplomats pointed out to the European Parliament that since Russia’s invasion of Ukraine, the EU has poured 35 billion euros into Russia’s coffers to acquire energy supplies, while giving Ukraine just 1 billion euros as aid during that same period.
The issue is a tricky one since some countries in Europe depend heavily on Russia’s energy supplies to ensure the functioning of their economies and societies. Germany, for example, has warned that the economic consequences of banning Russian oil and gas would be devastating.
However, some countries, including the Baltic states, are urging immediate steps be taken to end fuel purchases from Russia. The EU has been able to agree on a decision to end coal imports, which make up only a small portion of fuel imports from Russia into the EU. The bloc will also consider imposing sanctions on Russian oil imports, but as yet have made no mention about gas imports.
Experts say tougher sanctions against Russia could severely weaken Europe’s economies, which in turn would weaken the continent’s ability to render any sort of aid to Ukraine. For this reason, Europe and its allies, the U.S. and the U.K., have been seeking to perform a delicate balancing act of punishing Russia while limiting the adverse impact on Western economies that inevitably flow from such measures.
According to experts, the punitive measures resulting in the least pain for the West are now at their limits, and any further measures that could increase hardship for Russia will likely result in considerable hardship in Western countries as well.
Meanwhile, the West is engaged in the process of devising further sanctions against Russian businesses, but those measures will do little to halt Russia’s earnings from its energy exports, experts say.
Italy to Boost Gas Imports From Algeria
Italy has announced an agreement with Algeria to significantly increase its imports of gas from the North African country as it seeks to wean itself off of its heavy reliance on Russia.
The countries hope to increase Algerian supplies through the Transmed pipeline by as much as 9 billion cubic meters within the next year or two. Currently, the pipeline has the capacity to transport 32 billion cubic meters but is operating well below that.
Industry experts say it is unlikely Algeria will be able to supply gas in sufficient quantities to meet Italy’s needs over the next few years without also relying on Russian imports or gas from another source.
Algeria is planning to spend $40 billion to boost oil and gas production between now and 2026. The gas agreement between Algeria and Italy runs until 2027.
Last year, Italy imported almost 30 billion cubic meters of gas from Russia, and just over 22 billion cubic meters from Algeria. Italy is hoping that the agreement will lead to Algeria becoming its top supplier of gas, in place of Russia, and enable it to cut its imports from Russia by as much as half.
Experts have noted that it may take more than a year for Algeria to boost its exports to Italy, and the former is also constrained by ever-increasing demand for gas supplies from its own citizens. Algeria also supplies gas to Spain, with whom its relations have become chilly in recent times. However, Algeria cannot unilaterally end its export contract to Spain to facilitate greater supplies to Italy.
Algeria and Italy have also announced their energy companies will be jointly exploring a significant find of oil and gas in the Algerian desert. In addition, Italy has the option of turning to other natural gas producers, including the Congo and Mozambique, where an Italian delegation is expected to visit shortly to commence negotiations.
UK Energy Plans Leave Many in the Cold
The U.K. government has unveiled a strategy to boost the country’s energy self-reliance over the coming decade, but it fails to meet the immediate needs of ordinary people, some concerned groups say.
The plan, which comes in the wake of unprecedented price increases in Britain, includes new nuclear projects with a view to adding 24 gigawatts of installed nuclear power capacity by 2050.
Offshore wind installations are expected to grow from the present 10 gigawatts to 50 gigawatts by 2030, under the new strategy. The government will also be entering discussions on solar projects and has plans to offer more licenses to exploit oil and gas fields in the North Sea.
However, the government acknowledges that consumers won’t experience any immediate relief from high energy prices as a result, since it will take about three years for the benefits of the plan to kick in once implemented.
U.K. consumers began paying more than 50% more on their energy bills in April, and some industries have complained that soaring energy prices are making their operations unprofitable.
At the same time, the failure of the government’s strategy to address lower-hanging fixes such as increased insulation for homes and greater energy efficiency has been condemned, since millions of Britons are likely to continue to suffer from lack of adequate heating.
Tax Credit for Canadian Companies Adding Carbon Capture
Canadian companies in industries with high emissions will soon be eligible for a 50% tax credit when they build carbon capture, storage, and utilization projects at their plants, under the terms of a new federal fiscal plan. The credit, which will be cut in half after nine years, will help companies pay for equipment to retrofit their factories and make them less polluting.
Industry spokespersons welcomed the initiative but said the 50% credit was not nearly enough to cover the cost of such projects, and that they had been urging the government to grant a 75% tax rebate. However, they said the credit offered is a beginning, and a welcome assistance.
The government’s fiscal plan also includes a proposal to grant a 60% tax credit to companies looking at the use of direct air capture technologies, which remove carbon dioxide from the atmosphere.
Opinion writer: Jewel Fraser
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