Anti-war, anti-gas graffiti in Vienna, Austria. Photocredit: Herzi Pinki via Wikimedia Commons.

Online Exclusive 11/29/2022 Blog

Can the EU Ethically Wean off Russian Gas?

In response to Russia’s full-scale invasion of Ukraine at the end of February 2022, the European Union, the United States, the United Kingdom, and several other countries put together wide-ranging economic sanctions against Russia. One of the goals was to cut down on, and eventually eliminate, oil and gas imports from Russia. Though this was hailed by many as an opportunity for both increasing security and transitioning to green energy, some countries in the EU continue to have a more difficult time weaning off Russian gas than others.

While there is little dissent regarding the need for this transition, the pressing question is: can the EU ethically wean off Russian gas, ensuring that more vulnerable states do not bear an undue burden? Disparities inside the EU bring up questions of internal inequality and member state vulnerability to Russia. To see how, one must look no further than Hungary’s authoritarian leader, Viktor Orbán, and his agreement with Russia to secure Hungarian gas.1 These varied circumstances could easily turn into greater issues within the bloc, which is already dealing with the rise of far-right parties, housing and caring for Ukrainian refugees, and the onset of winter (which brings increased energy usage).

If the EU aims to counter inequalities between member states, it is imperative that policymakers keep in mind three factors contributing to EU countries’ vulnerabilities. First, most countries in the EU that are heavily dependent on Russian gas are former satellite countries, which means that there is a complex history that includes, at times, deep mistrust between these countries and Russia. Second, while some EU countries are already making efforts toward transitioning to more green economies, these steps have been uneven across the bloc. Third, the EU’s current plan to transition off of Russian fossil fuels, REPowerEU, pays extra attention to manufacturing, which tends to benefit countries that are not as vulnerable to Russian gas. Moreover, this set of agreements is non-binding, much like the other measures the EU has taken toward this issue.

What is meant here by vulnerability? On the surface, it seems as though the EU countries most vulnerable to cutting off Russian gas are Germany, Italy, and France, as they were the biggest importers of Russian gas in 2021.2 However, the picture becomes more complicated when we look at each country’s overall dependency on Russia for oil, gas, and coal, measured as the percentage of the country’s total energy usage cross-referenced by Euro Stat with the country’s internal energy mix.

Lithuania 96.1 %
Slovakia 57.3 %
Hungary 54.2 %
Netherlands 49.0 %
Greece 46.5 %
Finland 45.0 %
Poland 35.0 %
Germany 31.1 %
Latvia 31.0 %
Croatia 24.7 %

Figure 1. The percentage of combined natural gas, coal, and oil imports that come from Russia.3

As we can see in figure 1, of the three biggest importers mentioned above, only Germany makes the top ten list (clocking in at number seven) in terms of being the most vulnerable to the impacts of sanctioning Russian gas, oil, and coal. Notably, six out of the top ten most vulnerable countries are countries that were formerly occupied by the Soviet Union.4 The picture becomes even clearer when we look just at EU countries’ vulnerability to Russian gas imports.

Hungary 110.4 %
Latvia 100.1 %
Finland 92.4 %
Estonia 86.5 %
Czechia 86.0 %
Slovenia 81.0 %
Slovakia 75.2 %
Bulgaria 72.8 %
Germany 58.9 %
Austria 58.6 %

Figure 2. The percentage of natural gas imports from Russia in relation to a country’s overall natural gas imports. (Percentages over 100 indicate a country has imported a surplus to then export to other countries.)5

Once again, we see a strong showing of former satellite countries. These countries’ histories with Russia as well as their geographical proximity to it has led to a stronger political response against Russia’s aggression than other EU member states. These countries, specifically Poland, Romania, Hungary, Slovakia, and Czechia, took the majority of the first wave of Ukrainian refugees coming in February 2022 without immediate aid from the EU.6 While many refugees moved on to other EU countries, such as Germany, Poland is still housing close to 1.5 million Ukrainian refugees.7

Geographical proximity highlights yet another vulnerability—the options for alternative energy sources. As of 2020, across the EU, renewable energy sources only account for 17.4 percent of total energy use, with nuclear energy use at 12.7 percent.8 The top three countries using renewable sources are Sweden, Latvia, and Denmark, while Sweden (again), France, and Slovakia are the top three in nuclear energy use.8 When we compare this to the ten EU countries most reliant on Russian gas imports, we see that half of the countries on the list are below the EU average for renewable energy use, including Germany. However, a lack of alternative energy sources does not only depend on access to renewable resources. Due to the gas pipeline infrastructure of the EU, some countries, especially landlocked countries like Hungary, have no easy alternative gas sources.

Aware of the economic challenges sanctions would present, the EU came up with an energy plan to help with the transition away from Russian energy imports: REPowerEU. While this plan suggests new targets for the bloc to hit—such as having renewable sources comprise 45 percent of total energy use by 2030, as well as ways for states to increase energy efficiency—the plan is not an aid package.9 Instead, the plan gives recommendations and localizes the efforts down to the national level.

One of the first steps the EU took over the summer to address the energy crisis from the sanctions was to work on storing gas across the bloc for the winter.10 The EU managed this step well, having filled their storage facilities to 90 percent by the beginning of autumn.11 However, with growing inflation and the rise in utility costs in the bloc, the EU began meeting over the past two months to introduce aid packages and other policy steps to counter the damage from sanctions to EU businesses and citizens.12

There are three policies under discussion on the EU level to address the energy crisis. The first is a price cap on gas, which has wide support across the EU.13 The main issue with this solution is the implementation, as it has the potential to favor wealthier countries who can afford to pay more. Thus, the updated proposal is a dynamic cap, which gives different prices to countries; but again, this has the potential to benefit wealthier countries who can afford a price above another country’s cap.11 On the other hand, a price cap could allow the bloc to buy gas together, increasing their purchasing power. The second proposal is for gas companies, who have profited during this period, to be taxed on their profits, with the proceeds of the tax then being redistributed to aid citizens and businesses.11 This windfall tax, which comes into force December 1, 2022, is based on national taxation laws, and the funds will not be redistributed on the EU level, but back to that specific country.14 The third proposal is for countries to create mutual safety guarantees, which means that if one country has gas stored or has access to gas, it will aid another country that may not have the same access or storage capacity.15 The proposal is an attempt to prevent countries with access to alternatives and/or that are on the route of pipelines from stockpiling gas, running up the prices for their neighbors. Of the proposals, this one seems the most equitable, yet out of a potential forty bilateral agreements, only six such agreements have been made.11

While some agreements and policies have been implemented, such as the windfall tax, these steps have failed to address intra-EU inequalities. Moreover, these policies have put the responsibility primarily on the nation state, which further exacerbates financial and resource inequalities. For instance, Hungary has recently launched a domestic campaign stating that the sanctions are like a “bomb” on the Hungarian economy, complete with illustrations across the country of a bomb with the word “sanctions” on it.16 While the EU has decried this campaign as inappropriate—given the experience of Ukrainians who are being bombed daily—Hungary’s campaign and agreement with Russia to continue to receive gas highlights the dangers of the EU’s inaction in the face of inflation and rising energy prices. Leaving the decision up to national governments has the potential to make the more vulnerable countries in the bloc turn to more anti-EU parties, which as of late, have been predominantly far-right parties.

Finally, to continue to support Ukraine and to wean off Russian gas, the EU must pay attention to the ethical dilemmas of inaction. Not only will inaction continue to contribute to the Russian economy and, on a broader scale, climate change but the EU will also potentially face a greater onslaught of far-right parties, notorious for their poor human rights agendas. The EU may also isolate former satellite countries, who saw joining the EU as a way to ensure their independence from Russian influence in the future. In order to act, the policies put forward by the EU must then become binding. In order to act ethically, these policies must be thoughtful toward individual citizens, not only businesses, and implemented by member states in partnership.

—Jacqueline Dufalla

Jacqueline is currently a PhD student at Central European University studying international relations with a focus on Russian foreign policy.