If Russia were to cut off gas supplies to Europe — now considered the baseline scenario by EU officials — the bloc’s economy could shrink by up to 1.5 percent of GDP, the EU executive estimates.
That warning is part of a plan to pre-emptively reduce gas consumption starting this summer, so as to avoid supply shortages in the winter.
Early action would limit economic damage in case of a complete shut-off from Russian gas to 0.4 percent of GDP on average in the EU, the EU executive wrote in an updated draft communication seen by POLITICO and due on Wednesday.
Delaying action would increase costs by one-third, to between 0.6 and 1 percent of GDP. A severe winter would contract the bloc’s economy further, the Commission warned.
“The cost of delaying action in a cold winter environment would multiply significantly the costs for the EU, with a GDP impact between 0.9 [to] 1.5 percent on average, and in particular for the most affected Member States,” it wrote.
Russia has stopped or reduced gas supplies to 12 EU countries as well as halted flows through the Nord Stream 1 pipeline during a planned maintenance set to end on Thursday. EU governments and officials are skeptical that Moscow will restart those flows: “We’re working on the assumption that it doesn’t return to operation,” Budget Commissioner Johannes Hahn told reporters in Singapore today, according to the Wall Street Journal.
According to the draft, the Commission will propose that EU countries adopt voluntary reduction measures by updating their national contingency plans by the end of September.
It will also propose rules allowing the EU executive to trigger an “EU alert” level and demand binding gas reduction “if the situation and the outlook evolve negatively in terms of balance between supply and demand and is likely to lead to emergencies and if at least two Member States ask for it,” the Commission wrote.
The Commission says it will base such proposals on Article 122, a legal provision that allows it to pass legislation by qualified majority in the Council. That means no country would have a veto, and that Parliament would be bypassed.
The gas reduction targets are still bracketed in the draft, meaning it hasn’t been decided yet.
