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The Future of Natural Gas in Southeast Europe: Diversification and Phase-out

Key speakers

Natural gas is the Kremlin’s most powerful geopolitical weapon. Russia has increasingly been relying on energy blackmail to undermine Europe’s unity in responding to the Russian aggression against Ukraine. Europe’s excessive reliance on Russian natural gas has been the single biggest energy and climate security risk and the root cause of the continent’s ongoing energy crisis.

Accelerating the gas phase-out in Southeast Europe is the most sustainable pathway to stronger regional energy and climate security. This is the key message from CSD’s latest analysis of the future of natural gas in Southeast Europe, presented during the online policy round table “The Future of Natural Gas in Southeast Europe: Diversification and Phase-out” held on 12 December 2022.

CSD experts were joined by prominent European and U.S. energy policy experts in discussing the future of the European energy and climate security including Melanie Kenderdine, Principal at the Energy Futures Initiative and former Energy Counselor to the U.S. Energy Secretary and Director of the U.S. Energy Department’s Office of Energy Policy and Systems Analysis, Ivan Ivanov, Chairman of the Bulgarian Energy and Water Regulatory Commission, Andreas Graf, Senior Associate on EU Energy Policy at Agora Energiewende, Dimitri Lalas, Senior Advisor at the Greek energy think tanks, FACETS, and Genady Kondarev, Senior Associate for Central and Eastern Europe at E3G.

During the discussion, the speakers agreed that overcoming the structural energy and climate security risks in the region requires a long-term policy approach with ambitious security of supply and decarbonisation targets. In the long run, a full fossil fuel phaseout is the most sustainable way to improve energy and climate security. Decarbonizing energy markets will also deliver a blow to Kremlin’s ambition to increase its economic and political influence in Europe. Speakers, however, have been divided on the necessary speed of the transition and the feasibility of some of the common EU objectives.

This winter and the next will be extremely challenging as the risk for a complete Russian gas supply cut to the region persists. Tackling the impact in terms of gas shortages and surging prices requires emergency measures focused on protecting vulnerable consumers and ensuring security of supply. 

SEE countries should roll out demand response tenders for industrial gas and electricity consumers to urgently reduce energy demand and protect large business losses in the upcoming winter season. Direct compensation to businesses and energy price caps should be avoided as not to distort market signals and prevent wasteful consumption. Compensation mechanisms should be linked to concrete measures for improving energy efficiency and replacing the use of fossil fuels in production processes with alternative low-carbon solutions including renewable energy-based investments, the massive uptake of heat pumps, hydrogen and synthetic fuels, as well as massive optimization of energy consumption patterns and overall business processes.

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