The European Union depends on energy exports from Russia more than from any other country. Today, the EU is proposing to cut itself off from Russian oil.
“Today we will propose to ban all Russian oil from Europe,” European Commission President Ursula von der Leyen announced on Wednesday, unveiling the latest European plan to punish Russia for invading Ukraine. .
The proposal comes after weeks of speculation over how far the bloc would go to impose economic sanctions that could harm its own member states.
The ban would hit a pillar of the Russian economy by phasing out the import of Russian crude oil to Europe within six months and stopping the flow of refined oil by the end of the year. It would also put enormous pressure on the 27 members of the EU to find new energy sources and face retaliatory measures imposed by Russia in return.
Here’s a quick rundown of why the oil ban is a particularly thorny issue for Europe:
The EU wants to punish Russia, its biggest supplier of fossil fuels
Anyone who feels conflicted about doing business with a company whose values diverge from theirs can probably relate to the EU conundrum. The bloc wants to support Ukraine, and it doesn’t want to fund the Russian war machine. But the EU has come to depend on Russia more than any other country to meet its energy needs. New oil sanctions could expose European citizens to price hikes and fuel shortages.
In 2019, Russia accounted for almost 27% of EU crude oil imports, far more than any other single source. And despite the unity that prevails in Europe to oppose Russia after the invasion, the EU has not stopped buying Russian energy.
In the first two months after Russia started a war in Ukraine, Russia exported $66 billion worth of fossil fuels, and the EU accounts for 71% of that trade, according to a recent report by the Center for Research on energy and clean air.
Germany was the biggest importer, followed by Italy. The Netherlands and France were also among Russia’s top six customers for fossil fuels.
Is natural gas the next step?
The EU took its first big step away from Russian fuels last month, when it banned coal imports from Russia. Now he is targeting oil. But the toughest energy ban Europe could impose is on natural gas. Indeed, as dependent as the EU has been on Russian oil, it is even more dependent on Russian gas.
In the first two months of the war, deliveries of natural gas from Russia to Europe actually increased by 20%, even as oil and coal exports to the EU fell, according to the recent CREA report.
In the first quarter of 2022, the EU got 30% of its natural gas imports from Russia, according to the Institute of Energy Economics. Compare that to 2019, when Russia accounted for more than 41% of EU gas imports.
EU Energy Commissioner Kadri Simson said cutting off gas supplies from Russia completely to the EU would be a serious challenge.
“It’s not sustainable or affordable,” Simson said this week, to replace 155 billion cubic meters of Russian natural gas with gas from other sources.
She urges the EU to accelerate its adoption of green technologies and the transition to renewable energy sources, so that it can be independent of fossil fuels from Russia.
In the short term, Simson said, the EU should focus on boosting its gas storage levels, which currently sit at just over 32% of capacity. This will not be enough, she warned, to ensure sufficient supply for the next heating season.
Every member of the EU, Simson said, should ensure they have contingency plans in place “for full disruption”.
Europeans got a taste of what that disruption could look like last week, when Russia’s Gazprom suspended gas deliveries to Poland and Bulgaria after the countries refused to pay in Russian rubles.
Many EU members back oil ban plan
At Von der Leyen’s oil plan announcement immediately drew applause from lawmakers during a session of the European Parliament. But the proposal does not seem to be unanimous: Hungary and Slovakia, particularly dependent on Russian energy supplies, have come out against a total ban. These countries will be given an exception to the ban, until the end of next year, according to Reuters.
The oil ban is part of the EU’s sixth sanctions package regarding Russia’s attacks on Ukraine. The plan must be approved by all 27 EU members before it can come into force.
“Let’s be clear: it won’t be easy,” von der Leyen said, “because some member states are heavily dependent on Russian oil. But we just have to do it.”
She promised the EU would institute the oil ban “in an orderly fashion”, to give countries time to organize alternative supplies and minimize disruption to the global oil market.
Von der Leyen recognized the potential for collateral damage to hurt the European economy. In doing so, she addressed another dilemma for the EU: how to punish Russia while minimizing the fallout.
“Because to help Ukraine, our own economy has to stay strong,” she said.