How France is preparing for winter Russian energy shock

Good morning and welcome to Europe Express.

With Europe melting in record-high temperatures and wildfires spreading faster than coronavirus, it can feel somewhat counterintuitive to talk about winter gas shortages. But as the European Commission is preparing to table new plans tomorrow, we’ll look at how France, which has for a long time relied on nuclear power, is slowly waking up to the reality of an energy supply crunch in the coming months.

Beyond turning down thermostats and planning for industrial gas rationing, the commission is also seeking to secure alternative supplies, even as no single exporter will be able to make up for the shortfall if Russia turns off the tap indefinitely.

And in more worrying news for the colder months, Covid-19 is making a comeback, prompting the health commissioner to write to governments urging them to step up their vaccination campaigns.

Belated wake-up call

French consumers have taken cheap energy for granted for so long — even to the extent of routinely heating the outdoor terraces of Paris cafés and restaurants with gas or electricity until the practice was finally banned this year — that the impact of the Ukraine war on prices and supply has come as a salutary shock, writes Victor Mallet in Paris.

President Emmanuel Macron belatedly sounded the alarm in an interview last week in which he called for “a general mobilisation” to manage the probable cut-off of Russian gas supplies to western Europe and urged businesses, government agencies and households to do more to save energy. 

Big retailers took up the baton yesterday, with the bosses of groups such as Leclerc, Carrefour and Monoprix agreeing to put in place an energy-saving protocol from mid-October that would involve turning off the illuminated signs after stores close and limiting winter heating to 17C at times of peak power demand.

“This is a time for energy parsimony,” said Thierry Cotillard, president of the Perifem alliance of big food retailers, “and this will profoundly change the way we consume”.

France is also launching a commercial load-shedding system whereby businesses agree with RTE, the electricity grid operator, to voluntarily cut their consumption when demand looks like exceeding supply. Carrefour became the first business to sign such a pact yesterday, although various government agencies are already onboard. 

In recent years, French policymakers have fallen prey to complacency about fossil fuels and energy saving because most of the country’s electricity is produced by nuclear power stations. 

Even the energy alarm bells triggered by Russia’s invasion of Ukraine and subsequent western sanctions against Moscow did not ring very loud in Paris because France has relied on Russia for only about 17 per cent of its gas imports, whereas Germany’s dependence has been over 50 per cent.

But it is now dawning on French policymakers that while their country may be less vulnerable to energy supply disruption than some of its neighbours, they still face the possibility of a severe crisis prompted by shortfalls and the high price of imports. 

One challenge is that the famed nuclear sector operated by the state-controlled Electricité de France (EDF) has been crippled by lack of new investment and corrosion problems at several of its 56 reactors, pushing electricity output down to multi-decade lows and obliging an embarrassed France to import power from its neighbours. 

Another is that Germany and other big importers of Russian gas will inevitably want the burden of energy shortages to be shared across the 27 members of the EU. 

Climate campaigners, the pro-nuclear ones anyway, are pleased that the Ukraine war seems to have goaded France into doing what many observers believe it should have done anyway: invest in more renewable energy such as offshore wind farms, develop a new range of nuclear power stations, and conserve energy by reducing unnecessary consumption. “Never let a good crisis go to waste,” said one senior executive in the energy sector. “Every gesture counts.” 

In the meantime, however, the French government is looking beyond the current extreme heatwave to the risk of a cold winter of discontent. Senior officials say they are planning for a range of scenarios, building up natural gas stocks and negotiating a deal with Sheikh Mohammed bin Zayed al-Nahyan, the United Arab Emirates president who met Macron at the Elysée yesterday, for the supply of diesel fuel.

Looking for alternatives

With EU countries set for a hard winter if Russia turns the gas taps off any further, EU officials have been burning fuel travelling around the world to secure alternative supplies, writes Alice Hancock in London.

Commission president Ursula von der Leyen signed a deal with Azerbaijan (which the EU has previously criticised for human rights abuses) yesterday to more than double gas supplies to “at least” 20bn cubic metres by 2027 and increase current flows by 48 per cent to 12 bcm this year.

Norway has suggested that an additional 9 bcm could be made available to the EU, according to senior EU officials, while deals have already been inked with the US, Israel and Egypt pushing liquefied natural gas imports up by 24bcm.

In context, though, Brussels still has a long way to go: the EU imported 155 bcm of gas along Russian pipelines in 2021, around 40 per cent of its total natural gas consumption, and the only way to make sure it has enough to go round this winter will be to cut demand, the International Energy Agency said yesterday — something that the commission seems to have taken on board with the latest draft of its winter gas reduction plan.

Meanwhile, commission officials will also be off on missions to Nigeria and Qatar. “Latin America is also a target,” said one, so no gasfield is being left unturned.

But many fear that with increased competition around the world for gas as demand ramps up again following the pandemic, the EU faces a difficult task.

“It’s not a supermarket into which we can swagger and come home for tea,” the official said.

Chart du jour: Worsening outlook

The European Central Bank is dealing with a deteriorating situation in the continent. The worsening outlook is reflected in last week’s sharp fall in the euro below the value of the US dollar. But the ECB has little choice but to start raising rates after inflation in the bloc surged to a record high of 8.6 per cent. Read more here

Ill tidings

As if there isn’t enough to worry about in Europe, the health commissioner yesterday gave warning that member states need to be fully prepared for a fresh Covid-19 onslaught, writes Sam Fleming in Brussels.

In a letter to health ministries seen by Europe Express, Stella Kyriakides flagged the “concerning surge” in cases currently under way in the EU, including increasing rates of severe illness, hospital and intensive care admissions. (The latest coronavirus sub-variant has been nicknamed Centaurus).

A number of actions by public health authorities will be needed to see the continent through the “next chapter” of the pandemic, she warned. These include:

• A swift round of second booster doses for those aged 60 or over or with medical conditions that make them vulnerable (as per EU health agencies’ recommendation earlier this month)

• Making the logistical preparations for future vaccination campaigns using updated jabs once they’re approved

• Implementing year-round surveillance and testing capacity for acute respiratory illnesses this winter “and beyond”

• Securing plenty of healthcare supplies in preparation for a rise in Covid-19 cases and influenza

• Being prepared to reintroduce masks and social distancing, while avoiding school closures

The implication from the letter is that health ministries have only a brief window to prepare for the next phase of a pandemic which is far from over. Coupled with the worsening energy crisis and a rising risk of recession, this is shaping up to be a grim autumn and winter for Europe.

What to watch today

1. EU starts accession negotiations with Albania and North Macedonia

2. Industry and trade ministers meet for an informal council in Prague

3. Russian president Vladimir Putin meets his counterparts from Turkey and Iran in Tehran

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