Auditors question EU’s gas crisis response, joint purchases

Neither the European Union’s overall response to the 2022 gas crisis nor its joint purchasing push delivered clear benefits, the bloc’s auditors have concluded in a report released on Monday (24 June). 

2022 saw Europe scarred by a six-fold increase in gas prices, and EU countries rushed to subsidise bills. With prices stabilised, the European Court of Auditors found that the EU’s contribution cannot be readily identified and that the cross-country solidarity rules need work.

While prices did rise significantly, “we were fortunate not to experience a major gas shortage”, explains João Leão, the auditor in charge of the report, which evaluated the EU’s crisis response.

Leão argues that while the EU managed to provide enough natural gas, it failed on two fronts: affordability was not a priority, and the Commission failed to plan long-term.

“The Commission knew already in 2014 that a cut-off of Russian gas would have a huge impact on prices, but never modelled its effects on consumers or industry,” he told a press conference to mark the report’s publication.

His audit adds that other policies could not be judged adequately. The EU’s reduced gas consumption could not be convincingly linked to the bloc’s 15% demand reduction target and may have just been due to the price surge.

Additionally, the auditors added that storage obligations—increasing up to 90% before the start of winter—mostly reflected historical trends. 

AggregateEU, the EU’s joint gas purchasing mechanism and pet project of the European Commission’s Maroš Šefčovič, was slammed most strongly. The mechanism allowed buyers to bundle their purchasing power to negotiate lower prices.

EU auditors could not find “added value” provided by the platform compared to established market mechanisms – nor could they identify “the market failure that AggregateEU addresses.” 

The scheme did attract a lot of initial interest from gas buyers, who used the platform to signal an interest in purchasing gas equivalent of 50% of the EU’s storage capacity.

However, the Commission did not have the right to see any supply contracts that resulted from these offers, so it is unknown how much gas was actually secured thanks to the platform.

More positively, smaller companies – those active in a single country – were found to have embraced the scheme, making up two-thirds of the participants. 

Fixing cross-country solidarity

The auditors identify “significant challenges” if the EU wants to be “fully prepared for a new gas crisis.” 

Primarily, this means “fixing” the bloc’s gas solidarity framework.

EU law requires countries to share gas supplies with their neighbour during emergencies, to ensure households in both countries can still receive gas. In practice, setting up bilateral deals to facilitate the sharing has proved challenging.

At the height of the 2022 energy crisis, Germany went around Europe asking for solidarity contracts, so gas could be shared to keep the lights on, with little success. Today, the Commission has created basic templates to ensure gas can flow across borders in a crisis.

But beyond that, the auditors find that the old European gas world is dead. Flows no longer go East to West, but arrive through a variety of LNG terminals. 

In this context the auditors call for a fresh approach to risk assessment. 

Some 18 EU countries had not completed their gas security of supply reporting before the crisis, two had submitted nothing at all, the auditors find.

The entire procedure should be reassessed with a view to “streamlining … reporting requirements” and simplifying the drafting of deliverable documents, the report advises.

[Edited by Donagh Cagney/Alice Taylor]

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