In order to avoid a gas shortage next winter, it will be necessary to use this summer to fill up the European gas stocks, as the European Commission has planned in its Repower Europe package, said energy minister Claude Turmes (déi Gréng) in an interview with Delano’s sister publication Paperjam.
Solidarity across borders must be organised within the EU so that countries with good gas storage capacities can, in the event of difficulties next winter, come to the rescue of those who lack gas or are more dependent on Russia. Luxembourg imports 27.2% of its gas from Russia, but together with Belgium it has only four days’ storage capacity.
The war in Ukraine continues and sanctions against Russia are being stepped up. Should we worry about a worsening energy crisis and a potential gas shortage in the coming months, or even next winter?
Claude Turmes: You have to understand that gas stocks are emptied from November until March, sometimes April. Then they have to be refilled from April or May. For this winter, we are on the right side. And for the next winter, the most important thing is to fill up the gas stocks this summer.
This is a battle that I have been fighting since October: Gazprom, which owns the gas storage in the Netherlands, Germany and Austria, did not fill them up as in other years. In fact, Gazprom had already been preparing for war in Ukraine since last spring and we were naive to ignore this.
Gazprom was already preparing for war in Ukraine since last spring and we were naive to ignore this.
In October, I asked the European Commission for a European law that obliges all member states to fill gas storage to 90% before the winter. But the commission did not put it on the table. Then Russia attacked Ukraine. Finally, at the beginning of March, the commission proposed a European law on filling gas stocks in its Repower Europe package.
The situation is very different from one European country to another as regards dependence on Russian gas. Is there a need for coordination in this area?
If the situation becomes difficult next winter, there is no point in the French gas stock going to the French, the German gas stock to the Germans, etc. We are strong because we have an internal gas market with stocks and we help each other across the borders.
Part of the gas storage of Germany and Austria must therefore be prepared to help countries that are closer and more dependent on Russian gas, such as the Czech Republic or Poland, which have very little gas storage capacity.
What gas stocks does Luxembourg have?
We do not have and we will never have gas storage on our territory because our geology does not allow it. Enovos has a gas storage facility in Germany. Together with Belgium, we have a four-day gas storage. Hence our common interest in fitting into a broader context.
As chairman of the Pentalateral Energy Forum this year, which brings together France, Germany, the Benelux countries, Austria and Switzerland, I took the initiative to bring the ministers together in March. In a week’s time, in Berlin, we will try to finalise our political cooperation on our gas storage facilities and on the mechanisms for mutual aid in the event of difficulties next winter.
We do not have and we will never have gas storage on our territory because our geology does not allow it.
27.2% of the gas consumed in Luxembourg is imported from Russia, a relatively small share compared to other countries. Does this help us in this context?
We are in a Belgian-Luxembourg gas market, so in a part of Europe that is less dependent on Russian gas imports. Our main supply, on a physical level, is through pipelines from Norway and through the LNG terminal based in Zeebrugge. So we are much more supplied by Belgium than by Germany. Fortunately, we have this Belgian-Luxembourg gas market, which has enabled us to gain both in terms of price and security of supply.
Belgium and Germany have decided to postpone the closure of their last nuclear power stations. You have stated that you are “dismayed and stunned” by the Belgian government’s decision and have sent a letter. What does it say?
We expressed our astonishment at this decision and asked to be told how the Belgian government is going to consult the neighbouring states and their populations on this decision that jeopardises their safety.
Consumers are strongly affected by the explosion of energy prices. To what extent does the state support the purchasing power of households?
With the system of automatic wage indexation, Luxembourg has a very powerful guardian of purchasing power. We are in a completely different situation compared to France and Germany, which do not have this system at all. In France, we’re talking about a cheque for €200 or €300 per year. In Luxembourg, one bracket corresponds to a much higher level of purchasing power.
With the system of automatic wage indexation, Luxembourg has a very powerful guardian of purchasing power.
€75m in aid for households with the lowest incomes--this is the stabilisation of gas and electricity prices and the cost of living allowance. We have extended the latter with a single energy premium that covers a good proportion of people in quintile 1, i.e. the 20% of households with the lowest incomes.
What mechanism do you use to influence energy prices themselves?
Since gas has increased more, proportionally, than oil or petrol, the state will pay the gas network fees for small consumers, which will allow a 20% drop in the price of gas.
And most importantly, as the energy of the future will be electricity produced from renewable energy, we have stabilised the price of electricity for this year with a specific measure. You should know that the price of electricity is made up of the grid and the price at which the supplier buys electricity on the exchanges.
In addition, there is the compensation mechanism for renewable energy. So, in normal times, electricity from a wind turbine costs €0.80 to €0.90, and if the electricity market is at €0.40, this system pays the difference.
Today, there is a double phenomenon: as electricity prices are at €0.90 or €1, much less money is needed to feed this system, which is half paid by the state and half by the citizens. On 1 January, we reduced the citizens’ contribution to 1.5 cents by increasing the state’s participation, which makes it possible to absorb the increases in electricity prices. Now we are going to look at the evolution of prices on the electricity market. And we can lower this price from 1.5 cents to 0, so we still have some room to lower electricity prices.
Is capping energy prices an option?
It’s very dangerous. If you tell a gas company that there is a cap on the gas market, then they are going to be able to buy at an exorbitant price because they know that the government is going to cover it. And what message do I give to the Opec+ countries, like Saudi Arabia or Russia? That you can ask for what you want in terms of price and we will pay. So I am not at all in favour of this kind of measure.
The CO2 tax is a way to get our country out of its dependence on fossil fuels.
Do you think that lowering or even temporarily abolishing the carbon tax is an option for reducing energy prices?
I'll give you an example: the carbon tax in Luxembourg on diesel is 6 cents. Diesel had gone up by 40, so it's not really going to help... Besides, the money from the CO2 tax is compensated for households with the least income--and they are even partly overcompensated.
On the other hand, behind the Russian crisis there is another crisis, which is climate change. But what is the point of this tax? It aims to get rid of our dependence on fossil fuels, with subsidies for electric cars, for replacing oil or gas boilers with renovation and heat pumps. So the CO2 tax is a way to get our country out of its dependence on fossil fuels.
The evolution of the energy crisis seems unpredictable. How do you feel about the future?
We saw one of the difficulties in the Chamber of Deputies on Thursday (10 March). Because diesel had risen by 40 cents on Wednesday (9 March), the CSV exclaimed: 'It's crazy, Luxembourg is in the water, it's going to sink!' On Friday (11 March), it had fallen back by 42 cents. By Wednesday (16 March) it had fallen by another 8 cents, to a level much lower than in the middle of the previous week.
So, at a time when it’s hard for citizens, after two years of covid and now this war that’s unheard of since the Second World War, I think my role as a minister, and the role of responsible politicians, is to calm things down and to distinguish between very short-term phenomena--such as what's happened on diesel--and those that really need action.
This interview was first published in French on . It has been translated and edited for Delano.