Thread by @PascalLTH

Tomorrow Russia will take Nord Stream 1 offline

There will be a major potential for escalation of the geopolitical and energy crisis

So here's a thread on why not to panic now, when you might want to, and just what on earth is EU Regulation 2017/1938 🧵

Let's start with the easy bit

NS1 is going offline. This is normal.

The gas pipeline, which handles a substantial amount of Russian gas exports to Europe, is due to undergo maintenance

In theory this will last for around 10 days - at which point the gas should flow again/1

In other words, you don't need to worry too much for this coming week

It's the end part of the following week that risks being the flashpoint /2

Much as the maintenance is normal and scheduled, it's entirely possible that Russia could use this as an excuse to simply keep the gas off

With other pipelines of Russian gas already at low levels, or shut off completely, shutting down NS1 would be a major issue /3

And we know that Russia is willing to use its gas supplies as a weapon - NS1 gas flows to Germany were already cut to around 60% of normal levels

Russia claims they had to reduce capacity while waiting for a part they need for repairs /4

But the German government and others have never bought that excuse and call the cuts a political move

Even if the need for repairs is genuine, it wouldn't explain the level of cuts to gas supply /5
independent.co.uk/news/ap-gazpro…

So the very real fear in Berlin is that Putin will do the same in a couple weeks' time, claiming some unexpected fault and keeping NS1 closed beyond the normal maintenance period /6

If that happens, not only will it push (already high-wateringly high) gas prices even higher, it will also massively impede the ability of many countries in Europe (notably Germany and some south-eastern neighbours) to build up sufficient gas storage for this winter /7

Because when it comes to the geopolitical face-off taking place between Europe and Russia, gas storage is the name of the game

With enough gas storage, Europe can ride out this winter and disruptions to gas supply without too much pain /8

That's why the EU passed a law requiring all countries with gas storage facilities to fill them up to at least 80% by 1 November

(and some are choosing to aim higher - France for example has set itself the goal of 100%) /9
euractiv.com/section/energy…

It's also why Putin has every incentive to disrupt those plans and to limit the amount of Russian gas used to fill up European storage facilities /10

So if an extended cut-off of NS1 is Russia's move, what will be Germany's response?

This is where EU Regulation 2017/1938 - also known as the Security of Supply Regulation - comes in /11

There's a lot of detail you can go into for this 2017 law (I would know, I've written plenty of policy analysis on it in recent months) but for now the key point is that all EU countries (and the UK) have a three-stage security of supply plan /12

The three stages are: early warning, alert and emergency

A smattering of countries are already in the early warning phase, although in itself this does not lead to any particular changes or policies /13

For now, Germany is the only country to have moved to Stage 2, alert (although Italy came close).

But even then, they have hardly made use of the powers available to them. If NS1 doesn't come back online later this month, that will change /14

The aim will be to conserve as much gas as possible and to get what gas supply there is going into storage

That will mean measures like the return of coal plants to produce electricity or limits on temperature controls in buildings /15

If that's not enough - and it might not be if NS1 stays offline for a while - then the country will need to move to stage 3, emergency

The final threshold is aptly named as it would truly be a gas supply emergency - there would be a real risk of gas running out /16

Above all, stage 3 means rationing of gas supplies

Various industries would be told to cut their gas use or even find they have lost access to gas entirely /17

Household gas supplies would be protected but the potential economic and social impact of gas rationing in Europe's biggest economy would be very serious, with likely consequences for the rest of Europe too /18

In spite of that pain, this is what it might take for Europe to resist Putin's blackmail

It's this security of supply plan - EU Regulation 2017/1938 - that will get Europe through the winter without needing to give in to Russia's demands or give up on supporting Ukraine /19

And once we're through this winter, Putin may find that Europe's businesses and governments have little interest in getting their energy from someone who likes to play political games

In the long-term, Putin's strongest move in energy geopolitics may also be his last /end

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