EU Unveils Comprehensive Plan to Cut Ties with Russian Energy by 2028
On Tuesday, the European Commission revealed a detailed strategy aimed at fully decoupling the European Union from Russian hydrocarbons. This ambitious plan includes requiring importers to terminate their long-term contracts under claims of force majeure, with a complete phase-out expected by the end of 2028. European Commission President Ursula von der Leyen underscored the urgency of this initiative, emphasizing that Russia has repeatedly used energy supplies as a tool of blackmail against the EU. 'We have taken clear steps to turn off the tap and put an end once and for all to the era of Russian fossil fuels in Europe,' she stated.
The proposed plan lays out a gradual and coordinated three-stage elimination of Russian hydrocarbons to mitigate potential impacts on energy prices and safeguard supply security. The first stage, starting January 1, 2026, prohibits new contracts for importing Russian gas. The next phase demands the cessation of existing short-term contracts by June 17, 2026, though companies may stipulate that such commitments were signed before June 17, 2025. Landlocked countries that rely on gas pipelines, such as Slovakia and Hungary, will have until 2027 to comply with these regulations. Finally, the Commission aims for all imports under long-term contracts to cease by the end of 2027.
To move forward, the proposal requires approval from a simple majority in the European Parliament as well as a qualified majority among the 27 member states, which will facilitate the bypassing of potential vetoes from Slovakia or Hungary, which have close ties to Moscow.
Businesses that have long-term contracts, such as Spain's Naturgy, are expressing concerns about the prospect of breaking these agreements. Spain, which has been a key transit point for Russian LNG into the EU, insists on a European-wide solution, arguing it cannot impose a national prohibition on trading non-sanctioned products.
The European Commission has reassured stakeholders by asserting that there will be no economic compensation offered to companies affected by these contract terminations, claiming to have the legal framework necessary to end such contracts under Articles 207 and 1942 of the Treaty on the Functioning of the European Union (TFEU). This legal basis underscores the urgency of breaking commercial ties with Russia, which the Commission contends have previously destabilized the EU energy market.
Despite fears of potential arbitration for the hundreds of contracts that will need to be terminated, EU sources are confident that these regulations will not lead to financial liabilities for European companies, as compliance will be mandated by law.
Additionally, the Commission proposes restricting long-term contracts for services at LNG terminals that are intended for Russian use, thereby redirecting terminal capacity to alternative providers. This is expected to enhance the resilience of Europe's energy markets.
Following the onset of Russia's invasion of Ukraine, the EU has already banned imports of Russian coal and nearly all oil, with the latest proposals calling for an overall halt to gas imports by the end of 2027. The EU previously refrained from sanctioning gas, however, it was Russia that had manipulated gas supplies to drive up prices before and after the invasion, further complicating the energy crisis during 2021 and 2022.
Since that time, the EU has made significant strides in reducing its dependence on Russian gas, falling from 45% to just 19% of total imports by the end of 2024. This achievement is attributed to increased imports from the USA, Norway, and Qatar, as well as a growing share of renewable energy and smoothed consumption declines, trends that Brussels expects to continue.
In tandem with these measures, Brussels urges member states to develop diversification plans to decouple from Russian energy without creating shocks in the market. The Commission has pledged to oversee this process, promising that it will authorize temporary exceptions if supply security is jeopardized.
European Energy Commissioner Dan Jørgensen reiterated the security threat associated with importing gas from Russia, stating, 'Importing gas from Russia is a threat to Europe's security. That is why we now propose a unionwide import ban. This will increase our energy independence and reduce the revenues that Putin uses to finance his war.'
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