Scientists for Future Austria
by Martin Auer
How would an exit from Russian natural gas affect the Austrian economy? A recently published report by the Complexity Science Hub Vienna to 1. The answer in a nutshell: noticeable but manageable if the EU countries work together.
Austria imports 80 percent of its annual gas consumption from Russia. The EU about 38 percent. The gas could suddenly fail, either because the EU imposed an import embargo, or because Russia stopped exports, or because pipelines were damaged by the military conflict in Ukraine.
The report examines two possible scenarios: The first assumes that EU countries work together to solve the problem together. The second scenario assumes that the affected countries act individually and in an uncoordinated manner.
In 2021 Austria consumed 9,34 billion cubic meters of natural gas. If there is no Russian gas, 7,47 billion will be missing. The EU could procure an additional 10 bcm via existing pipelines and 45 bcm in the form of LNG from the US or the Gulf States. The EU could take 28 billion m³ from the storage facilities. If the EU states worked together in a coordinated manner, each country would be missing 17,4 percent of its previous consumption. For Austria, this means a minus of 1,63 billion m³ this year (from June 1st).
In the uncoordinated scenario, all member countries would try to buy missing gas on the international markets. Under this assumption, Austria could auction 2,65 billion m³. In this scenario, however, Austria could dispose of its storage itself and could withdraw an additional 1,40 billion m³. Under this scenario, Austria would be short of 3,42 billion m³, which would be 36,6 percent.
The study assumes that 700MW of gas-fired power plants can be converted to oil in the short term, saving some 10,3 percent of annual gas consumption. Behavioral changes such as reducing the room temperature in homes by 1°C could result in savings of 0,11 billion m³. The reduced consumption would also reduce the gas required to operate the pipeline infrastructure by a further 0,11 bcm.
If the EU countries work together, Austria would be short of 0,61 billion m³ in the coming year, which would be 6,5 percent of annual consumption. If each country were to act on its own, Austria would be short of 2,47 billion m³, which would be 26,5 percent of annual consumption.
After the protected customers (households and power plants) are supplied, the remaining gas is allocated to industry. In the coordinated scenario, the industry would only have to reduce its gas consumption by 10,4 percent compared to the normal level, but by 53,3 percent in the uncoordinated scenario. In the first case, that would mean a drop in production of 1,9 percent, in the worse case, by 9,1 percent.
Losses, the report said, would be significantly less than the economic impact of the first wave of Covid-19 in the first scenario. In the second scenario, the losses would be comparable, but still smaller than the losses from the first corona wave.
The impact of a gas import ban depends heavily on the countermeasures that are taken. As key points, the report cites the EU-wide coordination of gas supply policy, preparation for switching power plants to other fuels during the summer, incentives for switching production processes, incentives for switching heating systems, incentives for investing in renewable energy technologies, incentives for the population to actively participate in saving gas.
In summary, the report concludes: "In view of the immense damage caused by the war, an EU-wide import embargo on Russian gas could represent an economically viable strategy."
cover photo: Boevaya mashina: Gazprom Main Building in Moscow, via Wikimedia, CC-BY
1 Anton Pichler, Jan Hurt*, Tobias Reisch*, Johannes Stangl*, Stefan Thurner: Austria without Russian natural gas? Expected economic impacts of a sudden gas supply stop and strategies to mitigate them.
https://www.csh.ac.at/wp-content/uploads/2022/05/2022-05-24-CSH-Policy-Brief-Gasschock-Fin-Kurzfassung-DE.pdf.
The full report:
https://www.csh.ac.at/wp-content/uploads/2022/05/2022-05-24-CSH-Policy-Brief-Gas-Shock-Long-Version-EN.pdf
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