Europe urgently needs a common strategy on Russian gas

n uncoordinated approach threatens EU energy security and the green transition

Publishing date02 April 2025
AuthorsUgnė Keliauskaitė Simone Tagliapietra Georg Zachmann

As the United States pushes for a peace agreement between Ukraine and Russia, the question of whether European Union members should resume large-scale imports of seemingly cheaper Russian gas is already being discussed by some leaders, in both the public and private sectors 1 . A return to Russian gas risks fracturing consensus among capitals.

Tapping into Russia’s gas resources using currently idle pipelines might seem appealing, especially considering rising energy costs and low gas storage levels 2 . However, a fragmented European approach to Russian gas imports will benefit Putin, enabling him to leverage gas supplies and manipulate pricing, politically divide the EU and threaten the bloc’s long-term energy security. It could also hinder the EU’s energy transition efforts, with cheaper gas undermining investments in clean energy.

EU policymakers set a non-binding goal to phase out use of Russian gas by 2027 3  but the presentation of a plan on how to do this, initially set for March, has been postponed for the second time with no new date announced 4 . Here, we assess the viability and effectiveness of an embargo, tariffs and quotas as potential measures to form part of an EU strategy to limit and phase out this reliance.

The state of play

In 2021, Russia supplied the EU with 157 billion cubic metres (bcm) of gas, about half of the EU’s gas imports (Table 1). The EU imported most Russian gas via four pipelines (Nord Stream 1, Ukrainian gas transit, Yamal and TurkStream) and liquified natural gas (LNG) shipments (Figure 1). By 2024, Russian gas imports had fallen to 54 bcm, accounting for 18 percent of EU gas imports. This drop was primarily driven by Russian supply cuts rather than action by EU countries 5 . Note that EU imports of Russian LNG have risen by 60 percent over the past three years.

Figure 1: Monthly European gas imports by source, billion cubic meters, 2021-01 — 2025-02

Figure 2: Russian pipeline infrastructure in Europe

Source: Bruegel.

While Russian gas flows to the EU have fallen substantially, Russia continues to supply some European companies. Despite several countries, including Lithuania, Latvia, Estonia and Poland, imposing national bans on Russian gas, there are no robust EU-level legal restrictions on Russian gas entering via pipelines. Sanctions apply only to LNG transshipments via EU ports for non-EU destinations 6 .

Nonetheless, several contracts between Russia’s Gazprom and EU energy companies have been terminated. The contract between Austria’s main gas provider, OMV, and Gazprom, originally valid until 2040, was terminated in December 2024. Czechia’s CEZ, Germany’s RWE and Uniper and Italy’s ENI have initiated legal proceedings against Gazprom over non-delivery or breaches of contract 7 . Yet several companies still have long-term contracts with Gazprom with ‘take or pay’ clauses forcing them to purchase Russian gas to avoid penalties.

European routes for Russian gas

Most of the Russian pipeline infrastructure still exists (Figure 2). While reopening Yamal is unlikely, given Poland’s stance against Russian energy, and TurkStream’s capacity is fully utilised, two options remain: restoring transit via Ukraine or using an undamaged Nord Stream 2 pipe.

The contract for Russian gas transit through Ukraine expired in January 2025. The EU discussed the possible renewal of Ukrainian transit 8 , with Slovakia threatening to block support for Ukraine unless transit is resolved. In 2024, Gazprom was required to pay Ukraine for the transit of 40 bcm of gas; however, Russia transported only 16 bcm. The technical capacity of the pipeline system is around 100 bcm.

Completed in 2021, Nord Stream 2 (NS2) has not been certified for operation by Germany or the European Commission and was partially damaged during a 2022 explosion, leaving one intact pipeline with an annual capacity of 28 bcm. Despite reported discussions between a Putin aide and US investors 9 , reopening NS2 faces financial hurdles: pipeline operator Nord Stream 2 AG, part of Russia’s Gazprom, has until 9 May 2025 to restructure its debt and settle with small creditors or face bankruptcy 10 .

Evaluating policy responses

A unified EU-level policy framework should include measures to discourage use of Russian gas, and incentives for EU countries still reliant on it to end their dependence. We assess an embargo, quotas and tariffs as potential tools for a unified EU approach.

Applying an embargo on Russian gas imports 11 , would immediately cut dependency and end gas sales revenues for Russia 12 . If sanctions were imposed, EU companies with long-term contracts with Gazprom could terminate their contracts without incurring penalties. However, a complete embargo would likely cause temporary price spikes, especially in Hungary and Slovakia.

Legally, an EU-wide embargo requires unanimous approval from EU countries 13 . A ban on Russian LNG imports failed to gain enough support for inclusion in the 16th package of EU sanctions on Russia, adopted in February 2025. At Slovakia’s request, the European Council stressed the need to find a workable solution for Ukrainian gas transit 14 . Given the current political landscape, securing unanimity remains very challenging, suggesting that an alternative approach is necessary.

The EU could consider measures for a phased reduction of Russian gas that would create less financial strain and which are more politically viable. The two main options are quotas, which are limits that cap the volume of gas that can be imported into the EU, or import tariffs, which are levies that the EU would place on Russian gas. Tariffs are preferable to quotas because they generate revenues for the EU rather than increasing revenues for Russia.

First, tariffs would create revenue that could be used to minimise the impact of the tariffs on industries affected by rising energy costs. Importers would pay a levy per unit of Russian gas, either as a percentage of the gas value or a certain amount for each cubic metre of gas. This revenue could fund alternative energy supplies and infrastructure, notably in Slovakia and Hungary, in a manner that preserves market signals. Quotas, on the other hand, restrict supply without generating financial returns.

Second, tariffs would hurt Russia’s economy while potentially benefiting the EU 15 . Tariffs would increase the cost of Russian gas imports. If Russia wants to maintain or increase its export volumes to the EU, it may have to lower its gas prices, partially offsetting tariffs for consumers. As a result, the EU’s terms of trade would improve. Meanwhile, quotas create a shortage of gas. If the EU’s demand for Russian gas remains high, prices for Russian gas will rise until they reach a level where demand matches the restricted supply. Quotas enable Russia to charge more per unit of gas, compensating for lost sales volume and maintaining, or even increasing, its revenue. The longer the phase-out period with quotas, the longer Russia would benefit from higher gas prices.

Companies bound by long-term contracts with ‘take-or-pay’ clauses would need to buy a minimum volume of Russian gas to avoid fees. To compensate these importers for paying tariffs on these minimum quantities until contracts expire, revenues from spot market purchases could be used.

Legal and political viability of tariffs

Legally, tariffs in the EU can be introduced by a qualified majority vote, unlike an embargo, which requires unanimity. The question of which treaty article provides the appropriate legal basis for a tariff remains to be answered. The EU Court of Justice states that when multiple legal bases are applicable, the most specific must be used (Kleimann et al, 2022). The two relevant options for a tariff on Russian gas are energy supply and commercial relations (Kleimann et al; Lenk, 2022).

The article under which the tariff is deemed to fall is crucial – if the measure is considered to target energy supply rather than trade, Article 194 TFEU should apply. Under this article individual EU countries have the right to determine their energy mixes. An EU-wide tariff would overstep those rights.

If understood to be a trade measure however, Article 207 TFEU would apply, under which the EU has exclusive competence to set tariffs as part of its Common Commercial Policy. Tariffs are considered trade measures – not sanctions – and thus can be adopted by qualified majority voting in the Council of the EU based on a European Commission proposal.

Principles for tariff design

The key question for tariff design is the extent of Russia’s dependence on the EU as an export market for its gas rather than the EU’s reliance on Russian gas. The optimal tariff level is primarily determined by the elasticity of Russia’s gas supply (Sturm, 2022), which is economically inelastic. Europe, with its well-developed pipeline infrastructure, has been the key buyer of Russian gas. Developing LNG capacities and pipelines to China will take time and involve different gas sources. This allows the EU to impose substantial tariffs on Russian gas without significantly reducing Russia’s commercial incentive to export to the EU. Still, politically Russia can threaten to halt supplies if it disagrees with EU tariffs; therefore, the EU must adopt a firm stance against Russian gas.

To make gas tariffs effective, the EU needs to prevent circumvention that masks the origin of Russian gas, such as Turkey’s rebranding of Russian oil as its own 16  and its marketing of a ‘Turkish blend’ of gas from various sources, potentially including Russian gas 17 . Another example is considering Azerbaijani gas as an alternative to Russian gas through Ukrainian gas transit. However, Azerbaijan’s limited output makes a swap deal with Russia likely, effectively leaving Europe’s dependency on Russian supplies unchanged (Keliauskaite and Zachmann, 2024).

Furthermore, the EU must be able to secure sufficient affordable gas if Russia cuts off supplies. While it is technically feasible to deliver additional LNG through terminals in Croatia, Italy, Poland and Germany 18 , finding reliable replacement volumes is challenging due to the limited number of large suppliers, with the US being the main alternative. Two new US LNG facilities began operating in early 2025 19 , boosting US exports by 15 percent in 2025 20  (20 bcm). While significant gas volumes remain uncontracted 21 , it is unclear how much will be available in the short term, when EU demand is highest. This shift to alternative gas sources also risks creating new dependencies.

Conclusion

The recent energy crisis clearly illustrated why the EU must accelerate its transition away from fossil fuels. This strategic decoupling is critical to achieve climate goals and to end the risk of energy weaponisation, as well as to foster economic competitiveness.

An effective common tool on Russian gas imports is urgently needed – as otherwise Russia might again use (the prospect of) selective gas supplies to fuel profound discord amongst member states. A tariff on remaining Russian gas flows should be pursued. This represents a viable option, as tariffs could prompt Russian suppliers to lower prices to remain competitive, generating revenue to support vulnerable EU countries in their transition away from Russian gas. Ultimately, a tariff would also limit the Kremlin’s gas revenues and therefore weaken its ability to fund future aggression against Ukraine or other neighbours.

The authors thank Agata Łoskot-Strachota, Conall Heussaff, Filip Rudnik, and Ignacio García Bercero for their comments.

References

Keliauskaite, U. and G. Zachmann (2024) ‘The end of Russian gas transit via Ukraine and options for the EU’, Analysis, 17 October, Bruegel, available at https://www.bruegel.org/analysis/end-russian-gas-transit-ukraine-and-options-eu

Kleimann, D., B. McWilliams and G. Zachmann (2022) ‘How a European Union tariff on Russian oil can be designed’, BruegelBlog, 29 April, available at https://www.bruegel.org/blog-post/how-european-union-tariff-russian-oil-can-be-designed

Łoskot-Strachota, A., U. Keliauskaite and G. Zachmann (2024) ‘Future European Union gas imports: balancing different objectives’, Analysis, 3 July, Bruegel, available at https://www.bruegel.org/analysis/future-european-union-gas-imports-balancing-different-objectives

Lenk, H. (2022) ‘The Costs of War: how tariffs could help Europe give up Russian oil and gas’, Perspective, Swedish Institute for European Policy Studies, available at https://www.sieps.se/globalassets/publikationer/2022/perspective_the-costs-of-war.pdf

Sturm, J. (2022) ‘The simple economics of trade sanctions on Russia: A policymaker’s guide’, mimeo,  available at https://sturm-econ.s3.amazonaws.com/Sturm+policy+lessons+2022.pdf
About the authors
Ugnė Keliauskaitė
Ugnė is a Research analyst in Energy and Climate at Bruegel. She holds a MSc in Environmental Economics and Climate Change at The London School of Economics and Political Science (LSE). Her master’s thesis investigated the impact of wildfires on average rents on the US Pacific coast. Prior, she completed a MA in Economics and Mathematics with Honours at the University of Glasgow. In her bachelor thesis, she designed a carbon tax for reaching net-zero emissions in Lithuania’s road transportation sector. Along her studies, she worked in the State Investment Management Agency (VIVA), lending to companies affected by Covid-19.

Ugnė is fluent in English and Lithuanian and has a working knowledge of German and basics in Russian.
Simone Tagliapietra
Simone Tagliapietra is a Senior fellow at Bruegel.

He is also a Part-time professor at the Florence School of Transnational Governance (STG) of the European University Institute and an Adjunct professor at the School of Advanced International Studies (SAIS) Europe of The Johns Hopkins University.

His research focuses on the EU climate and energy policy, and on its industrial and social dimensions. With a record of numerous policy and scientific publications, also in leading journals such as Nature and Science, he is the author of Global Energy Fundamentals (Cambridge University Press, 2020) and co-author of The Macroeconomics of Decarbonisation (Cambridge University Press, 2024).

On the basis of his policy and scientific production, Dr. Tagliapietra regularly supports EU and national institutions in the development of their public policies in the field of climate and energy, also through regular interaction with public decision-makers in EU and national institutions, as well as through regular parliamentary testimonies in the European Parliament and various national parliamentary assemblies inside and outside Europe, such as the French Senate, the UK House of Lords and the US Senate. His columns and policy work are widely published and cited in leading international media.

Dr. Tagliapietra also is a Member of the Board of Directors of the Clean Air Task Force (CATF) and Senior associate of the Payne Institute at the Colorado School of Mines in Golden. He holds a PhD in International Political Economy from the Catholic University of Milan, where he previously graduated under the supervision of Professor Alberto Quadrio Curzio and where he also served as an Assistant professor (tenure-track) until 2024. Born in the Dolomites in 1988, he speaks Italian, English and French.
Georg Zachmann
Georg Zachmann is a Senior Fellow at Bruegel, where he has worked since 2009 on energy and climate policy. His work focuses on regional and distributional impacts of decarbonisation, the analysis and design of carbon, gas and electricity markets, and EU energy and climate policies. Previously, he worked at the German Ministry of Finance, the German Institute for Economic Research in Berlin, the energy think tank LARSEN in Paris, and the policy consultancy Berlin Economics.