Rethinking the security of the European Union’s gas supply. Bruegel Policy Contribution, Issue 2016/01 January 2016

Highlights: • The security of the European Union’s gas supplies is crucial to ensuring that supplies to households are not disrupted in freezing winters, that industry can flourish and that the EU cannot be blackmailed in vital foreign policy questions. • Gas supply security should be addressed at EU level because a joint solution would be cheaper, national approaches could undermine the internal energy market and have adverse effects on other countries, and the EU Treaty explicitly calls for energy solidarity. • The current focus on supply diversification and reduction of dependence on imported gas is expensive and does not constitute a systemic response. • Instead of doing everything to reduce gas supplies from key suppliers, gas supply security could more effectively be safeguarded by ensuring that unused alternatives are maintained so that they can be tapped into for an indefinite period in case of supply disruption from a key supplier.This Policy Contribution outlines a market approach that could safeguard gas supply security at very low cost.