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THREE-DAY COUNTDOWN FOR EUROPE: Russian state-owned energy giant Gazprom halted gas deliveries to the EU today via its Nord Stream 1 pipeline, beginning a three-day maintenance period that leaders fear could be a pretext to more permanently halt deliveries to the bloc.

Gazprom confirmed today that its supplies were “completely stopped” for “preventive work” at its Portovaya compressor station in Russia. It said it is carrying out the work “jointly” with Siemens Energy, which assisted in repairing a spare turbine earlier this summer, though the company said today that it is not involved in any maintenance work.

The shutoff comes two months after Gazprom first began throttling its gas deliveries to Europe via Nord Stream 1 in early June.

The EU is on track to meet its targets to fill its gas storage tanks before winter, but analysts have warned that, in order for the supplies to last through March, the bloc must also be prepared to slash consumption at a level not seen before.

Without Russian gas, failing to aggressively curb consumption in industries and buildings in the EU will likely force the bloc to ration its electricity supply this winter.

Member countries agreed last month to curb their gas consumption by 15%, but Reuters notes that countries like Germany, which rely more heavily on Russian supplies, must be prepared to make even steeper cuts of up to 25%.

If Gazprom were to completely halt gas delivery via Nord Stream 1, German demand would be “severely curtailed this coming winter, with some of the shortfalls being passed on to Germany’s neighbours” in central and eastern Europe, the Oxford Institute of Energy Studies said in a recent report.

Why it matters: In the short term, this leaves the bloc increasingly dependent on other countries for LNG imports to make up for Russian supplies, since pipeline gas is already flowing at full capacity.

But it is unlikely that suppliers can ramp up production at a level necessary to offset cuts from Gazprom—and analysts have warned that it will likely take “years” for this to happen due to production and infrastructure constraints.

While LNG producers such as the U.S., Qatar, and Australia technically have enough supply on the market to make up for the rest of the EU's gas imports, roughly 70% of its cargoes are already reserved for long-term contract holders. Even if they were to drastically scale up imports to the bloc, the EU only has enough spare terminal capacity to take in about 50% of that, according to data from Bloomberg Intelligence.

(Other countries such Canada, the fifth-largest natural gas producer, are prohibited from scaling up production before 2025 due to climate change legislation limiting CO2 emissions.)

Russia, meanwhile, has benefited from the soaring energy costs: Moscow earned roughly $97 billion from its exports of oil and gas as of July. Suppliers have been able to reroute much of their supply from the West to Asia, where demand for Russian crude remains high.

In fact, analysts at the consultancy Capital Economics said that, if gas prices stay at current levels, Moscow could keep gas exports to the EU at 20% of normal levels for “at least the next three years'' without feeling the pain. Russia could also cut supplies to the EU completely for a year without facing adverse economic consequences, the group found.

In other words, Russia’s position seems strong, despite the West’s sanctions and efforts to phase out imports of its energy products.

What’s next: Shell CEO Ben van Beurden said this week that Europe should prepare for several years of gas rationing, warning that the energy crisis would test the “solidarity” between EU nations in the months to come.

“It may well be that we have a number of winters where we have to somehow find solutions through efficiency savings, through rationing and a very, very quick buildout of alternatives,” van Beurden, the head of Europe’s largest oil and gas company, said at an event in Norway..

Others said it could take longer: Belgium has warned of an “economic time bomb” if Russia were to halt supplies, and Prime Minister Alexander De Croo said last week that the bloc should prepare to face “five to ten winters” of prolonged economic hardship due to the ongoing energy crisis.

“We are monitoring the situation closely, but we must be clear: the next few months will be difficult, the next winters will be difficult,” he told reporters.

Welcome to Daily on Energy, written by Washington Examiner Energy and Environment Writers Jeremy Beaman (@jeremywbeaman) and Breanne Deppisch (@breanne_dep). Email [email protected] or [email protected] for tips, suggestions, calendar items, and anything else. If a friend sent this to you and you’d like to sign up, click here. If signing up doesn’t work, shoot us an email, and we’ll add you to our list.

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CHINA WANTS SOME SORT OF REBUKE OF PELOSI BEFORE TALKING ON CLIMATE: China wants some sort of repercussion for House Speaker Nancy Pelosi in retribution for her visit to Taiwan earlier this month before it reengages in climate talks.

"The U.S. side should dispel the negative influence of Pelosi scuttling to Taiwan, this is an indispensable condition of China-U.S. climate change cooperation," China's foreign ministry said in a statement to Reuters.

What would it mean to dispel the negative influence of Pelosi? We don’t know. But China was reacting to Climate Envoy John Kerry’s remarks in an interview yesterday that he hoped talks would resume before the November COP27 climate summit in Sharm el-Sheikh. (Kerry also made some very flattering statements about China’s climate efforts, as we noted in yesterday’s letter).

Why it matters – a reminder: China is the world’s largest carbon polluter and not much the U.S. does to reduce emissions will matter much if China does not bring down its own. Kerry had touted an agreement on cooperation on emissions late last year, but the deal lacked concrete pledges, emissions targets, or timeframes. Then, in January, Xi Jinping said bluntly that he wouldn’t allow the goal of reducing carbon emissions to disturb the economy and that the country must “overcome the notion of rapid success” on climate change.

IAEA INSPECTORS HEAD TO ZAPORIZHZHIA: A team of inspectors from the International Atomic Energy Agency began traveling from Kyiv to the Zaporizhzhia nuclear power plant in Ukraine today, Director-General Rafael Grossi said, finally advancing toward the facility after months of protracted negotiations with Russian and Ukrainian leaders.

Grossi told reporters today that the IAEA team is planning to spend a “few days” at the site. Speaking shortly before the convoy of vehicles set off from Ukraine’s capital city, he said: "We are now finally moving after six months of strenuous efforts.”

"We have a very important task there to perform— to assess the real situations there, to help stabilize the situation as much as we can,” he said.

While at Zaporzhzhia, Grossi said, he will seek to set up a permanent monitoring mission at the facility. Another top priority will be speaking with Ukrainian technicians who have continued to operate the plant after it fell under Russian control in March."That’s one of the most important things I want to do and I will do it,” he said.

They are expected to arrive to Zaporizhzhia tomorrow morning.

News of their departure comes one day after Ukrainian presidential chief of staff Andrew Yermak accused Russia of sabotaging their planned visit by launching heavy artillery strikes in the region, which delayed inspectors’ travel.

“Russia is trying to disrupt the IAEA mission to the Zaporizhzhia nuclear power plant by simulating combat operations in Energodar and shelling the area neighbouring the nuclear power plant site,” Yermak wrote yesterday on Twitter.

HEAT WAVE – CALIFORNIANS TO BE ASKED TO SET AC AT 78 AND FORGO EV CHARGING: California grid operators warned residents to prepare for voluntary energy cuts and other emergency measures as the state braces for a heat wave expected to last through early next week.

Operators said they are taking measures to bring “all available resources” online ahead of the heat wave, which is expected to be the longest and most severe high-heat period to hit the state so far this year.

CAISO officials warned that residents may be asked to set thermostats to 78 degrees or higher, avoid large appliance use and EV charging, and to turn off unnecessary lights between 4 p.m. and 9 p.m, when the grid is the most stressed. Lowering electricity usage during that time will help prevent “more drastic measures, including rotating power outages,” officials said.

An excessive heat warning is in effect through much of Southern California, where meteorologists said “dangerously hot” conditions could climb as high as 115 degrees. Temperatures in Northern California, meanwhile, could climb up to 18 degrees above average.

TOYOTA TO TRIPLE PLANNED INVESTMENT IN BATTERY PRODUCTION FACILITY: Toyota said today that it will triple its planned investment in a new U.S. hybrid and EV battery manufacturing plant, investing an additional $2.5 billion toward the facility that comes as the automaker seeks to meet rising consumer demand for electric vehicles.

Toyota said the additional funds will go to its planned Toyota Battery Manufacturing North Carolina plant in the U.S., which is slated to come online in 2025. "This investment is aimed at enabling Toyota to flexibly meet the needs of its various customers in all countries and regions by offering multiple powertrains and providing as many options as possible," the company said in a statement.

It’s part of a larger investment of up to $5.6 billion in EV and hybrid battery funding announced today by Toyota. The automaker said its goal is to increase its “combined battery production capacity” at its facilities in the U.S. and Japan by as much as 40 GW hours, CNBC reports.

MISSISSIPPI WATER CRISIS TO LAST AN ‘UNKNOWN’ PERIOD OF TIME: Mississippi Gov. Tate Reeves declared a state of emergency for the city of Jackson after its main water treatment plant broke down, leaving as many as 180,000 residents in the state without potable running water for an “unknown” period of time.

“Until [the water treatment facility] is fixed, it means we do not have reliable running water at scale,” he said. “It means the city cannot produce enough water to fight fires, to reliably flush toilets, and to meet other critical needs.”

The city was already under boil-water notice beginning in late July, after health officials said cloudy water there could cause digestive problems. Officials warned that until the facility is operational, it is likely unsafe for residents to use the water to cook or brush their teeth.

Reeves said he has placed the state’s emergency management agency in charge of distributing bottled water for drinking and dispatching tanker trucks to meet other critical needs, calling the operation a "massively complicated logistical task."

NORTHEAST STATES PLANNING RENEWABLE HYDROGEN HUB: Maine and Rhode Island have joined a New York-led, multi-state agreement to build one of the first “clean” hydrogen hubs in the U.S.

The two states announced last week that they plan to join the coalition, which will vie for a portion of funds available under the Department of Energy’s $8 billion Regional Hydrogen Hubs program.

New York Gov. Kathy Hochul billed the effort in a statement as a “a game-changing clean energy alternative that will transform our ability to meet our shared climate goals.”

DOE is expected to announce its final selections for the hub money next May.

The Rundown

Financial Times ‘Perfect storm’ energy crunch lengthens life of coal power in US

Bloomberg One of world’s most polluted spots get worse as $1 billion cleanup drags on

NPR Why even environmentalists are supporting nuclear power today

Washington Post Gene editing could revive a nearly lost tree. Not everyone is on board.

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Calendar

THURSDAY | SEPTEMBER 1

1 p.m. The White House, the EPA’s Office of Water, and the American Association for the Advancement of Science (AAAS) hold a virtual discussion titled. "Regional Reflections on Green Infrastructure and Nature-Based Solutions: Southwest." Register for the virtual event here.