Judy Asks: Should the EU Have an Energy Union?

Yes, of course. But the question is what sort of energy union.

Former Polish prime minister (now European Council President) Donald Tusk and former Polish foreign minister Radek Sikorski called earlier this year for an EU-level body to bargain directly with Russian energy giant Gazprom, bypassing big national companies. Admirably, their goals were to strengthen the EU’s hand against an increasingly aggressive Russia and to bring down prices for countries dependent on gas imports.

Interconnected gas and electricity grids would increase flexibility.

 

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But it should come to no one’s surprise that proposals to make member states disclose the terms of their long-term energy contracts and to distribute national quotas for gas negotiated in bulk have been a nonstarter. Instead, the EU is left with the practical objective of completing the single market in energy. That involves, among other things, the interconnection of national gas and electricity grids, which would increase flexibility. A bottom-up, market-driven approach is more effective vis-à-vis an oligopolist like Russia than centralization is.

EU institutions still play a role, for example in enforcing the rules, notably on unbundling—the practice of splitting electricity production from transmission. The European Commission stood its ground against Gazprom over the South Stream pipeline by rejecting demands that intergovernmental agreements should take precedence over EU law.

That is an encouraging sign, but more is needed. Brussels should consider setting targets for diversification—and provide incentives to meet them. That is the kind of energy union the EU should have.

The new European Commission took office on November 1, 2014, with the objective to “build a resilient Energy Union with a forward looking climate change policy.” In an EU where energy policy is still largely dominated by member states’ domestic policies, a new dynamic—outside traditional policy silos—is certainly required in the stuttering energy market and an increasingly complicated climate change debate.

While the European Commission Vice President for Energy Union Maroš Šefčovič is still working on the political concept of the proposed union, there are three key aspects that need to be addressed.

First, the energy union needs to be more than window dressing of existing policies. Instead, it should provide answers to the trade-offs that exist between different policy areas.

Second, the union needs to avoid becoming a tool for free riding. It must not become an instrument for member states to ask the EU to pay for what they should do themselves or what they have failed to do in the past.

#Energy union must not be an anti-Russian platform.

 

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Third, the energy union should avoid becoming an anti-Russian platform and thus a policy that is pushed into the security and defense corner. Although some member states may be arguing for this, the concept needs to be much broader and more inclusive.

If done right, the energy union could bring a much-needed strategic approach to energy and climate policy aimed at ensuring sustainable, secure, and affordable energy for European citizens.

The biggest energy risk the EU faces this winter is not Russia cutting off natural gas supplies. A more dire threat is missing the opportunity to create a robust energy union.

The EU and its member states have a terrible record of seeing energy as a realm of intra-EU competition rather than cooperation. Certain member states, such as Germany, have sought to export their own models instead of considering challenges at the European level. The European Commission’s past efforts to fund energy infrastructure started as a mad dash for EU funding, not as a strategic evaluation of Europe’s energy needs. It took over a year to whittle down the list of key energy infrastructure projects from 248 to 34.

Cooperation would boost the EU's strategic thinking on #energy.

 

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An ambitious EU energy union would finally capture the strategic importance of energy. Cooperation rather than competition could place the EU at the forefront of infrastructure solutions, technological innovation, and strategic thinking on energy issues. This would not only make the EU a more attractive area for investment but also empower the EU to take a united stance toward suppliers—Russia in particular.

Yes, absolutely.

Ukraine should have been a wake-up call for EU #energy independence.

 

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The Ukraine crisis should have been a wake-up call to step up the EU’s energy independence. Europeans are remarkably good at keeping energy consumption steady, as opposed to the growing demand in the rest of the world. However, the EU produces only 47 percent of the energy it consumes, the main producers being France, Germany, the UK, Poland, and the Netherlands.

Yet of all EU countries, only Denmark is a net exporter of energy, and most member states need to import more than half of their energy supplies. In particular, EU nations imported 34 percent of their oil and 32 percent of their gas from Russia in 2012.

Europeans should aim to be energy independent, and to do so, they will have to start investing in renewable energy. However, a substantial increase in renewables is technically and politically very challenging. It is not the availability of resources but rather public policies that will determine future developments on renewables.

More advanced technologies are needed to decrease the costs of production and to optimize infrastructure capacity for renewables. Such advancements will happen only if the EU substantially invests in research in renewables, joining forces and sharing information with the United States.

Only with lower energy costs, which will help the economic recovery, and with energy independence, which will change Europe’s geopolitics, can Europeans finally take responsibility for their own future.

Maybe. Every time politicians call for a new union (fiscal union, banking union, and so on), you know it’s time to run for the hills. It means leaders are about to hatch out patchy and erratic policies, only loosely connected to the real union—the European Union—and its four core freedoms, the free movement of goods, services, capital, and people.

The EU needs to create a real energy market. The European Commission’s energy packages have taken Europe in the right direction. However, more is needed. European governments have sprinkled subsidies on the energy sector only to see energy prices diverge on an upward path, away from world markets.

Europe can only improve #energy security by diversifying supply.

 

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European countries are more interconnected now than in the past, but the “singleness” of the single market is still challenged by arcane regulations and protectionist energy incumbents. Market efficiency and ambitions to reduce carbon emissions have been sacrificed on the altar of muscular energy politics and market carve-ups behind closed doors.

Europe needs to improve its energy security. Yet this can happen only if energy supply is diversified and if prices are allowed to reflect market conditions rather than political desires. If an energy union is about extending the single market into energy, let’s proceed. If it is an edifice of Europe’s big man politics of energy, let’s not.