Energy Union: Step towards a unified energy policy or a futile undertaking?

  • Michaela Ceklová
  • 5.3.2018 12:52

The Energy Union Package was published by the European Commission in February 2015. The objectives of the Energy Union are generally ambitious, on the contrary, the discussion about their overall efficiency and feasibility is needed. The ideal concept of an Energy Union remains miles away.

The Energy Union Package consists of three main attributes. The first is a framework strategy to create an Energy Union, containing detailed information on the objectives of the Energy Union and the concrete steps to be taken to create it. The second attribute is the EU climate policy (which has been successfully completed, the outcome is the Paris Climate Agreement negotiated in Paris in December 2015) and the last attribute is the interconnection of electricity networks within the EU by 2020.

The Energy Union project has been on the table since 2010 when Jacques Delors introduced the first European Energy Community plan. The Energy Union is based on five principles: security of supplies, completing the internal energy market, increasing energy efficiency, low carbon economy, and energy research and innovation. The biggest arguments for creating an Energy Union are energy security, affordability, and competitiveness. The EU is currently the largest energy importer in the world with imports around 53 % at around € 400 billion a year. Several Member States are heavily dependent on a limited number of gas suppliers. For this reason, they are vulnerable to disruptions to energy supply. In addition, due to the ageing energy infrastructure in Europe, low competition, underdeveloped energy markets - especially cross-border – and uncoordinated national energy policies, consumers and businesses in the EU face limited options and high energy prices. A better connection of energy systems between the Member States and modernisation of infrastructure would lower disruptions of supply and energy dependency. Moreover, the establishment of an internal energy market would facilitate access to energy markets beyond national borders. This would improve the affordability of energy and the competitiveness of energy prices. In line with the EU climate and energy targets, the EU must also reduce its overall dependence on fossil fuels and greenhouse gas emissions by 2030.

 

Every Member State follows their own national interests, has a different energy mix or industry structure.

 

Looking closer at the arguments for the energy union, we find that they are in many ways distorted. First, it is necessary to realise that energy is and has been exclusively in the hands of nation-states. Such a strategic-market approach to energy is common within the EU 28 (27) and the Member States at this moment reject any interference to their energy policies. Building an interconnection and adopting of common energy positions across the EU 28 (27) is right now unthinkable, because every Member State follows their own national interests, has a different energy mix or industry structure. The coal-dependent Poland, with the historically-given coal industry approach, is unlikely to suddenly move dramatically towards renewable or nuclear sources, even if we dismiss economic disadvantage and financial burden of this transition process. Similarly, we can compare Scandinavian countries with Central Europe, as Scandinavian states have a better predisposition to renewable resources than the Czech Republic.

 

A realistic goal is to reduce the energy dependency on Russia, not replace it.

 

The issue of energy dependence on a limited number of supplies is even more problematic. The EU is dependent on Russian gas, but Russia is equally dependent on European gas demand. Due to the large volume of Russian natural gas (247 out of 606 billion cubic meters imported in 2016) on European markets, it is impossible to eliminate this dependency. A realistic goal is to reduce it with diversification. Russia as a supplier to the EU has some predisposing advantages over competitors such as its massive gas infrastructure. The argument about Russia's unreliability in terms of gas supplies is a subject of discussion. The gas crisis was aimed primarily at Ukraine and not on EU countries, and it is, therefore, illogical to completely cut off Russia. Not to mention that Norway or the USA (possibly with liquified natural gas - LNG) wouldn’t be able to cover Russian outages. As for the US and LNG it is essential to consider the fact that the Asian market is much more attractive for them than the European one.

When it comes to insufficient energy infrastructure, it was paradoxically Gazprom that hinted to this problem during the European Gas Conference in January 2017. The company pointed out that because of the long-term demand for natural gas, it is necessary to invest in building new infrastructure. The question remains whether it is inadequate due to the increased focus on alternatives to gas supplies or because of insufficient efforts to link the internal market.

 

Member states that deal with long-term energy sector problems are unlikely to intensively transfer Energy Union concepts into their strategy should they not overwhelmingly align.

 

The unification of the interests of national states is problematic at the moment. Some Member States consider Russia as the biggest threat to national and energy security, other Member States do not agree with Germany's transition to green energy and states on the southern border of the EU deal with insufficient energy infrastructure. In principle, member states that deal with long-term energy sector problems are unlikely to intensively transfer Energy Union concepts into their strategy should they not overwhelmingly align.

Lastly, despite attempts to achieve EU climate policy objectives, the member states are not able (while doing their best) to reorganise their entire energy mixes and change their primary industrial setting, with Poland being a perfect example.

The concept of an Energy Union is praiseworthy and certainly welcomed, but it is currently impossible to unify energy mixes, national interests, unite suppliers, transfer energy decision-making to trans-national level, and still meet climate commitments across the EU.

 

The ideal concept of an Energy Union is possible only when national states change their strategic approach to energy to address problems that go beyond their borders.

 

The ideal concept of the energy union is, therefore, a question of long-term discussion. In December 2017, Member States agreed on the general principles of the EU's future energy policy, at present three major energy laws - the Common Internal Market, Renewable Energy and Governance - in the EU platform where they are being discussed. All three laws can be seen as a precursor to the ideal concept of an Energy Union when national states change their strategic approach to energy to address problems that go beyond their borders, such as climate change, biodiversity or cross-border threats to energy infrastructure.

About author: Michaela Ceklová

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