Difficult journey towards EU energy union

  • Tereza Krásová
  • 29.10.2015 16:02

The EU's Energy Union could strengthen Europe's energy security but it is not certain whether there is enough political courage and will for it.

Energy security of the European Union is currently dealing with many challenges that have no easy solutions. It has to face its dependence on Russian natural gas while Russia does not shy away from using it as a political tool. It also needs to safely and cheaply reduce CO2 emissions and some member states would like to lower high energy prices. Although these problems may require in some cases contradictory measures, all three issues could be solved by better relations between the individual states and the establishment of a common energy market.

A unified energy market is one of the long-term objectives of the European Union but its realisation has been progressing very slowly. The degree of interconnectedness between member states is low and it has not grown in recent years. The deadline for the completion of the single energy market set for 2014 was not met. But it seems that Brussels is going to make a breakthrough in this area now. The Energy Union itself is a project initiated in April 2014 by then Polish Prime Minister Donald Tusk, who currently serves as the President of the European Council. Tusk called for a unified price negotiation strategy concerning Russian natural gas. Although the EU adopted the Energy Union as its own, the final proposal does not include this point, even though it aims to increase energy security. On the other hand, the interconnection of networks and markets, the improvement of energy efficiency and plans to reduce emissions are included. At the same time, the Energy Union should help to increase research investments. As in the other areas of European politics, it will be necessary to find a consensus between the individual member states that have different views on energy.

The main point of Tusk's original proposal was to end the current state of things, where prices of natural gas are determined in bilateral agreements with Russia's Gazprom, which results in politically motivated differences in prices for individual states. Instead, the proposal aimed to set a single price for the entire European Union, which would give the Union a strong bargaining position. However, Germany and the European Commission think that the proposal could harm trade secrets of individual companies. Nevertheless, greater interconnectivity and construction of natural gas pipelines and LNG terminals could help to enhance the energy security of all countries, including the Czech Republic. It should be noted that while the Czech government welcomed the Polish proposal, in the past the Czech Republic and Great Britain called for leaving the energy issues exclusively to the discretion of individual states.

The proposal itself predicts unwillingness of individual states to give up the choice of their own energy mix, so it focuses instead on coordination between individual countries. A better interconnection between countries can also have a positive impact on energy security. Specific legislative proposals will not be presented until 2016, but we can already see the effort in building new gas pipelines and power lines between member states. For instance, the construction of the underground power network between Italy and France has already started and there is a plan to build a pipeline between Poland and the Baltic states, which should reduce their isolation.

At this moment it is impossible to predict whether the proposal will pass and in what form. The European Union is currently facing many challenges aside from energy and the question is whether the Union will find enough strength and political consensus needed to carry through the Energy Union which would be more than an empty bureaucratic tool. There are also disagreements over what problems should the Union concentrate on. While the states of the Western Europe emphasise environmental issues, Central and the Eastern Europe are more concerned about their dependence on Russian natural gas. Especially Poland refuses to make significant changes in its energy mix, which relies largely on coal. On the other hand, greater interconnection would enhance the energy security of individual states, including the Czech Republic, and would lower energy prices. The Energy Union could become a strong unit that would have a better position on the market than individual states and would ensure a smooth energy transition. Yet, it will depend on the willingness of individual states to accept compromises.

About author: Tereza Krásová

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