Leaders hesitate between common EU response and ‘silver bullets’ on energy

  

Several EU leaders attending a summit in Brussels announced yesterday (22 May) they would prioritise ‘silver bullet’ solutions - such as the development of shale gas - to reduce energy prices. The European Commission, meanwhile, said simultaneous action was needed "on several fronts."

EU leaders held a two-hour and a half discussion on energy with the objective of lowering prices and boosting the Union’s industrial competitiveness.

The summit conclusions suggest that no major decisions were taken, indicating that "the supply of affordable and sustainable energy to our economies is crucial" in the current economic context.

Guidelines were adopted in four areas, including on the completion of the internal energy market, launched more than 10 years ago amid much resistance from wary member states.

The European Commission will report on the implementation of the energy market, which should be completed by the end of the year. Member states also committed to inform one another of major decisions, such as the planned construction of a nuclear plant.

Financing to come ‘from the market’

EU leaders said the financing of energy projects should come “primarily from the market”. The needs for investments in modern energy infrastructure are estimated at €1 trillion by 2020, a figure that also includes research and development.

To decrease the dependence on imported energy, the development of indigenous sources is foreseen, while building on the experience of Denmark and Germany, which have heavily invested in renewable technologies.

Russia was not mentioned in the conclusions despite being the EU’s major supplier of imported gas. But the text says that the Council will review developments, “including the need to ensure a level playing field vis-à-vis third country energy producers”.

Russia’s Gazprom charges Germany a rate for gas that is much lower than what the former Soviet Union’s Baltic republics pay.

Despite this, German Chancellor Angela Merkel said after the summit that the EU needed “transparent prices for energy in all member states”.

She also said that the link and connection among many member states needed to be strengthened, with some regions having to make progress faster, particularly the Scandinavian countries together with Poland and the Baltic states.

Merkel also said that EU leaders had discussed the need to “stop subsidising” the carbon market. The summit conclusions say a well-functioning carbon market and predictable climate policy is seen as key, and the Commission is tasked to come up with “more concrete proposals”.

No ‘game changer’?

The conclusions also say that the Commission intends to assess “a more systematic recourse to on-shore and off-shore indigenous resources”, with a view to their cost-effective exploitation. Several EU countries have plans to develop offshore gas or unconventional gas on-shore.

Speaking after the summit, European Council President Herman Van Rompuy said that EU leaders knew that there was no major 'game changer' on the horizon, and therefore the countries needed to keep working on several fronts.

Commission President José Manuel Barroso also said that there was “no silver bullet to solve the strategic energy challenges that Europe faces”.

However, Van Rompuy acknowledged that some countries could also develop safe and sustainable ways to tap other resources – conventional and unconventional.

“Yes, this includes shale gas, which could become part of the energy mix for some member states, perhaps less for others. It's of course up to each country to decide its own energy mix,” Van Rompuy said.

Shale gas promoters

The British, Polish and Romanian prime ministers made statements promoting shale gas, referring to the energy revolution currently taking place in North American and similar developments in China.

British Prime Minister David Cameron said Europe could not afford to be left behind as the world scrambles to develop the resource. He said that Europe had 75% of the American shale gas potential.

Romanian Prime Minister Victor Ponta said that “clearly an option exists to allow EU members to adapt their legislation to encourage [shale gas] exploration and exploitation”.

According to reports, Lithuanian President Dalia Grybauskaitė also made the case for developing shale gas to decrease her country’s dependence from expensive Russian gas imports.

In contrast, French President François Hollande said his country would not change its ban on developing shale gas. France and Bulgaria are the only EU countries which have adopted legislation effectively preventing the industry from developing shale gas.

Pleading for Nabucco

Bulgarian President Rossen Plevneliev told reporters that his country’s position with regard to shale gas remained unchanged. He said that in his speech he had focused on the Nabucco West natural gas pipeline as a priority not only for his country, but for 16 EU members.

He called Nabucco West a “geopolitical project”, unlike its rival TAP which he described as a “transit project” bringing gas from Azerbaijan mainly to Italy.

Plevneliev said that his country had made very strong lobbying in favour of Nabucco West in the last months. Asked by EurActiv what would happen if the rival TAP project was selected, he conceded that his country could get gas from TAP from an interconnector with Greece, yet to be built.

Romania’s Ponta also said that in his statement, he had highlighted “the importance of Nabucco project”.

The Nabucco West and Trans Adriatic Pipeline (TAP) projects offer different routes to Europe from the Shah Deniz II field in the Caspian Sea.

Both projects are in an advanced stage of preparation. The Shah Deniz consortium is expected to announce publicly which project it choses in June. 

Positions: 

European Commission President José Manuel Barroso said he presented to leaders a “No regrets” scenario with actions in five areas:

  • Complete the internal energy market.
  • Invest in innovation and infrastructure.
  • Commit to greater energy efficiency.
  • Exploit renewable sources more cheaply.
  • Diversify supplies.

“There is no silver bullet to solve the strategic energy challenges that Europe faces. But there is much we can do if we act together through Europe. The status quo is not an option, which is why we really need to implement what has been agreed today,” Barroso said.

Thomas Becker, chief executive of the European Wind Energy Association, said: "Finally Europe's dangerous dependency on fossil fuel imports is alarming European leaders, thanks to EU Council President Herman Van Rompuy. I fully support his view that Europe puts its competitiveness at risk and endangers its economy. We cannot afford to let the EU's dependency on imported fossil fuels grow to 80 per cent by 2035."

"Our continent is buffeted by a resource worth renewable gold - the wind, and is currently a world-leader in wind energy technology. We must transform our energy system and reduce our expensive and polluting energy dependence. Wind power is one of the best answers to this necessary transformation", Becker added.

Eurochambres, the European Association of Chambers of Commerce and Industry, welcomed the commitment of EU leaders to foster the EU’s competitiveness by challenging high energy prices.

“It was high time to declare this issue a top priority and to discuss it at the highest level,” said Arnaldo Abruzzini, the organisation's secretary-general.

Brook Riley, climate and energy campaigner at Friends of the Earth Europe, said: "European leaders are plainly correct to put economic and energy policy on the same page. But they need to get with the times. Just as the current economic model landed us in today's financial mess, so the traditional reliance on fossil fuels is the root of the climate crisis.

“Politicians need to end energy-as-usual and our reliance on dirty fossil fuels. They need to embrace real green policies, including binding targets to cut emissions, save energy and develop renewable energies," Riley added.

The summit conclusions also suggest that concern about high energy costs risks opening the door for more unconventional and dangerous fossil fuels, including shale gas. Antoine Simon, shale gas campaigner at Friends of the Earth Europe, said: “Going down the route of more unconventional fuels like shale gas, as recommended by EU heads of states, will just delay the transition we really need to a low carbon economy. Shale gas is anything but safe and sustainable, it is not an answer to climate change, and nor would it make economic sense for Europe.”

The EU’s Climate Commissioner Connie Hedegaard said: ''It is very encouraging for climate policies in Europe that the EU leaders welcomed the Commission's Green Paper on a 2030 framework for climate and energy policies. It shows that the EU Member States are now willing to take the next major steps forward. The Commission has now also got the green light to present concrete proposals before the end of this year, so that the European Council can return to this issue in March 2014.” 

Hedegaard continued: “This also shows that while it is extremely important to address the issues of competitiveness and energy costs, Europe's leaders also realise that the climate challenge remains urgent and that the way forward for Europe is to have climate and energy policies that go hand in hand. In today's Council conclusions, EU leaders also call for a boost in energy efficiency and a completed single energy market with more domestically-produced renewables and new and intelligent energy infrastructure. And as we need investments to achieve these goals, EU leaders pledged to phase out harmful fossil fuels subsidies and strengthen our market mechanisms, in particular the EU's carbon market. Now governments must show that they mean it and support the Commission's backloading proposal.''

“The Heads of States recognise the much needed benefits of a 2030 energy framework. It would attract private investments, bring down capital costs as well as future energy prices and step-up the deployment of renewables”, said Rainer Hinrichs-Rahlwes, President of the European Renewable Energy Council. “Boosting renewable energy  is key to addressing the EU’s  competitiveness and  large trade deficit”, he added. “Predictability and stability are of the utmost importance for our sector. Renewable energy investors are looking ahead to the  coming decades and are expecting an ambitious and robust signal from policy makers. We need a binding target for the sector by 2030 and Heads of State must join the European Parliament in its call for a new mandatory target.”

“The EU is falling behind in global competition, lacking ambitious renewables policies for 2030, while at the same time importing fossil fuels worth €406 billion annually. In this regard, EREC welcomes that Heads of  States make it a priority to phase-out fossil fuel subsidies. Europe needs to reap the benefits of its first-mover advantage in renewables by providing the sector with predictability, allowing for investments which are vital for jobs and growth and enhanced competitiveness of Europe’s industry”, he said.

Mónica Cristina, spokesperson of Shale Gas Europe, noted what she said was “a growing understanding amongst European decision-makers that shale gas development can take place within a responsible regulatory regime. The work to provide clarity about the environmental impacts or the compatibility of shale gas development with the agriculture sector, for example, must go on.”

“Shale gas development in Europe may not be a silver bullet,” she went on. “But to address the economic and environmental challenges we face we need to diversify our energy sources as much as we need energy efficiency, the modernisation of Europe’s energy infrastructure and completing the internal energy market. Natural gas, the cleanest fossil fuel available today, can help to address those challenges by adding to energy supplies, bringing employment, investment and improving Europe’s competitiveness at a time of great economic uncertainty.”

Joseph Daul, chairman of the European People's Party (EPP) group, commented:

“The EPP group calls continuously for ‘more Europe’. Not that we think everything has to be decided in Brussels or Strasbourg. But because it is at the European level that this kind of issue can be resolved in the most efficient way. Energy, for example, is no longer an exclusively national topic. On the contrary, it is in an integral part of our single market. We welcome the commitment of the European Council to addressing the issue of energy prices. Increasing costs for energy represent not only a burden for households and SMEs, but also a brake on competitiveness for our industry. We therefore suggest that renewable energies in Europe should be promoted in a more coordinated manner and not by a multitude of different national schemes. This would render support more efficient and would save money."

Greens co-president Rebecca Harms stated:

"This summit, which should have prioritised progress on long-overdue measures to tackle tax evasion and avoidance in the EU, has been overshadowed by the red herring of energy prices. As a result, EU leaders have done little to break the impasse on key legislative proposals on tax and savings transparency, which are stalled due to obstructionism in Council, whilst adopting confusing conclusions on energy policy. Instead of heeding misleading and flawed arguments from polluting industries, EU leaders should be seeking to promote the readymade domestic solutions we already have. Ambitious measures to improve energy efficiency would bring down energy costs and reduce our dependence on energy imports at the same time. Promoting home-grown renewable energy would give a boost to the economy and create jobs in Europe, and not elsewhere.”

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