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26/08/2016

Commission admission: energy independence has a price

Energy

Commission admission: energy independence has a price

Oil platform. North Sea, 2008. [Andrew/Flickr]

One year after EU leaders adopted measures aimed at bringing down energy prices, the European Commission tabled another blueprint aimed at reducing energy dependence on Russia. But Commission experts admitted that reducing energy dependence would further raise prices.

At the special summit dedicated to energy issues on 22 May 2013, EU leaders adopted measures to lower energy prices, and so improve the  European Union’s industrial competitiveness [read more].

But this time, the Union’s political priority being the high degree of dependence of many member states on Russian energy imports, the European Commission tabled today (28 May) another blueprint, as a basis for discussion for the 26-27 June EU summit.

Presenting the paper, Energy Commissioner Günther Oettinger said that the European Union wanted strong and stable partnerships with important suppliers such as Russia, but that it must avoid “falling victim to political and commercial blackmail”.

The EU and its member states have a lot of homework to do, Oettinger said. He argued that the Union needed to reinforce its solidarity with its more vulnerable members. Charts reveal that Latvia, Lithuania, Estonia, Finland are 100% dependent on Russian gas imports.

He also said that the EU needed to complete the internal energy market, improve the energy infrastructure, become more energy efficient, and better at exploiting its own energy resources. Moreover, the Union needs to accelerate the diversification of external energy suppliers, especially for gas, he said.

The Commission made available a 14-page document titled “In-depth study of European energy security”, which in fact is a collection of familiar facts, illustrating the European Union’s vulnerability, in terms of energy dependence.

As it was already known, the document shows vulnerabilities not only in terms of dependence on Russian gas supplies, but also in the nuclear sector, and in terms of oil refineries [read more].

But the document offers little guidance as to how to overcome these weaknesses. Asked to comment on how the envisaged measures, such as interconnectors, increased storage capacities or alternative supplies would impact energy prices, the European Commission recognised that it could only raise the price of energy.

Stress tests

The main novelty appears to be to ensure uninterrupted supplies this winter. The Commission document proposes “stress tests” to be conducted on regional or EU level by simulating a disruption of the gas supply.

The aim is to check how the energy system can cope with security of supply risks, and based on that, develop emergency plans and create back-up mechanisms. Such mechanisms could include increasing gas stocks, decreasing gas demand via fuel-switching (in particular for heating), developing emergency infrastructure like, for example, completing reverse flow possibilities, and pooling parts of existing energy security stocks.

Positions

Susanna Williams, Policy Officer on Energy and Climate Change of the European Environmental Bureau (EEB), an NGO, reacted: “Europe’s number one priority should be to exploit our abundant indigenous resources of energy savings and renewable energy. This is the only truly sustainable solution which does not rely on costly and unsustainable alternatives such as diversification of gas supply routes or the development of shale gas.”

Justin Wilkes, deputy chief executive officer of the European Wind Energy Association, said: "The report from the Commission does not outline how Europe can reduce its energy dependence on external sources; instead it focuses on severing the reliance on Russia by shifting the dependence elsewhere."

Wilkes added: "In the first half of 2014, we have seen Ukraine fall into disarray and an IPCC report warning that investment in renewables is needed to avoid a climate catastrophe. Circumstance has forced Europe's leaders into a rethink. Now they must act to ensure the region's energy security for years to come."

"It is imperative that we make the switch over to renewables, particularly wind, sooner rather than later. Heads of State can start down that road by setting an ambitious 2030 renewables target that strives towards true energy security and independence," he said. 

Background

The Ukraine crisis has raised EU-wide concerns about ensuring uninterrupted energy flows as well as stable energy prices. At the March 2014 EU summit the Commission committed to conduct an in-depth study on European energy security and to present a comprehensive plan on how to reduce EU energy dependence. The findings and the proposals will be discussed at the European Council on 26-27 June.

On the one hand global energy demand is growing and is expected to increase by 27% by 2030. On the other hand EU domestic energy production has decreased by almost one-fifth between 1995 and 2012. Today more than 50% of the EU's energy needs are covered by external suppliers: in 2012 almost 90% of oil, 66% of gas and 42% of solid fuels consumed in the EU were imported, representing a bill of more than €1 billion per day. 

Timeline

  • 26-27 June: EU leaders to discuss how to reduce the Union’s energy dependence

Further Reading