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27/08/2016

Leaders broadly endorse ‘Energy Union’ plans, leave details to later

Energy

Leaders broadly endorse ‘Energy Union’ plans, leave details to later

European Council, 20 March.

[European Union]

European leaders on Thursday (19 March) threw their weight behind proposals for a single market for power and gas, based on better connections between member states, but left prickly discussions to later.

Poland led the calls for the Energy Union, in order to put an end to decades of secrecy over gas supply contracts and curb Russia’s dominant position in the gas market.

But Germany raised concerns that it could lead to the disclosure of sensitive data, diplomats said.

However, a promise that the confidentiality of commercially sensitive information would be guaranteed had quelled opposition, they said.

>> Read: Secretive energy deals take centre stage at EU summit

“All leaders agreed to reinforce transparency in the gas market, so suppliers cannot abuse their position to break the EU law and reduce our energy security,” European Council President Donald Tusk said after the meeting on Thursday evening (19 March).

Russia’s Gazprom, which supplies about a third of the EU’s gas needs, is the target of an EU antitrust investigation for allegedly overcharging customers in Eastern Europe, thwarting rival suppliers and blocking the free flow of gas.

The European Commission had requested a right of scrutiny over member states’ energy deals with third nations like Russia, in order to avoid “undue pressure or market distortions”.

>> Read: Commission wants to vet member states’ energy deals

But EU leaders removed the clause in the final Council statement that would formally give the European Commission new vetting powers over bilateral energy deals negotiated with non-EU countries.

Although disappointing for the Commission, this is consistent with earlier drafts of the summit conclusions that saw member states reassert their sovereignty over their national energy mix.

>> Read: Member states reassert sovereignty over energy mix ahead of EU summit

Jonathan Gaventa, an associate director at E3G, a non-profit organisation and think tank, said: “The Commission didn’t need a ringing endorsement of its Energy Union proposals from the European Council at this stage. All it required was a gentle nod from the heads of state and a quiet signal to get back to work. Tonight they received a green light to proceed.”

“This is progress. The European Commission had set out a positive vision for an Energy Union that delivers both energy and climate security, but remained light on the detail. There will be plenty of fights to come – on market design, on governance and on infrastructure choices – but these will wait until there are more detailed proposals on the table.”

“Nevertheless, the cracks are already beginning to show. President Tusk initially tried to focus the discussion more narrowly on high carbon ‘indigenous resources’ (i.e. coal) and fossil fuel imports. In contrast, most member states and the Commission supported a broad view of the Energy Union, in which efficiency, low carbon technologies and a functioning Internal Energy Market are key tools for EU energy security and competitiveness. The final text was a messy compromise, but it will be sufficient to let the low carbon Energy Union agenda move forward.”

Interconnector boost

Apart from seeking to make supply contract details more transparent, the European Union would seek to improve EU resilience by speeding up the installation of new interconnections between member states.

Gas and electricity interconnections between member states must be speeded up, according to summit conclusions, as part of a broader push on infrastructure projects to boost energy security.

Interconnectivity is vital for Energy Union, which aims to create a bloc where surplus energy can be moved across borders to make up shortages.

>> Read: Energy union aims for elusive 10% power grid interlinkage

But environmental campaigners complain that the energy union debate puts too much emphasis on seeking alternative supplies of gas, rather than increasing renewable energy sources instead.

“We want to reduce our dependency on a country that engages in politics and power games based on resources and we escape into the arms of Azerbaijan or Kazakhstan instead of the home-grown renewables sector. This is really ironic,” Rebecca Harms, co-president of the Greens in the European Parliament, said.

Denmark stages ‘mini summit’ on renewables

On the sidelines of Thursday’s summit, Denmark led talks between business representatives and six other EU nations on renewable energy and energy savings.

“The issue of energy security is underlined in a very negative way with the crisis in Ukraine,” Danish Prime Minister Helle Thorning-Schmidt told reporters.

“We want to use this time to promote sustainable energy and also to focus on energy efficiency.”

Her talks brought together the political leaders of Finland, France, Luxembourg, the Netherlands, Portugal and Sweden and executives from companies including Dong Energy, Vestas , EDF and Siemens Wind Power and Renewables.

Small victory for efficiency campaigners

The role energy savings play in strengthening the EU’s resilience to potential shortages was also explicitly recognised by European leaders.

It is the first time energy efficiency and security have been mentioned together in EU Council conclusions related to the Energy Union project. That represents a considerable victory for campaigners, who have been pushing for an “efficiency first” approach to the Commission’s plan.

The connection to security is significant because the Energy Union was conceived as a response to the EU’s vulnerability to Russia using gas as a political weapon.

Positions

Greenpeace EU energy policy adviser Tara Connolly said, “EU leaders have talked up their global climate leadership and talked down their addiction to an old and polluting energy system at home.

“Europe can still claim it’s a step ahead on climate change – although it could do much more - but it’s struggling to back this up with a clear vision on energy policy that cuts out coal and other fossil fuels. There’s only so much you can promise before you have to deliver on the ground.”

Brook Riley, climate and energy campaigner for Friends of the Earth Europe said, "It’s baffling to see governments putting gas in prime position when these plans were born out of a desire to end gas import dependency. Heads of state seem to have fallen for gas industry propaganda. Saying gas is a clean fossil fuel is like saying filter cigarettes will prevent lung cancer.”

Tony Long, director of the WWF European policy office, said: "The EU energy system is increasingly low carbon and can become 100% renewable. Reference to a distinct category of ‘indigenous energy' is a Trojan horse meant to undermine Europe's fight against climate change and instead provide subsidies to polluters.

"Member states who have already shown the value of deploying renewable energy and energy efficiency at home must not be diverted by an old-fashioned agenda which ignores the economic, environmental, and social damage of outdated and dirty energy systems."

European Alliance to Save Energy President Monica Frassoni said, "In general terms the wording concerning energy efficiency is positive; to link energy efficiency and security is definitively an achievement. However, much more priority is still given to fossil fuels and the development of big expensive infrastructures. It would not have been the case if the 'efficiency first' concept was firmly endorsed by the European Council."

Background

When he was Prime Minister of Poland, Donald Tusk, now European Council President, spearheaded the idea of an EU Energy Union.

The Energy Union is the EU’s response to the Russian threat to its gas supplies. The majority of Russian gas imports to the EU, about 30% of its annual needs, goes through Ukraine. In 2009, Russia turned off the taps, causing shortages in the EU. 

The idea has since been taken up by the European Commission which nominated Maroš Šef?ovi?, Commission Vice-President in charge of Energy Union, to steer the project.

The Energy Union will cut across a number of policy sectors including energy, transport, research and innovation, foreign policy, regional and neighbourhood policy, trade and agriculture, according to the EU executive's plans.

Plans for the Union have developed beyond questions of security of supply to encompass issues such as fighting climate change.

A communication was published on 25 February and includes an annex of “concrete proposals”, including legislation, decisions and analysis.

>> Read: Will EU states play ball on Energy Union?

Further Reading