There will be a price to pay for the continuing focus on fighting climate change at the expense of ensuring the EU’s industrial competitiveness, writes Marek Gróbarczyk.
Marek Gróbarczyk is a Polish MEP from the European Conservatives and Reformists (ECR) group. He is coordinator in the European Parliament’s Industry, Research and Energy committee (ITRE) and rapporteur for the Energy Union report.
In times of economic crisis, the Energy Union, the EU’s flagship project as one could expect, should aim to strengthen Europe’s competitiveness, provide a boost to its economic growth and secure energy supplies. Instead, the Commission’s communication announced in February 2015 focuses yet again on tackling climate change. The Parliament’s response, currently under preparation, is the last opportunity to reopen a discussion on a more rational shape of Brussels’ key initiative. Otherwise, Europe can toll the death knell for a number of its industries.
Today, the EU is responsible for 11% of global greenhouse gas emissions as opposed to 29% by China and 15% by the US. Europe’s proportion is set to further decrease in the future and consequently the EU continues making ambitious declarations ahead of the COP21 conference to be held in Paris later this year. However, there is the price that we are all paying for this.
Industry gas prices are three to four times higher in the EU than in the US, India and Russia. The same goes for electricity which European companies buy for twice as much as their American and Russian competitors. When it comes to end-consumers, EU household electricity prices have on average risen 30% since 2008. In the developed world only the Japanese have higher energy costs. It does not, however, stem from their policy choices but is a consequence of the tragic Fukushima accident which led to the loss of 30% of the country’s generating capacity.
The future Energy Union has the potential to reduce EU’s competitive disadvantage. To this end, it must encourage Europe’s indigenous energy production. All available resources, including low-emission technologies, nuclear power and renewables shall be put to work to the benefit of EU industries and its citizens. No fuel or technology which potentially contributes to bringing down energy costs must be discriminated against. On the contrary, the upcoming revision of EU R&D programmes such as Horizon 2020 shall encompass the technology-neutral approach.
This will level the playing field for member states developing low-emission technologies other than renewables such as CCS and coal gasification. In the same vein, the EU state aid rules need to be revised in a way which will guarantee a non-discriminatory treatment of energy production from different sources. Those steps would let member states curb their CO2 emissions as they see fit. Above all, such an approach would be in full compliance with the Lisbon Treaty which clearly stipulates that defining energy mixes is a national competence.
The US example shows micromanagement is not necessary to successfully address climate change. A market-driven shale gas revolution has largely contributed to American emissions in 2013 being 10% below their 2005 level. That shale can facilitate the transition to a low-emission economy by shifting energy production from coal to gas is, surprisingly, constantly ignored in some EU countries. So is the fact that 30 million European jobs today are at risk owing to the shale boom as energy-intensive industries move operations to the US where energy costs are far lower.
One shall also not forget the justified security concerns of many EU member states which depend on Russia as the main energy supplier with Finland, Bulgaria, Slovakia, Lithuania, Latvia and Estonia being entirely dependent on natural gas supplies. By blocking shale gas extraction in Europe without even assessing its potential benefits we make ourselves more vulnerable to the Kremlin. It is not a wise thing to do given Russian imperialism is back on the scene. Let us then not forget that if Mr Putin turns off the taps the whole EU will suffer.
The quest for new energy suppliers for Europe is a serious challenge. The implosion of the South Stream project revealed its diversification strategy was non-existent. Some member states struck a deal which caused political controversy and failed to comply with the internal energy market rules. If energy flow is to become the fifth freedom all energy suppliers operating in the EU legislation needs to be fully respected.
The Commission should at least ensure that all intergovernmental energy contracts negotiated by member states with non-EU parties comply with the acquis ahead of signing. As the recently launched antitrust case against Gazprom demonstrated, a list of clauses banned from such agreements could be helpful in this respect. Concrete diversification efforts ought to be focused primarily on rolling out the infrastructure of importance to the whole of the EU which would grant new energy suppliers access to its market. One such example is the Southern Gas Corridor aiming to connect Europe to Caspian gas resources. The Commission must throw its weight behind this project to make sure it does not share the fate of Nabucco.
Streamlining the Energy Union project would save jobs, prevent industries’ escape from Europe and reduce EU’s energy dependence. At the same time, it would help achieve the EU’s climate targets by offering member states necessary flexibility as to how to move towards low-emission economies. The US energy revolution has proved that energy costs and CO2 emission can both be reduced by applying a technology-neutral approach. Europe should take note of this lesson.
More common sense could marry EU’s climate and energy policy objectives which until now have been at odds. Unless, in Europe, common sense is not so common?