Wishful thinking will not make European energy affordable

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As long as the European Union is unilaterally pursuing climate goals while other global actors are not following suit, it will suffer consequences in terms of competitiveness, writes Jacek Saryusz-Wolski. 

Jacek Saryusz-Wolski is a Polish MEP and vice-president of the European People's Party (EPP)

“Security, sustainability and competitiveness – this trinity determines the goals of European energy policy. There is, however, internal inconsistency within their implementation. In times of crisis in particular, the so far lopsided approach can be particularly costly in terms of growth and jobs. It can also lead to weakening of European external policy, especially in the East.

European Union defines energy security as a state where energy demand is provided for with indigenous or external resources and strategic reserves at "economically viable prices, using diversified, stable and accessible energy sources".

Energy policy should then ensure the security of supply of energy which is sustainable, that is without an overly adverse impact on the environment, at competitive, that is acceptable to citizens and industry, prices which allow to compete within the global economy.

These three goals are, however, inconsistent among each other, also due to the ever greater role of expensive renewables, which leads inevitably to ever higher energy prices. As long as the European Union is unilaterally pursuing the however just climate goals while other global actors are not following suit, it will suffer consequences in terms of competitiveness.  

At the same time, the Union is not fully tapping the potential of an integrated energy market and common external energy policy. The potential for lowering prices through diversification of sources and supply routes and a cheaper energy mix including shale gas, is not realised. Furthermore, due to its both internal and external shortcomings, the European energy policy does little to alleviate the difficult situation of those countries of the European Union, like Lithuania or Poland, which are dependent on a single external supplier which forces them to pay excessive, monopolist prices for gas. In times of crisis this has particularly negative consequences causing lower economic growth and job loss throughout the Union.

So far, the goals of European climate and energy policy are reflected in the 20-20-20 strategy which assumes that by 2020 energy efficiency throughout the EU will go up by 20%, while at the same time renewables will make up for 20% of the energy mix and the CO2 emissions will be reduced by the same 20%. While these targets can be measured, implemented and executed, competitiveness of the European energy markets, i.e. the price level, remains little more than wishful thinking. This goal is not endowed with any execution mechanisms nor does it have a target, not even an indicative benchmark. Competitive and accessible energy is therefore a Union policy goal of purely declarative, and therefore wishful, nature.

Why not then develop a policy goal of reducing energy pricing by 2020 as well, for example and by analogy by 20%, to re-establish the balance between the three European energy policy goals and put it on equal footing with the climate policy orientation.  This would result in a policy equilibrium propelling the full integration of the European internal energy market and leading to diversification and demonopolisation of external pricing. I propose such a price level reduction goal in my amendments to the European Parliament's report on the internal energy market.

Developing a policy orientation in this area is of particular importance given the fact that in 2012 Europeans paid five times more for gas than the Americans, and energy prices went up by a record 27% between 2005-2012 – more than any other developed economy. How in such a geo-energetical context can the Union be competitive vis-à-vis the US and other growing economic powers, which enjoy much lower energy prices and remain dismissive of calls for global climate solidarity?

This question is being raised by the industry, the Union economic circles as well as by the European Parliament. The consumers are also starting to become aware of this problem as they continue to battle with the consequences of the crisis. The upcoming European Council will be devoted to this issue as well- better late than never.

For the European Union to be a globally competitive economy, common actions are an imperative. To realise a common external energy policy, for which I have called in 2007 in a European Parliament's report on the issue, a competitive and secure energy market needs to be completed. We need common negotiations, purchasing and infrastructure. Such steps could strengthen the existing instruments of European energy policy such as the Third Energy Package, the European Energy Community as well as the dedicated energy chapters of association and partnership agreements. As part of the European Parliament's work on the integration of the internal energy market I have drawn attention to the potential of common investments in external diversification infrastructure and the creation of a Union Agency for Common Purchasing to counterbalance the external monopolist supplier position. This would then lead to lowering energy prices and increasing energy competitiveness thereby fostering economic recovery.

In times of economic crisis it is important than ever to tap the potential of measures at our disposal which could help foster recovery, lead to a more effective market integration and re-establish Europe as the competitive force within the global economy. As made clear in both the rejection by the European Parliament of the backloading proposal this year and this week's European Council focused on restoring economic growth through common energy strategy, a new climate and energy policy orientation is maturing in Brussels – one that is more balanced, conscious of its social and political, not just economic, consequences. There is also a growing awareness of the consequences of unilateral pursuit of the however just, climate goals, where the global negotiations are likely to fall short of expectations.

This is a new impulse for a common energy policy which can help the European project in a broader context where in times of crisis the Union is increasingly being torn apart by short-term national interests. In this way it can be what the European Union now needs more than ever – positive energy.”

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