Against the backdrop of the Ukrainian crisis and tension with Russia, the European Commission unveiled its new strategy on 28 May to secure energy supply in the EU and reduce EU dependence on imports.
This new European strategy is the third since the first Russian-Ukrainian gas dispute in 2006. It comes after the 2008 action plan on energy security and solidarity, and the 2011 communication on energy supply security and international cooperation. This new strategy blows the dust off previous proposals and brings a few new elements.
Among the most innovative elements, the Commission is to assess the options for implementing voluntary demand aggregation mechanisms aiming to boost buyers’ bargaining power. The idea of setting up a European agency to make joint purchases of gas and to fight against price variations between the member states that face a supplier in a dominant position (like Russia’s Gazprom) is the crux of the proposals from Poland’s Prime Minister Donald Tusk in his draft framework for energy union.
European Commissioner for Energy Günther Oettinger nevertheless sowed doubt as to the usefulness of this tool, from the Commission’s point of view. “We think that the best solution for harmonising prices is the completion of the internal market. If we achieve this, this agency will not be necessary as we will have a single price from Lisbon to Riga”, he said.
Based principally on the diversification of supply sources, the modernisation of energy infrastructure and the completion of the internal energy market, the Commission’s new strategy particularly emphasises the importance of saving energy.
“More than ever, we are convinced that saving energy is the first response to be made to the EU’s energy dependence”, Oettinger told press. The strategy also focuses on the Achilles’ heel of the EU’s common energy policy – its external dimension, including the coordination of decisions taken as part of the national energy policies, and the ability of the 28 EU member states to speak with a single voice to suppliers from third countries.
“We want strong and stable partnerships with major suppliers, but must avoid falling victim to political and commercial blackmail. The EU and its member states have a long list of homework in front of them – collectively, we need to reinforce our solidarity with more vulnerable member states”, Oettinger underlined.
“The EU has done a lot in the aftermath of the gas crisis 2009 to increase its energy security. Yet, it remains vulnerable. The tensions over Ukraine again drove home this message. In the light of an overall energy import dependency of more than 50%, we have to make further steps”, said European Commission President José Manuel Barroso in a press release, expecting the “strong support” of the member states for this strategy – which will be examined by the European Council on 26-27 June.
The Commission’s strategy depends firstly on immediate action to increase the EU’s ability to overcome a major disruption to supply in winter 2014-2015. The Commission therefore proposes conducting stress tests, at regional or EU level, of the EU’s energy system to a disruption to supply, and, based on this, to establish contingency plans and create emergency mechanisms. These could include increasing gas stocks, reducing short-term demand by using substitute combustibles (especially for heating), implementing emergency infrastructures and reverse flows, and pooling parts of the existing energy security stocks.
In the mid to long term, the Commission focus is on reduction of energy demand. The Commission will therefore monitor implementation of the energy efficiency directive, review the text this summer and draw the outline of a framework for 2030. Secondly, the Commission is counting on completing the EU’s internal energy market (planned for 2014!) and on constructing the missing links in its energy infrastructures. Furthermore, the Commission proposes extending the target as regards interconnection of installed electricity capacity from 10% to 15% in 2030.
To strengthen the medium-term solidarity and supply mechanisms, the Commission proposes reviewing the existing mechanisms aiming to guarantee supply security, and to strengthen them – if necessary – for oil, gas storage and nuclear fuel (uranium).
In the long term, the Commission advocates increasing indigenous energy production – including the further deployment of renewables, and the exploitation of hydrocarbons (including shale gas) and clean coal – and diversifying external supply through expanding gas infrastructures with Norway, in the Southern Corridor and Mediterranean, and increased use of LNG.
Lastly, the Commission proposes that the member states inform each other of their important national energy policy decisions before adopting them, and that they inform each early on before beginning negotiations on intergovernmental agreements with third country suppliers.
