Saturday 27 June 2015

Is European energy sustainable?

With two-thirds of the world’s pipeline infrastructure traversing Europe, and the European Union (EU) importing over 50 percent of the energy it consumes, Europe is a unique place to observe energy consumption, production, and policy. A long history of conflict and dependence on foreign energy has led the EU towards a new energy focus, which includes reforming trade agreements, strengthening partnerships, and exploring renewables.
Energy itself tends to be a critical tool throughout Europe as a mechanism to achieve foreign policy goals. Examples of policy using energy can be proactive or reactive and involve both economic and political motivations.
The primary case of energy used to advance foreign policy comes from Russia’s Gazprom . The state-owned energy company exports natural gas from Russia into Eastern and Central Europe, often crossing numerous transit countries before reaching the end consumer. Dozens of supply disruptions and price increases over the last decade are correlated with political and diplomatic friction in former Soviet States. Russia itself has leveraged its infrastructure to bully governments by seeking to extract behavioral modifications and continued dependency on Gazprom’s supply. In some cases, the State owned company has literally manipulated the flow of natural gas volume to other countries. Additionally, questions have emerged whether volumes have been altered by other former Soviet States through which natural gas must pass before reaching the country of final destination. The policy goals sometimes pursued in intermediary transit countries can also have consequences for Central Europe as evidenced by unexplained downstream shortages. Recognizing the disadvantages of continued dependence, the EU has begun to consider what measures it may take to lessen reliance upon Russian energy.

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Much of Russia’s policy is proactive: disrupting supply, raising prices, or rerouting supply lines. On the other hand, recipients are left to employ reactive foreign policy, purchasing natural gas from new sources, reducing domestic consumption, or potentially taking actions to placate Moscow.
In Central Europe, energy policies can be seen as either proactive or reactive. After passing the 2009 Third Energy Package, the EU restricted monopolistic energy practices and vertical integration. Heralded at the time, the move signaled increasing competition in the energy industry by preventing single companies from controlling every step of the process. This boost in competition will ultimately help reduce prices and stabilize supply, and will help prevent monopolies such as Gazprom from expanding influence.
Actions like this can help to reduce energy dependence on Russia, or any other foreign energy provider. While this is helpful, countries such as Lithuania have taken more direct actions. For example, the recently completed Klaipeda LNG import facility has resulted in better pricing for the country. Poland is also exploring new options to expand its supply. Despite knowing that consumers with supply choices are better positioned, the marriage of european countries into the EU has not led to increased integration of energy infrastructure or the ability to share each member country’s domestic energy resources. Thus many EU countries are no better prepared to diversify supplies than when President Reagan warned against continuing Soviet dependency as early as 1981.
As a final way to reduce foreign involvement, European countries are diversifying the sector with reducing demand through energy efficiency programs, and by an increased focus on renewable energy. With respect to renewables, the EU has already made strides in achieving its renewable energy goals and is on track to meet its 2020 target of 20 percent renewable energy consumption. With international discussions increasingly focusing on climate change and energy consumption, European States can lead the way on clean energy. With a foreign policy objective of reducing global temperatures, establishing greener domestic practices will put more weight behind European countries in discussions within the EU and Europe as a whole.
Diversifying energy providers relies upon a need to increase infrastructure connectivity and investment in renewables, while at the same time reducing overall consumption through increased efficiencies. In doing so, EU members will finally be positioned to move beyond Cold War dependencies.

While not having all of the eggs in one basket seems simple enough to understand, a common energy union has been certainly hindered by history and aged infrastructure. Despite these challenges, Europe’s overall energy future looks bright, thanks to the push given by Russia.

http://www.forbes.com/sites/brighammccown/2015/06/25/is-european-energy-sustainable/2/?ss=energy