Merja PaavolaPosted by: Merja Paavola
27.11.2014

The EU Energy Union has been a buzzword since last spring when Mr. Donald Tusk, Polish Prime Minister at the time, came forward with his initiative to establish a European Energy Union. The background was the increased risk for gas supply disruption following the escalating crises in Crimea and Ukraine and the need for the EU to counteract by adopting a stronger common energy policy.

We have heard lots of talk, but a common view of what this concept could or should actually contain has yet to gain traction. One concrete step has nevertheless been taken: the new European Commission President Mr. Juncker has nominated a dedicated Vice President for the Energy Union.

Backbone of the Energy Union was established in 2010

The idea of a European Energy Union is not new. In 2010 , Notre Europe, a Brussels based think tank, published a report that included a proposal for a genuine “European Energy Community”. The report coincided with a 2009 energy security crisis involving Russia shutting off the gas supply to Ukraine, leaving many European countries without gas for more than a week.

Notre Europe was concerned that despite the multitude of various regulatory activities relating to the internal energy market, climate policy etc., the EU still lacked a common energy policy. On the contrary, various national solutions were increasing the risk of divergent and even conflicting responses to common challenges. The ultimate solution proposed in the report was to create a European Energy Community with its own rules and methods specific to the energy sector. Nearly five years later, the concerns expressed in that report are as valid as ever.

Clearly, that initiative was considered too radical by the majority of the EU member states then – and it still would be today.

Even after the Lisbon Treaty, which gave energy policy its own article and hence legal basis for the first time, energy policy is still very much a shared competence between the member states and the EU. The undisputed right of each member state to decide on its own energy mix has made “Europeanisation” of energy policy a very difficult task.

Same strategic priorities as in 2010, but in a different order

In November 2010 the European Commission presented “Energy 2020 – A strategy for competitive, sustainable and secure energy“. Its new energy policy contained five priority areas for the EU energy policy: 1) Achieving an energy efficient Europe, 2) Building a truly pan-European energy market, 3) Protecting consumers by achieving the highest level of safety and security at affordable prices, 4) Expanding Europe’s leadership in energy technology and innovation, and 5) Strengthening the external dimension of the EU energy market. Following the publication of the strategy, the EU Commission has put forward separate policy initiatives on each priority area.

A sense of déjà-vu emerges when seeing how the new VP Energy Union, Mr. Sefcovic, has outlined the five pillars on which the new EU Energy Union should be built:

  • Security of supply and solidarity
  • Developing the functioning of the internal energy market, including infrastructure development
  • Moderating European energy demand through energy efficiency
  • Decarbonisation of the EU’s energy mix, including further development of (low-carbon) indigenous energy sources
  • Increase investments into research and innovation

The issues are the same as in the 2010 energy strategy, but the order of priority has changed.

Security of supply has been the number-one topic since the political tension between Ukraine and Russia started to escalate. Regarding the Energy Union, the main question therefore is, specifically, how will the Commission be able to improve the EU’s energy security. That’s where both the biggest political expectations and the strongest reservations lie.

It takes an internally unified EU to become a strong external player

Developing energy diplomacy and negotiation powers vis-à-vis third countries, improving coordination between member states, diversifying the EU’s energy suppliers and reducing Europe’s dependency on Russian gas – it is hard to object to any of these ideas. However, it is very difficult to see how the EU could become stronger externally without first becoming more unified and harmonised internally. Therefore, the logical “no regret” step would be to start the development of the Energy Union from the second pillar of VP Sefcovic’s plan, namely the internal energy market.

A properly functioning and sufficiently interconnected internal energy market that is based on harmonised rules is, without a doubt, the best way to improve the EU’s internal security of supply while simultaneously contributing positively towards competitiveness.

While respecting the right of all member states to decide on their own energy mix, the key rules and principles concerning the power sector should be the same across the internal market.

There is still a ways to go, but the discussion on the EU Energy Union has clearly created new momentum in taking steps towards “Europeanisation” of the EU energy policy – it can encourage gradual development from better coordinated national policies towards a more harmonised European energy policy. It is now up to the EU Commission to fully utilise the positive momentum at hand.

We look forward to the expected EU Communication on the Energy Union in early 2015.

 

Merja Paavola

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