The New European Energy Union Faces Some Critiques

by Nour Bundogji

The World Nuclear News recently discussed The European Commission’s intention to begin a new European Energy Union. This initiative will help “reform how Europe (EU) produces, transports, and consumes energy.”

The meeting took place on February 4, 2015 in Riga, Latvia where The European Commission outlined the intention and goals of this initiative. It’s primary aims are: “diversifying energy sources currently available to Member States, helping European countries become less dependent on energy imports, making the EU number one in renewable energy in the world, and leading the fight against global warming.” With these aims, the European Commission listed five goals for the European Energy Union, which are:

1) ensuring security of supply

2) building a single internal energy market

3) raising energy efficiency

4) decarbonizing national economies, and

5) promoting research and innovation.

Sounds appealing, at first. However, Forbes contributor, James Conca, points out a few nuances within this initiative making this Energy Union a little more difficult to implement than initially expected.

For instance, Conca interestingly pointed out that the second goal (building a single internal energy market) would require much enforcement while the fourth goal (decarbonizing everyone’s economies) “might not sit well if you have a definition for decarbonizing that differs from Germany’s (EU report).”

These goals also present a few unanswered questions like: “Will England insist on more wind in Ireland, against their will? Will Germany push for greater dependence on Russian natural gas? Will Germany try to shut down France’s nukes, even though they produce more carbon-free electricity than all other low-carbon sources in Europe combined?”

Nonetheless, the commission urges that the time is right for the creation of this Energy Union since “energy security is high on the political agenda, and a door for an ambitious climate agreement in Paris at the end of 2015 was opened in the European Council last October.” Furthermore, “the recently adopted Investment Plan for Europe is designed to unlock the financial means the energy sector really needs. The currently low oil prices are also giving an extra incentive and give more political and financial room to do what is necessary to achieve a more competitive, secure and sustainable European energy policy.” However, Conca claims that these “low oil prices are only the fallout of a battle between Saudi Arabia and the United States to bankrupt the American oil shale industry. And that can’t last too long before one side breaks.”

Maria van der Hoeven, the Executive Director of the International Energy Agency, was also at the Riga conference. She noted, “In the coming decades the EU is expected to retire half of its electricity capacity. Nuclear plants are ageing, with half of the EU’s existing nuclear capacity to be retired by 2040. Environmental rules also require the phase-out of old coal fired power plants.” On the other hand, it seems that “this concept doesn’t sit too well with Europe’s largest companies,” states Conca. For instance, CEOs of European energy companies like Germany’s E.ON, France’s GDF Suez, and Italy’s Eni disagree with the decarbonization plan and have blatantly stated that the stability of Europe’s electricity generation is at risk from the warped market structure caused by skyrocketing renewable energy subsidies that have swarmed across the continent over the last decade (Géraldine Amiel WSJ). Furthermore, there will be some push-back from Europe’s industries since renewables and their subsidies are a major component of the new European Energy Union’s strategy— a conflict of interest for these corporations (Capgemini).

Lastly, Vice president of the Energy Union, Maroš Šefčovič, said, “We will work to ensure a coherent approach to energy across different policy areas, to create more predictability.”

Sounds great!

But, as Conca notes, “there is the problem of integrating the diverse regulatory and market trading systems that would have to become congruent across all borders of Europe.” For example, some EU countries want to exploit domestic fossil fuels (Germany’s expansion of dirty coal) while others stress the need for lower carbon sources (UK’s increased use of natural gas).

All in all, the European Energy Union is scheduled to release later this month, on February 25th. However, the commission needs to move fast to accommodate for these subtleties if they want the Energy Union to succeed.

Conca, J. The Role of the New European Energy Union. Forbes.com. Feb. 9, 2015.

http://www.forbes.com/sites/jamesconca/2015/02/09/the-role-of-the-new-european-energy-union/

World Nuclear News. Europe Starts Work on Energy Union. Feb. 6, 2015.

http://www.world-nuclear-news.org/EE-Europe-starts-work-on-Energy-Union-0602154.html

Capegemini. European Energy Markets Observatory 2013. Oct. 10, 2013.

http://www.capgemini.com/resources/european-energy-markets-observatory-2013-full-study

Ameil, G. Energy Bosses Call for End to Subsidies for Wind, Solar Power. Oct. 11, 2013.

http://stream.wsj.com/story/latest-headlines/SS-2-63399/SS-2-352276/

 

TAGS: European Energy Union, Forbes, World Nuclear News, European Commission

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