New EU Energy Strategy Leaves Russia Out in the Cold

The European Commission (EC) has today proposed a wide-ranging energy package which gives a new boost to energy security in Europe, supporting the 20-20-20 climate-change proposals which should be agreed by December, according to the Commission. The EC put forward a new strategy to build up energy solidarity among member states and a new policy to stimulate investment in more efficient, low-carbon energy networks. There is also a new EU Energy Security and Solidarity Action Plan which sets out five areas where more action is needed to secure sustainable energy supplies, as well as papers on energy efficiency and wind energy.

United We Stand?

The EC proposes a five-point security and solidarity action plan:

• Infrastructure needs and the diversification of energy supplies;
• External energy relations;
• Oil and gas stocks and crisis response mechanisms;
• Energy efficiency;
• Making the best use of the EU’s indigenous energy resources.

The most interesting points are the first two, in which the EC outlines the potential strength of Europe as a solid bloc, united in energy policy. As part of infrastructural development, the Commission proposes a Baltic interconnection plan, to better link the region with the rest of the EU. In the second point, the EC says that Europe must "intensify its efforts in developing an effective external energy policy; speaking with one voice" and adds that "as much as Europe seeks security of supply, external suppliers and industry seek security of demand". It further states that the "important role of Africa in the EU energy security needs to be assessed".

It was reported earlier in the week that the EC was effectively seeking to create a "buyers cartel" in the face of Russian dependency. Clearly, the EC has stopped short of that, but the sentiment behind their actions is the same. This idea has surfaced before, notably in the IEA's September report into EU-Russia energy relations. The report proposed that the EU act collectively to deal with large energy suppliers, further stating a belief that Russia was more dependent on Europe than vice versa. A key point to note in this discussion is the relative absence in both EC and IEA papers of the role of transit states, and the relatively short-term outlook as to where in the world Russia exports its gas.

The EC's paper says a framework for co-operation with transit states is also provided by the "Energy Community", which is building an integrated energy market in South-East Europe, anchored to the EU. The EC adds: "If negotiations are successful, the accession of Ukraine, the Republic of Moldova and Turkey to the Energy Community would catalyse their energy sector reforms and create a mutually beneficial enlarged energy market based on common rules", in effect co-opting transit states. This is foreign policy creeping into energy policy, as it would keep these states—in particular Ukraine—West-facing rather than leaning towards Russia at a political level. This idea also overlooks the unreliable role of these states—again notably Ukraine—in transporting gas to Europe after Russia has fulfilled its part of the deal.

The idea of a "buyer’s cartel" being formed after the EU has voiced fears of the nascent gas troika created by Russia, Qatar, and Iran, opens the EC up to the charge of holding double standards. However, pushing the idea that member states must speak collectively could put an end (if adopted) to the problems associated with certain member states signing long-terms deals with Gazprom, which again affects these states' foreign policies.

Outlook and Implications

There will be around four months for each consultation on these papers. They are wide ranging in scope and share an underlying ethos that technology should play a lead role in energy strategy. The papers acknowledge the importance of incorporating renewable sources into the grid, and also flag-up a future Communication on Financing Low Carbon Technologies aimed at promoting carbon capture and storage.

Despite the EC's careful emphasis on EU-Russia energy "interdependence"—that if the supply is guaranteed then the market is guaranteed—the message risks being misinterpreted by Russia. One the one hand, the EC talks about diversifying supplies and focusing on Africa, yet on the other, calls on Russia to "play along". Although much of the draft strategy is innovative and forward looking, the same old problems are likely to complicate matters.

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