Momentum builds for a united energy front

Prepare for an increase in bureaucratic and political infighting over the scope of the project.

The energy union, the flagship project of European Commission President Jean-Claude Juncker, is starting to take shape — transforming from a nebulous theory into an actual policy that aims to tie Europe’s energy markets together.

“It is possible to trade fruits or cars freely across borders but it is still impossible to send energy freely from one end of Europe to the other,” said Jerzy Buzek, former Polish prime minister and now an MEP and chair of the European Parliament’s industry and energy committee.

The energy union is supposed to change all that, and most of the legislative proposals set to give shape to the project will come out in 2016.

That means an increase in bureaucratic and political infighting over the scope of the project as initiatives begin to wend their way through the European Parliament and national capitals.

The original idea came from Donald Tusk, now the European Council president, when he was still Poland’s prime minister. In 2014, he issued a call for the EU to help defang Gazprom’s market dominance in central Europe by creating an energy union that would allow the bloc to use its muscle to negotiate with Moscow.

That fairly narrow program was then taken over by Juncker when he began his Commission presidency and broadened to give it support across the whole EU, not just in central Europe.

The current scheme has five elements:

• Energy security (to reduce the bloc’s dependence on Russian gas).
• Internal energy markets (better connecting countries through more pipelines and power grids).
• Energy efficiency (consuming less energy to reduce pollution and cut the EU’s demand for energy imports).
• Decarbonization (reducing greenhouse gas emissions by 40 percent by 2030 from 1990s levels and reforming the bloc’s Emissions Trading System, its main tool for fighting climate change)
• Research and innovation (encouraging breakthroughs in low-carbon technologies).

While the broad, and relatively uncontroversial, idea of an energy union has been generally welcomed by EU states, industry and civil society groups, the project is gaining complexity as it moves from Juncker’s desk through the bureaucracies of Brussels and the 28 member states.

In a city that loves lists, the energy union has a very long one and that only increases the possibility for objections and delay. There are 43 actions that have to be checked off in coming years. The Commission plans to seek a redesign of the bloc’s electricity market, review the laws overseeing the security of electricity and gas supplies, come up with a strategy for liquefied natural gas, and review the renewables and energy efficiency directives for 2030.

The final goal is to tear down the physical and regulatory barriers to the free flow of electricity, oil and gas across the bloc.
And there’s a deadline: The Commission would like to have the energy union’s foundations set by the time Juncker leaves office in 2019.

“When you look at the map of the European Union, we don’t have a rational system of interconnectors complete,” Miguel Arias Cañete, the climate action and energy commissioner, said in September during an event sponsored by POLITICO.

But getting there won’t be easy.

“We know that expectations are high, not only here in the Parliament, but also amongst the many stakeholders I have met,” Maroš Šefčovič, the Commission’s vice president for energy union, told MEPs on October 6.

Šefčovič, a Slovak, has been visiting EU countries in an effort to pitch the initiatives to people on the ground and build support for the project.

He is set to present the first so-called state of the energy union in Brussels on November 18, when he’ll spell out the results of his country tours, including countries’ strengths and weaknesses on energy and climate.

Šefčovič told MEPs it should keep and, where necessary, give additional momentum on this key flagship initiative.
Many of the ideas of the energy union aren’t actually all that new. An EU-wide internal energy market — one of the main elements of the energy union — was supposed to have happened by December 2014. The deadline wasn’t met, however.

The energy union also doesn’t change EU treaties, which means countries continue to have a final say over their energy choice and mix. That will allow the French to continue generating power with nuclear power, the Poles to use coal, and the Danes to stress wind power.

The difference now, EU and national officials insist, is that there is strong “political will” behind the project.

Plus, there’s “a bit for everybody in the energy union,” said Georg Zachmann, research fellow at the Bruegel think tank.
For example, while Germany is already doing well on gas security, more interconnections and cooperation with neighbors on electricity should help make the country’s pricey Energiewende, its long-term plan to transition to renewable energy, more cost-efficient.

Poland stands to gain from Commission proposals regarding gas contracts, which would allow Brussels bureaucrats to see them before they are signed, weeding out illegal provisions that enhance Gazprom’s market power.

The main beneficiaries of the energy union will be consumers, the Commission contends. Linking national electricity grids will ensure that “energy will flow from one country to another and that there is no possibility of a blackout,” said Monique Goyens, director-general of BEUC, the European Consumer Organization.

But getting there is going to require a lot of negotiations, during which countries will have to give up some of their national priorities in order to build a union that benefits the EU as a whole, Bruegel’s Zachmann says in a paper.

For example, East Europeans are not sold on the EU’s desire to boost renewables.

France and Spain are also reluctant.

Also, why should consumers in France and Spain have to pitch in for a gas pipeline that would allow Spanish LNG to cross the rest of Europe, benefitting Poles and Latvians, but not their own citizens?

Getting countries to drop those kinds of concerns and pull together is going to keep Arias Cañete and Šefčovič very busy over the next year.