European Energy Union – are we getting closer to connecting the grid?

Although European integration in the early 1950s started around energy issues, efforts in this field have ever since been hampered by narrow national interests and a lack of coordination. Central and Eastern Europe serves as point in case – it is a region heavily energy-dependent on Russia, yet we can observe very diverging positions of these countries.IMG_6123 Even before the current international crisis, the energy sector had become highly unpredictable, stalling inflow of critical investments into infrastructure. The EU tried to be a front-runner in fighting global warming and setting very ambitious goals for CO2 reduction, but might have to review these goals. Does the new situation call for a reassessment of renewable energy, our position on shale gas and nuclear power plants? Will it mark a change of attitude in Europe – are member states willing to step beyond their national interests? To discuss these and many more issues, the Friedrich Naumann Foundation for Freedom together with the 4Liberty network organised a discussion aiming at critically assessing the European Commission’s proposal to build an Energy Union. IMG_6126The event also introduced the latest issue of the Review devoted to energy issues. Bernd Biervert, Deputy Head of Cabinet Maroš Šefčovič, Vice-President of the European Commission for Energy Union, confirmed the many obstacles on the “hardware” (technical obstacles) and “software” (regulatory obstacles) still present. The Commission’s proposal aims at offering more secure, competitive and affordable energy. To reach these objectives, the Energy Union focuses on five mutually supportive dimensions:

  • energy security, solidarity and trust;
  • the internal energy market;
  • energy efficiency as a contribution to the moderation of energy demand;
  • decarbonisation of the economy;
  • and research, innovation and competitiveness.

Fredrick Federley MEP, Member of the Committee on Industry, Research and Energy, welcomed IMG_6130the Commission’s proposal. In his view, the completion of the internal market in energy – a highly liberal goal – is feasible, however, certain goals might prove more difficult to achieve than others: “the hardest to solve will be to determine the right energy mix and to tackle differences in taxation and subsidies in the energy market.” He took the example of Scandinavia and the Baltic countries, which already have a functioning common energy market, to showcase the conflict. Companies who do not receive subsidies would feel threatened by having to compete with companies in other member states, where energy is heavily subsidized. What he called the “clash between EU member states” will indeed prove to be one of the trickiest obstacles to overcome. Fredrick Federley also called for a change of mindset regarding energy issues: “we need to treat energy as a product subject to market rules such as other goods and services.” Unlike the current situation, in which national governments determine energy production, he feels it is necessary to introduce more market logic in the energy production and distribution. In an integrated market it should be companies which will be able to export energy, to determine the production levels. Higher production levels and more competition would in turn reduce prices. IMG_6141Žilvinas Šilėnas, Director of the Lithuanian Free Market Institute, supported this plea. He voiced criticism of the EU’s concern for energy security; an issue he feels is rather “artificial.” In his view there are more than enough energy sources in the EU, both conventional and unconventional. Also, energy production is rather safe. Another problem which he thinks is driving the EU’s energy policy for the wrong reasons are the huge sums disbursed for infrastructure projects driven for political rather than economic reasons. He urged policy makers to involve more private investors in building infrastructure and introduce more competition to make energy more accessible and less costly.

You can download the 4Liberty review on energy policy here.

For more information on the EU’s proposal to build an Energy Union click here.

Julie Cantalou