By Ewa Krukowska
Gas pipes at the gas compressor station in Velke Kapusany, Slovakia, on Sept. 2, 2014.
European Union leaders are set to urge the bloc’s energy regulator to propose a strategy to strengthen the internal market and boost security after the conflict in eastern Ukraine jeopardized supplies from Russia.
EU heads of government will call on the European Commission to present a comprehensive energy union proposal “well ahead” of their next gathering in March, according to a draft political statement for today’s summit in Brussels, obtained by Bloomberg News. Leaders of the EU’s 28 member states are also due to discuss the situation in Ukraine and a 315 billion-euro ($387 billion) investment plan proposed by the commission.
The EU regulator has signaled it wants to release in the first quarter of next year a plan to accelerate cross-border gas and power interconnections, remove market barriers and diversify sources of energy while reducing greenhouse gas emissions. The Ukrainian crisis highlighted the need for Europe to cut its energy dependence on Russia, which supplied 27 percent of the natural gas consumed in the EU last year.
“The leaders clearly want to keep the pressure on the commission,” said Christian Egenhofer, a researcher at the Centre for European Policy Studies in Brussels. “I see the energy union as the nucleus of a very delicate balance between very different interests of member states on policies ranging from energy security to climate.”
Missing Deadline
A common energy policy among member states is supported by 73 percent of EU citizens, according to a Eurobarometer survey published yesterday. Europe is set to miss its deadline for completing work on the internal market by 2014, with several member states lagging behind with enactment of energy laws. Reducing imports is another challenge for the region, which buys 53 percent of the energy it consumes from external suppliers at a cost of 1 billion euros per day, according to the commission.
The energy union plan is set to be based on five pillars: security of supply, integration of national markets, reduction of energy demand, cutting carbon dioxide and promoting research and innovation, according to a commission document drafted last month. It will be funded through the commission’s investment plan, said the document, also obtained by Bloomberg.
“We need to work intensely on the southern corridor to get Caspian gas to Europe, develop our partnership with Norway, promote the project of Mediterranean gas hub, develop energy cooperation with Africa, and explore the potential of LNG and energy from North America,” according to the outline of the energy union strategy. LNG stands for liquefied natural gas.
The EU also needs a “strategic approach to challenges such as energy relations between the Russian Federation and Ukraine, or the South Stream project,” it said. The decision earlier this month by President Vladimir Putin to scrap the South Stream pipeline bypassing Ukraine left countries in southeastern Europe scrambling for alternatives.
Russia Standoff
Disputes between Russia and its former Soviet ally over gas debts and prices led to fuel transit disruptions and shortages across Europe amid freezing temperatures in 2006 and 2009.
Russia is locked in its worst standoff since the Cold War with the U.S. and the European Union over the crisis in Ukraine. The U.S. and the EU imposed sanctions after Russia annexed Crimea in March and extended them after accusing Russia of backing separatists in the Donetsk and Luhansk regions of eastern Ukraine. Russia has denied it’s involved in the conflict.
Key actions planned by the commission to increase energy security over the next two years include developing a common purchasing system for gas. They are also considering forcing gas suppliers to source reserve supplies to cover interruptions.
Interconnections, Efficiency
The EU regulator will also seek to help improve cross-border power interconnections, which currently can handle about 8 percent of the bloc’s potential power output, less than the 10 percent target set by EU leaders in 2002. To increase energy efficiency, it plans to introduce fuel-economy measures for the transport sector and roll-out of smart meters.
The decarbonization pillar of the energy union plan will be based on an agreement by EU leaders in October to cut greenhouse gases by 40 percent in 2030 from 1990 levels. Europe will “show continued leadership” in international climate negotiations before a global deal planned in Paris next year and will aim to become the world’s number one in renewable energies, according to the EU document.
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