Whilst many eyes in the European Union have been on the continuing debate about who will be the next President of the Commission, there are multifarious calculations taking place in the 28 capitals of the EU’s member states. Who will get the now much sought after European Commission portfolio of energy policy? As one very high-level German Commission official recently said “there are many after the energy portfolio”, writes Tim McNamara.
Whoever is appointed will have the opportunity to have a decisive impact on the future energy policy of 28 countries over many years and this may have geo-political consequences in Russia, Asia, the Middle East (and Washington?) as well. Nuclear, fracking, gas imports, coal and renewables are just some of the sources of energy that will make up the EU’s energy mix.
The recent European parliament election has also changed the political landscape as many of the populist parties elected are very sceptical about climate change.
There are strong indications that the UK now sees the energy portfolio as a prize worth having and is working behind the scenes to be given it when the next Commission starts its work in November of this year. Energy may well become a continuing source of tension between Berlin and London.
The incumbent in charge of energy policy is Günther Oettinger, a reputedly lacklustre German politician from Merkel’s Christian Democratic Union. It is not known, as yet, if he will be re-nominated as a Commissioner and what portfolio he would obtain. For such a sensitive portfolio in recent times, Oettinger has managed to remain remarkably low-profile and some see him as having had a charisma by-pass. He was reportedly kicked upstairs by Merkel to ensure the CDU bastion of Baden-Württemberg remained in CDU hands.
Up until recently there has not been an appetite amongst a sufficient number of member states to make energy strategy an EU competence. The consequence of which has allowed Moscow to have an almost free rein in a blatant divide-and-rule policy. Central to such a policy was to keep Berlin close by treating it as a special case. This may also have been a result of Germany’s long-standing Ostpolitik position that up until recently translated into a traditionally conciliatory posture toward Russia.
With Russia’s annexation of Crimea and the ongoing troubles in Eastern Ukraine, there appears to have been a fundamental reappraisal of the need for a common EU energy policy amongst many member states. Previous backers for such an initiative have historically been the Baltic States and other ex-members of the Eastern bloc. These have now been joined by others who see the geo-political consequences of doing nothing.
Russia has a track record in using gas and oil as diplomatic tools in pursuit of its interests. This is especially true of the Ukraine since the ‘Orange Revolution’ in late 2004 and early 2005. Russia has also conducted a policy of favouring some Member States at the expense of others.
Construction by Russia’s Gazprom of the Nord stream gas pipeline directly from Russia to Germany (via underwater pipeline across the Baltic sea) to Germany is one manifestation. The ex-German chancellor, Gerhardt Schroeder, is the Chairman of the Nord Stream project. Russia is also pressing ahead with the South Stream gas pipeline project that would enter the EU in Bulgaria and terminate in Austria with possible junctions to Greece and Italy.
The South Stream project is also intended to try and forestall the EU-backed strategically important Nabucco pipeline project, using gas from, principally Iraq and Azerbaijan. . This has always been intended to be as a way of reducing the EU’s dependence on Russian gas. Yet it is presently beset with technical and political difficulties whilst Russia’s Gazprom presses ahead with South Stream.
It is the issue of diversification of supply allied to a different energy sources mix that is at the heart of a drive towards a EU common energy policy. This presents a great opportunity for a commissioner/member state to have a decisive influence over EU energy policy for the next decade or two.
Defensive strategic action is already being taken by some. Lithuania is building a liquified natural gas terminal at a breakneck pace. Croatia, Estonia, Finland, Ireland, Italy and Poland are also constructing new LNG terminals. These are directly linked to a perceived need to reduce reliance on Russian sources of supply. The French are nearing completion of a very large LPG terminal at Dunkirk. The UK (already partly dependent on Norwegian gas) is rapidly increasing LNG imports from Qatar as it sees the need to replace declining resources from the UK part of the North Sea. Even Ukraine is considering building one near Odessa in order to reduce dependence on Russia.
Whilst the UK, Finland, France and Lithuania are pressing ahead with new nuclear plants, Austria and Italy remain resolutely opposed to nuclear energy and Germany and Belgium, amongst others, are still considering closing all of their nuclear plants. It is not beyond the bounds of possibility that both Germany and Belgium may yet change their minds.
This urge by many to bring about change in the mixture of sources of their energy needs is seen by many as an imperative for the next EU commissioner for energy. Whilst renewable are seen as the respectable alternative, augumentation by other sources will always be necessary in the near to intermediate future. Nuclear as well as gas and oil from fracking are the most controversial alternatives. Although onshore wind farms have their opponents also.
However, those who have turned their back on nuclear power such as Germany are increasing their dependence on dirty coal like lignite (or brown coal) and not using clean coal technology to ameliorate its effects. Coal imports from China and Australia are also increasing. Germany has made great strides in adopting renewables as central to its energy mix, yet it’s carbon dioxide emissions actually rose 1.2 % last year — largely because of a matching increase in the consumption of brown coal. Poland continues to see brown coal as central to its energy policy.
It will be indicative of Germany’s current attitude to Putin’s expansionism as to how they perceive the importance of the energy portfolio and what will be the nationality of the next European commissioner for energy. Will Germany allow itself to be treated as a favoured client by Moscow, to the detriment of other smaller EU member states. If Berlin obtains the EU’s energy portfolio then this will be received (quietly) as a bad portent in London.
Diversification of supply is seen by many who matter as a way of emasculating Putin’s foreign policy goals of returning Russia to being a great global power. As Putin’s Russia is heavily dependent on commodity exports (especially oil and gas), it is highly vulnerable to a decline in demand for its hydrocarbon assets. Although it may be able to switch gas exports to China and Japan (as LPG) amongst others in Asia, however, it would be a major body blow to its foreign policy if the EU were able to significantly reduce its dependence on Russian gas exports.
President Obama very recently said “It’s always encouraging for us to know that GB has a seat at the table in the larger European project”. It would certainly be in the US’s interests to see Russia’s economic clout decline. Could the UK be Washington’s proxy in the drawing up of the EU’s future energy policy?
If the UK were to nominate a ‘heavy hitter’ as its next commissioner, then obtaining the energy portfolio could be a distinct possibility. The US administration would be very pleased if the UK’s plans were to come to fruition.
Tim McNamara is head of the Peercourt consultancy firm. He was previously political editor at the European Commission.