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Russia’s energy hold over Europe must be broken

Russia needs the EU, its market and its investments more than member states need Russia – writes Annika Ahtonen

Recent Russian actions have underlined that he country does not play by the rules. This provides a wake-up call for Europe as a whole. European heads of state and government should commit to breaking the unhealthy energy dependency on Russia. The European Union cannot continue to depend on an unreliable energy supplier, which is prone to using energy as a political tool.

While the EU’s energy policy has built on the objective to secure cheap, sustainable and reliable supplies of energy – its vulnerability is of its own making. It has put all its eggs in one basket. The EU-28 import over 53 per cent of their energy. Russia is the main supplier of crude oil – 35 per cent of EU-27 imports in 2011 – and natural gas – 30 per cent of imports in 2011; not to mention solid fuels – 26 per cent of imports in 2011. Germany is the largest importer of Russian gas in the EU and in member states such as Lithuania, Latvia, Estonia, Poland, Hungary, Slovakia, Bulgaria and Finland the share of Russian gas and oil in their national consumption is more than 90 per cent.

This vulnerability has been recognised and in the past years the union has taken a number of actions to promote energy security. The third energy package, adopted in 2009, aimed to open up the EU’s gas and electricity markets. The 2020 climate and energy objectives include increasing the share of renewables to 20 per cent and energy efficiency by 20 per cent, supported this objective. Recent developments, however, remind Europeans that the progress has been too slow and much more needs to be done now.

The EU has a common energy policy on paper but implementation has remained weak. European energy security has been undermined by an internal challenge: a patchwork of national mini-markets, bilateral deals with Russia and lack of political cohesion. Recognising the implications of Russia’s actions for the whole of Europe and acknowledging the EU’s vulnerability vis-à-vis this unreliable supplier should provide the needed momentum for a change.

Energy security starts with an integrated energy market that will increase efficiency in the distribution and use of energy. All member states have agreed to complete the market by the end of this year and they must commit to fulfilling this objective. Member states must act now if they want to develop interconnections for gas and electricity by 2015. Integrating alternative sources and increasing lines of supply would help to ensure that no EU country is left alone in case of a disruption.

Smarter approach is needed with renewables and union’s own resources. This requires developing a smart grid that will integrate renewables in the electricity network. Countries should cooperate in placing production capacity where the sun shines and the wind blows, and stop expensive support schemes in sub-optimal places. And it is time to be more creative and learn from each other. For example in Lille, France, buses run on biogas produced from organic waste. Not a bad alternative for Russian gas.

Diversifying the EU’s energy supply and reducing its dependence on Russian energy requires looking at other alternatives internally and externally. While environmental and safety considerations must remain the highest priority, Member states should continue to explore possibilities with nuclear power and the potential with unconventional oil and gas within the EU. In addition, Europe needs to find alternative sources of supply from outside the union. Options include increasing liquefied natural gas imports from Algeria, Qatar or Nigeria, increasing gas imports from Norway and exploring the possibility to export shale gas from the United States. There is a great potential with southern gas corridor and cooperating with Azerbaijan. In the meanwhile, negotiations on the south stream pipeline must be put to a halt and it should be permitted only if also other than Russian suppliers can use the gas transit routes.

Increasing energy efficiency across the EU would decrease dependency on foreign energy imports but also reduce costs for consumers and bring down emissions. To get Europe going, a thorough review of the EU Energy Efficiency Directive is needed and nations must include energy efficiency measures in their national energy plans.

The EU can only succeed if member states stick together and start implementing a common energy policy – and Germany, plays a key role in this. The country, with questionable bilateral energy deals with Russia, needs to take a strong stance with rest of the EU vis-à-vis Russia. Also it should contribute to building a functioning and competitive energy market and it must delay the shutdown of its nuclear power plants rather than rely on coal and import nuclear energy from neighbouring countries.

The EU need not depend on Russian energy as it does today, and it must take the necessary steps to reduce its dependency from this unreliable supplier. Remember, Russia needs the EU, its market and its investments more than member states need Russia. It has an economy the size of Italy, with gross domestic product per capita ranked 58th in the world in 2012. It depends on its gas and oil exports to Europe. If European nations are united and implement the common energy policy while building an internal energy market together, this will not only benefit its citizens and industry but it would assert pressure on Russia. It would demonstrate to Russia that it has exceeded the limits of European tolerance.

Annika Ahtonen is a policy analyst at the European Policy Centre think-tank

Comments
  1. This is a very interesting article. Can it be accepted as the official Brussels’ standpoint? It would have a great impact – at least on preparing a new energy strategy in CZ, which is now underway.

    Comment by Zdenek Pistora on March 27, 2014 at 8:36 am
  2. Countries like Russia need to trade with the EU, but the EU can’t continue to exist without markets from Russia and China, unless it went in for a self sufficient drive and this Russia could also do as it holds huge mineral wealth potential, which of course it cannot afford to exploit without a huge political and social change. However the EU is only as good as it’s members and if one by one they leave, would lead to the disappearance of this great bureaucratic machine. No one really needs the EU or even Russia for that matter, except possibly Russians and Bureaucrats.

    Comment by Simon Ansbach on July 28, 2014 at 1:22 am
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