Shaping the Energy Union: towards low-carbon security and a “prosumers’” market?

Posted on Posted in Analyses, Energy Security, EU & NATO, n, Sustainable Development and Climate Change

By Dr. Filippos Proedrou, Vice President KEDISA

Following the Juncker Commission’s “Framework Strategy for a Resilient Energy Union with a Forward-Looking Climate Change Policy”, discussions about the shape of the Energy Union are ongoing. In the policy mosaic proposed one can find diverse goals such as the establishment of solidarity mechanisms, securitization of energy, foreign policy considerations, further intra-EU, cross-border market integration and infrastructure, smart grids, transition to a low-carbon economy, promotion of renewables and smart technologies, and further regulation. Behind these different goals lie different players and interests, be they member-states, the corporate world and institutional infighting.
For now, there seems to be agreement on what is called a “first gas policy”. The EU prioritizes investments in the gas sector as the most reliable and clean steady fuel that can both replace coal and oil, as well as cover for any shortages in the estimated contributions of the intermittent renewable energy to the energy mix. Reasonable as this policy may sound, it may discourage to an extent investments on research, development and innovation with regard to smart technologies and renewable energy, this way delaying comprehensive transition to green energy and a low-carbon economy. Moreover, the fluidity and hence unreliability of projections of future gas demand may end up in an unwanted lock-in in gas consumption that may prove to be more expensive and less climate-friendly in the scenario of solid increases of renewable energy, and thus lead to stranded assets.
A second characteristic is the promotion of a low-carbon common market. Plans here range from mediocre roadmaps to reach the climate goals the EU has set for itself, to demand-side energy policies and the much bolder endeavor to create a vast EU network of “prosumers”, with consumers becoming themselves also producers of energy. This is feasible if households and businesses invest on renewable energy production themselves (through solar panels, batteries etc). Two-way meters will supply energy to and from the network, thus rendering the EU energy market greener, more efficient and more resilient.
Thirdly, high dependence on Russia and turbulent North Africa and Middle East perpetually raises concerns over both energy security as well as compromising foreign policy stands in international crises and with regard to human rights. The “first gas policy” retains such chains with regard to Russia and North Africa, while it aims to unblock oil dependence on the Middle East. The advent of a resilient EU energy market run predominantly on renewables, to the contrary, bears high potential for disentangling the EU from pressures on its foreign policy. Needless to stress out, a more dynamic foreign policy vis-à-vis Russia is feasible if the energy dependence factor is removed, and the EU’s normative power can be exerted consistently in case North Africa ceases to be a crucial energy supplier.
At the same time, a renewables-run EU energy market will not only provide a raw model for other states, not least in the Energy Community and its neighborhood, but also serve to weaken authoritarian regimes around the world whose power is based on energy-born revenues. This becomes crucial for one further reason. If climate change continues unabated, further instability is bound to hit Africa and the Middle East. An inhospitable environment can only aggravate people’s displacement, to such a degree that the current refugee crisis might be considered a mock in decades’ time.
In a nutshell, the shape the Energy Union will take will have catalytic repercussions for the EU’s energy security, its climate policies and the geopolitical and geoeconomic development of the broader European space. The EU is well advised to revisit its “gas first policy” to the extent that it will not overshadow the most-far reaching and revolutionary potential of renewables and advanced research and innovation. The term low-carbon security captures the benefits of such an approach to security of supplies and relations with producers. At the same time, this can be key to the EU’s competitiveness in the global market in the decades to come. Thirdly, prioritizing climate goals is critical at this point, since the planet is already overburdened and any further carbon emissions’ increase in the atmosphere will only translate in higher economic costs, not least in terms of displacement of people, geopolitical upheavals and further turbulence in the EU’s broader neighborhood.