Scared Into Action? The EU's Energy Future
DEVELOPMENTS
At their respective parties’ national conventions, John McCain and Barack Obama called attention to America’s need for energy independence. With the rising cost of oil and the United States’ dependence on foreign resources, both candidates have linked a more self-sufficient energy policy with national security, climate change, and the creation of jobs at home. Limited resources and the increasing global demand for energy are straining governments all over the world. This is particularly true of one of America’s largest partners on many world issues: the European Union (EU).
In response to the August war between Russia and Georgia, EU officials convened an emergency meeting on September 1st in Brussels. Although the meeting was intended to explore the future of the EU’s relationship with Russia, EU officials made a small, but important remark regarding energy. The summit's participants declared: “Recent events illustrate the need for Europe to intensify its efforts with regard to the security of energy supplies…in particular as regards diversification of energy sources and supply routes.” This recognition may allow the EU to finally embark upon a feasible energy strategy that will reduce its dependence on foreign resources, especially from Russia. But what would such a strategy look like?
BACKGROUND
The EU, like the U.S., imports the vast majority of its hydrocarbons (oil and natural gas). As Blair Glencorse pointed out in a previous edition of Foreign Policy Digest, the largest share of these hydrocarbons comes from Russia. On many occasions, Russia has turned off the taps to some EU countries, including Lithuania and the Czech Republic. These supply disruptions make EU leaders wary about future energy supply. Consequently, many EU officials believe that additional pipelines that bypass Russia will help Europe diversify its growing energy needs. The Nabucco Oil Pipeline is a prime example. Slated to come online in 2013, the pipeline will bring gas from the Caspian Sea into the heart of the EU. However, Nabucco’s chances of success are looking increasingly slim, with inflation pushing up costs and rumors of construction delays. In addition, Russia is constructing a rival pipeline dubbed South Stream that would carry gas from Central Asia into the EU, via Italy. Nabucco was further undermined this month when Russia signed a gas deal with Turkmenistan and Uzbekistan.
Differences between EU member states are a key factor impeding the development of a coherent European energy strategy. While smaller member states have sought energy suppliers other than Russia, energy firms in large member states like France, Germany, and Italy have all signed long-term contracts with Russia’s gas giant, Gazprom. Germany also signed onto Nord Stream, a controversial gas pipeline from Russia to Germany that bypasses several former Soviet countries, and whose project head is former German chancellor Gerhard Schroeder. Referring to Italy’s close energy relationship with Russia and its support for South Stream, one diplomat even called Italy “Russia’s Trojan horse in Europe.” These differences of opinion between individual EU member states, particularly between large and small countries, will continue to undermine any EU energy strategy.
ANALYSIS
The EU has several options to diversify its energy resources. First, the EU could invest in developing infrastructure in the major countries on which it depends for energy. Two examples are Norway and Algeria. Although it opted to stay out of the EU in a 1994 referendum, Norway is still a member of the European Economic Area (EEA), and it possesses an abundance of natural resources, including oil and gas. It is currently the world’s third largest exporter of natural gas, and over 80% of Norwegian oil is already sold via the EEA market. As for Algeria, 97% of its exports consist of oil and gas, mainly to Europe. The European Commission recently approved a new pipeline from Nigeria to Europe via Algeria, dubbed the “African Nabucco,” and it also unveiled a new Africa-EU Energy Partnership. If there is greater Euro-Mediterranean integration from French President Nicholas Sarkozy’s Union for the Mediterranean, more energy deals are likely. However, this option does not come without challenges. Many analysts believe that North Sea oil has been exploited beyond its peak and that its yield is now in long-term decline. It’s also possible that Algeria and other African countries could strike a deal with another player, such as what Libya (which supplies about one quarter of Europe’s gas) may do with Gazprom. Although investing in non-EU countries will not necessarily allow the EU greater energy independence, it will allow it to diversify its supply lines, thereby decreasing the EU’s current dependence on Russia.
Second, Europe could follow France’s lead in nuclear energy. France has long been considered the leader in European nuclear energy with approximately one-third of the continent’s nuclear reactors that produce about 80% of France’s total electricity. But nuclear power also presents several challenges, primarily its negative image. Although the majority of French citizens have a favorable view of nuclear energy, a Eurobarometer survey indicates that only 12% of citizens EU-wide approve of the technology. After being exposed to above average amounts of radiation since the Chernobyl disaster in 1986, most European countries maintain a negative image of nuclear energy. Despite these challenges, Bulgaria, Romania, the Czech Republic and Finland plan to bring additional nuclear reactors online in the near future.
The third and most feasible option for the EU lies with renewable energies. Europe has long been an advocate of greener technologies, and it was the principal driving force behind the Kyoto Treaty. Many European firms are leaders in energy efficiency as evidenced by the various projects underway in its automobile industry. One renewable energy source is hydropower. Switzerland is a leader in this area, where hydropower accounts for 57% of energy production. Other renewable sources include biomass, wind, and solar. The European Technology Platform for Wind Energy, a think tank supported by the European Commission, surmised that wind can produce over 25% of the EU’s electricity by 2030. And there are currently discussions in the European Parliament to construct a massive wind farm in the North Sea. The price of silicon, the single largest component in solar panels, is expected to fall by approximately 40% next year, reducing the cost of solar panel production. The momentum behind solar technology is also growing. Germany, which accounts for about half of the world’s solar panels, and Spain have large solar programs thanks to government subsidies, and are now being joined by other European countries such as the Czech Republic, Bulgaria and Switzerland. There are even discussions about a massive solar supergrid in the Sahara that would supply a substantial amount of the EU’s energy consumption. However, as with all other options described above, developing renewable energy sources has a hard hurdle to overcome: time. It will undoubtedly take years to develop the technology and infrastructure to provide enough energy for Europe’s future consumption.
The past fifty years of European integration have seen the EU rise from the ashes of World War II to become a major economic player in world affairs. Yet without a coherent energy strategy, the EU will struggle to compete. EU officials’ recent decision to integrate the existing national energy grids looks promising. The recent events in Georgia may have created the impetus for Europeans to get on track to achieve a more independent energy policy. Regardless of who comes to power in America next January, if Senators McCain and Obama want to keep their election promises of making the U.S. energy-independent, they may be able to learn from the alternatives their EU counterparts pursue in the near future.
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Ryan Kaiser is a Master's Candidate at Georgetown University's School of Foreign Service. In addition to having experience in international affairs in both the public and non-profit sectors, he served at the U.S. Mission to the European Union in Brussels in Summer 2008.