Monday, November 17, 2008

EU Strategic Energy Review

The EU came out last week with its latest Strategic Action Plan. On a quick read of the highlights I think this goes in the right direction. And while I still must actually read what is planned, it on the surface appears headed in the right direction, particularly since it points to a goal of a "high-efficiency, low-carbon energy system" by 2050. I think it is best if we take this end point and work backwards in the memo issued.

The key points of the memo list the following broad strategic areas:

- Infrastructure needs and the diversification of energy supplies
- External energy relations
- Oil and gas stocks and crisis response mechanisms
- Energy efficiency
- Making the best use of the EU’s indigenous energy resources.

Let me approach the list in reverse.

Making the best use of the EU’s indigenous energy resources.
I was at a conference a few weeks ago, and there was a large collection of policy makers, academics, usual-sorts-of-people, with a nice mix of Russians and people scared of Russia (including Georgians). After the first day I was convinced that a) the Nabucco was a pipe dream if the EU didn't step up to the plate and push the project like the Russian government has pushed South Stream. b) Everyone, but the Russians, were constantly whining about the Russians and how they can use gas as a weapon. Well, I thought, 'if Russian gas is such a problem then don't buy it.' As simple as that. Whatever the statistic say, I can imagine that the EU countries can come up with an energy solution that does not rely on Russian gas. There are other options.

While the Energy Plan describes a new push for Nabucco, it may be addressing my idea of put-up or shut-up. That is, boosting EU indigenous energy sources with energy efficiency these can play a large role in mitigating gas dependence. But the main thing is to move the former Soviet satellites away from their gas depedency, as they are the most dependent on their former ruler. There are other issues in this category, but I won't go into these at this time.

A new impetus on energy efficiency

This is it! I've never been more convinced about the need to put into place EE projects. This must be elevated at even a higher level than building generation and other big infrastructure projects. Why? Because these big infrastructure projects will certainly command the attention of politicians and those that are already are well placed to influence policy making and the where investment money goes. The hardest part is implimented policies and monitoring the progress on the smaller EE projects that need to be done. This is the largest challenge of the future, and how the EU tackles this and not only makes these requirements for governments to follow, but it is having the right programs that promote EE and ensuring governments tackle this in a constructive and the least wasteful way.

Improved oil and gas stocks and crisis response mechanisms

Not much to say on this topic. Fairly routine and boring, but just hope you are not a Baltic country which relies/relied on oil from Russia.

A greater focus on energy in the EU's international relations

Ah, this is it.

The EU needs to intensify its efforts in developing an effective external energy policy; speaking with one voice, identifying infrastructure of major importance to its energy security and then ensuring its construction, and acting coherently to deepen its partnerships with key energy suppliers, transit countries and consumers.

Acting together, like the EU should on external issues. I just read that Szarkozy was complaining that he was the one that had to take the lead on the Georgia conflict and also the financial crisis. Well, while I'm sure the leadership role works for him, apparently, he has become more convinced about the need for a full time EU President. I say this because it brings up the issue of coherency in the EU and not just a common energy policy, which everyone agrees with the broad and even some detail provisions. But there will need to be a common stance on Russia. This should be a possibility, since by the time that this document is adopted PM Gyurcsany will be out of power, allowing a stronger stance against Russia - at least for Hungary.

Coherency in policy and a strong driver for a specific Caspian Sea pipeline (i.e. Nabucco) can only be accomplished if the EU acts jointly and like Russia. In fact, the EU will have to work harder than Russia to get Russia's friends - the 'Stan countries' to commit to supply Europe with Gas. Of course they would prefer the higher prices paid by the Europeans than Russia but culturally and historically and geographically it is easier to do business with the Russians. So the EU must overcome this surmountable obsticals and put some money up and drive the companies forward through and dipolomatic channels.

I'll save the final point: Promoting infrastructure essential to the EU's energy needs
For the next blog post, as this is a great area to really talk indepth about.

Overall, the new impetus must be coming from both the ground up and from the top-out. That is the Member States must be conviced of the role that energy efficiency can play in their energy mix and boosting security of supply and the EU leadership itself must work coherently internatinoally to bring the energy resources to the whole union. Greater weight needs to be lent to Eastern European issues which still must restructure the historical infrastructural network with Russia.