Can energy unite a divided Europe?

Brussels is working to ensure that Europe's energy market is more unified than ever.  

The European Union is on shaky ground. Debates over migration policy devolve into screaming arguments in Brussels. Countries threaten to build walls and close borders, sparking fears that the era of visa-free travel may soon come to an end. Great Britain, one of the union’s strongest members economically, is negotiating ways to distance itself from the EU – if it doesn’t decide leave the union entirely.

 But despite this bleak picture, there is one area in which European countries are inching closer together: energy. The European Union largely agrees that it needs to produce cleaner energy, and better connect that energy among its members. Doing so would better protect Europeans from volatile global energy markets, and it would help curtail the greenhouse gas emissions that cause global warming.   

While Europe's center enjoys a relatively high level of energy security, its periphery is peppered with “energy islands” where critical infrastructure is often completely cut off from the rest of the continent.

 In January, the European Commission agreed to invest around $236 million in 15 energy infrastructure projects that would connect isolated parts of Southern and Eastern Europe with the rest of the continent’s energy market. Commission officials say the investment will enhance Europe’s energy security.

"Today, we are targeting those regions in Europe that need it the most,” European Commissioner for Climate Action and Energy, Miguel Arias Cañete said during the announcement. “We must press ahead with the modernization of our energy networks to bring any country still isolated into the European energy market.”

But insiders say the commission is being forced to take a lead role directing EU energy policy in an increasingly divided Europe. Market forces alone have failed to attract investment to many parts of Europe’s peripheries, prompting Brussels to use grants where the market failed. What’s more, some say the commission’s efforts are being met with limited enthusiasm, especially by EU members to the east.

“Ironically, it’s that bureaucracy in Brussels that is the key actor when it comes to maintaining the whole idea of market creation,” says Andreas Goldthau, associate at the Geopolitics of Energy Project at Harvard University’s Belfer Center. “It is no longer necessarily London or Berlin, and certainly not Eastern Europe.”

The push for interconnection

Despite its limited ability to dictate national policy, experts say the commission’s efforts to promote energy integration have been admirable. Over the years the European Union pushed for the creation of a EU Energy Union that would abolish regulatory barriers that impede the development of an integrated market. The Energy Union also aims to promote policies that improve energy efficiency and enable the EU to meet its climate commitments.

Meanwhile, the commission finalized three rounds of energy legislation known as “energy packages”. The third energy package, approved in 2009, put a number of regulations in place to increase the independence of national energy regulators and transparency in retail markets.

Some, however, worry that not all EU countries are participating wholeheartedly. In order for Europe’s energy market to be fully integrated, the right regulations and infrastructure need to be put in place. But regulations are ineffective if countries don’t comply with them.

 

“There are a lot of countries across South Eastern Europe, Bulgaria, Romania, Hungary, for example, they simply ignore EU regulations,” says Dr. Goldthau.

In its latest push for energy integration, the European Commission is focusing on developing Europe’s energy hardware. The Commission has drawn up an ambitious list of 195 energy projects, known as “projects of common interest” that need to be completed if Europe’s energy market is to be fully integrated.

Many of the fifteen projects funded by this latest round of investments are on the list. The projects include efforts to modernize Bulgaria’s gas transmission network and create interconnectors that would link gas networks in Austria, Bulgaria, Hungary, and Romania.

The funds will also go into studies on how to secure and improve the Southern Gas Priority Corridor, which will bring alternative sources of gas from the Caspian basin to the EU via Azerbaijan, Georgia, and Turkey.

Russian gas

Many of the EU projects are aimed at reducing the union’s dependence on Russia. Consequently, most EU funding is funneled into efforts to ensure gas can flow as smoothly from west to east as it can from east to west. Electricity and renewable energy sources are getting less attention as a result.

Many countries on Europe’s periphery, like Bulgaria, Estonia, Latvia, Lithuania, and Slovakia, are almost 100 percent reliant on Russia for their natural gas. Energy experts say that improving gas interconnectors so that gas can flow east would reduce this dependence substantially.

“In Eastern Europe many of the networks were built up during the Soviet era and are configured mainly to accept Russian gas from one direction and then to pass it on,” explains Bud Coote, senior fellow at the Atlantic Council’s Global Energy Center.

“But Lithuania now has a LNG [liquefied natural gas] terminal, and there is a planned pipeline under the Baltic sea from Estonia to Finland, an active project that would connect Lithuania and Poland with a gas pipeline,” he adds.

Despite the presumed benefits of unification, however, experts point out that countries are continuing to prioritize their national interests.

“As much as Europe talks about regional cooperation, most of the new security of supply projects are national endeavors,” says Brenda Shaffer, a specialist on energy and foreign policy at Georgetown University. “The fact that both Lithuania and Poland recently each inaugurated national LNG terminals, versus one project connected by a pipeline, is an example of the challenges to cooperation on energy security infrastructure.”

Trust needs to be fostered between EU member nations if the commission’s efforts are to bear fruit, insiders say. Moreover, a common energy policy needs to be agreed upon and followed. That might be difficult as Europe continues to struggle with a variety of other political problems.

“The Brits in the past have been the most important pro-market forces within the EU,” says Goldthau. “Things like the Brexit [a potential British exit from the EU] and the refugee crisis, they complicate the political agenda.”

And Dr. Shaffer agrees that a lack of trust could create future roadblocks.

“The response to the migration crisis will create further challenges to the drive to unite Europe’s energy markets,” says Shaffer. “If the countries don’t trust each other’s border controls anymore, are they really going to trust each other to transit energy supplies during a time of crisis?”