While the European Union is pondering the economic crisis, it often goes unnoticed that co-operation in energy issues is taking huge leaps towards increasing integration. Headlines are screaming about Greece and Italy but in the EU Commission’s corridors there is also a lot of talk about the growing influence of energy politics for the operation of the EU.
A change of paradigms is happening swiftly at the same time both in the economic and energy politics ‒ the Commission is strongly extending its authority in the name of stabilizing the economy in both sectors. The only difference is that the power structures are changing in the energy policy without wide media coverage.
The euro crisis has opened the eyes of many EU decision-makers: without a common EU energy policy also the solutions for solving the economic crisis will only be half measures. Many people acknowledge that one of the reasons behind the economic crisis, for example in Italy, is a failed energy policy. Italy closed down its nuclear power plants due to a referendum result in the 1980’s. The country was left at the mercy of ever-increasing prices of imported energy, its competitiveness weakened… and the rest of the story we can read in our daily newspapers.
EU will need huge energy investments in the years to come to strengthen the market functionality and speed up other investments. This year, the Union has made many far-reaching decisions in the energy sector. Tens of billions of euros have been earmarked for developing the electricity and gas networks. In the new EU research framework energy has become a key priority. In addition to this, EU is forming common licensing procedures for energy projects and is aiming at building a uniform external energy policy. Mid-winter gas crises between Russia and Ukraine are still very well remembered in Brussels.
However, power structures change all the time. EU decision-making is hampered often in the name of subsidiarity principle. The necessary harmonization of energy policy is being hindered repeatedly by populist actions in Member States. The fact that many Member States are exercising subsidy and tax competition to enhance the uptake of renewables is frustrating the EU Commission. Also the endeavors to create capacity markets in some Member States are in the worst case wrecking the possibilities for creating a truly European energy market.
The number one “EU energy soloist” prize in 2011 will go by a wide margin to Germany. Germany’s bilateral gas co-operation with Russia and the decision to abandon nuclear energy are destroying EU’s emission targets for a decade. Germany’s decision ‒ in practice a decrease of 5 % of the EU’s electricity generation capacity without even hinting about it to surrounding countries ‒ is causing bad blood amongst Germany’s neighbors.
The consensus of many energy experts in Brussels is that Germany’s “green” decision will lead to coal renaissance, extra emissions running up to hundreds of millions of CO2 tonnes and an escalating decline in EU’s industrial competitiveness.
However, Germany’s radical nuclear power shutdown may become a blessing in Brussels. Many other Member States have started to emphasize the need for a more European approach in speeding up energy investments and integrating energy markets. The EU Commission has taken up the gauntlet. The EU energy roadmap 2050 released last week is by far the first long-term EU energy vision that strives to strengthen consensus about low-emission energy investments. Nuclear energy has a strong role in the roadmap since every third light bulb in Europe is illuminated by nuclear.
One has to hope that EU will reach an agreement about market-based approach to enhance energy investments in the beginning of next year. This would be essential both to handle the EU economic crisis and to put an end to populism in energy decisions in some Member States.
Sami Tulonen
Aula Europe
