CEEP: POSITION PAPER ON AN ENERGY UNION

CEEP: POSITION PAPER ON AN ENERGY UNION

Central Europe Energy Partners, AISBL (CEEP), welcomes the priority status granted to the Energy Union by the President of the European Commission, Mr. Jean-Claude Juncker, and actions undertaken in this regard by the Commission Members. This is fully in line with the recommendations made by Mr. Jacques Delors, Mr. Jerzy Buzek in 2010, and the plan presented last year by the then Prime Minister of the Republic of Poland, Mr. Donald Tusk.

The discussion so far shows a willingness to put energy in the global context and to end ‘deceptive silo’ approaches. What we all need is to give a wider vision of energy policy based on this global context. The process has to be gradual – but persistent - moving from existing European Energy Policy to the Energy Union. It has to be inclusive, and provide the notion of European solidarity with a new, wider context. The initiative could not be better timed. Right now, the political climate is there to set the Energy Union in motion. The Commission – but first of all – we, the EU Member States, have to use it to our best advantage.

The current geopolitical situation on the EU’s eastern border – however unfortunate in itself – has pushed all energy issues, especially Europe's energy security, even higher up the agenda. The Commission’s Energy Union initiative, therefore, has to be seen in its widest possible context – the 5 dimensions reflect a holistic approach across many policy areas, from transport, over competition and agriculture to industrial policy. Just as a reminder these are (as presented by Mr. Maroš Šefčovič – Vice-President for Energy Union):

  • Enhancing our supply security, based on solidarity and trust.
  • Building a single internal energy market which is highly competitive.
  • Increasing energy efficiency.
  • Reducing energy production pollution by decarbonising our economies.
  • Boosting renewable energies by investing in research and innovation.

What we are expecting are tangibles.
CEEP considers that an Energy Union is the catalyst for the necessary energy transition in Europe, and must be used to overcome the fragmented, short-sighted, and isolated approach that is spreading across Europe at this time.
CEEP would like to see the Energy Union based on a sustainable economic development model, supporting the growth and competitiveness of the European economy. The focus of the European energy system must shift from the supply side to the demand side, and from a production model to one aimed at reducing consumption, and therefore, demand. Making this a priority in Europe involves placing energy efficiency on an equal footing with other energy resources. The Energy Union must be fully inter-operational, with a new industrial strategy – based on innovation.

The Energy Union should be inclusive and promote solidarity where necessary, such as ensuring an energy supply for all at a universally affordable price.
It is also vital to keep all EU Members motivated to continue their efforts to achieve a properly-functioning internal market, through reliable interconnections and the ability to fully integrate the EU’s diverse energy resources – including indigenous ones.

[Tweet "The internal market is the cornerstone of European energy policy and the first priority is to make it work"]The internal market is the cornerstone of European energy policy and the first priority is to make it work. This also means being more serious about implementation of the rules by all actors, and supplementing the existing instruments with those which are still missing, such as effective regulations dealing with the security of electricity supply and improving the existing gas and oil security of supply. We need an energy market in which energy flows freely. An energy market where companies compete to provide the best energy prices. To this end, the Energy Union should remove the technical and regulatory barriers among Member States. This will not happen overnight: and as a first step, we should build stronger regional co-operation arrangements, within a European framework. An effectively-functioning internal energy market should be a key mechanism to be put in place, in order to ensure a sufficient, equal level of diversification of resources, and provide necessary instruments to create and promote liquidity in and between all the Member States in the European Union.

In terms of integrating the EU energy market and ensuring its security, joint regional and European activities are needed with regard to the synchronization of the Baltic States’ electricity systems with the European Continental Networks. Current situation of the Baltics is unacceptable – a third country can significantly influence the electricity systems of these EU Member States. To develop a resilient Energy Union, full EU support should be given to end this situation.
Europe is a global player and must be duly accompanied by a resilient and strategic Energy Union. This, however, cannot be achieved without assertive and coherent energy diplomacy at the EU level. One of its’ main tasks – as CEEP sees it – should be to enhance our security of supply, based on solidarity and trust.

This matter is very close to our hearts. Central and East European countries are particularly exposed to gas supply risks, with 80 per cent of their Russian gas imports crossing Ukraine, apart from an underlying high gas import dependency – between 60 to 100 per cent – on Russia’s supplies. These countries pay, on average, between 10 and 30 per cent more for Russian gas, than do other Western European gas customers. Therefore, Central Europe Energy Partners, AISBL, would like to see the following principles reflected in the concept of an Energy Union:

  •  strengthening the bargaining power of Member States and the EU, in relation to external suppliers;
  •  strengthening solidarity mechanisms;
  •  achieving full interconnectivity of a common energy infrastructure;
  •  development of indigenous energy sources in the EU;
  •  diversification of energy supply by gas and oil;
  •  reinforcing the European Energy Community.

[Tweet "Many West European countries are opposed to the idea of working as a single EU gas buyer"]Many West European countries are opposed to the idea of working as a single EU gas buyer because they believe it hampers competition and free-market rules. We, in Central Europe, have a different view. At the same time, we take notice of the EC’s Vice-President, Mr. Maroš Šefčovič’s statement that countries might be able to collaborate on a voluntary basis, or in the event of a market failure or crisis. At least this statement provides a good working basis for further deliberations.

The Russian Federation will remain a major supplier of energy to Europe. It can be a player, but must play by the rules of the game, and not continuously ‘move the goalposts’. CEEP believes that the EU’s 3rd energy package constitutes a mutually-beneficial and sound legal basis upon which to build our energy relations with the Russian Federation.

[Tweet "According to CEEP, expansion of infrastructure should be one of the key concepts behind the Energy Union"]According to CEEP, expansion of infrastructure should be one of the key concepts behind the Energy Union. A strategic imperative for Europe is to build a North-South Corridor of energy, transportation and telecommunication links from the Baltic to the Mediterranean and Black Seas (as presented in a 2014 CEEP/Atlantic Council report: ‘Completing Europe: From the North-South Corridor to Energy, Transportation, and Telecommunications Union’).

The Corridor would diversify Central Europe’s energy supplies by connecting the entire region to the liquefied natural gas terminals being completed on Poland’s north-west coast, and proposed for Croatia. Improved oil and electricity routes, as well as road and rail links, would better connect the Baltic region with those along the Adriatic and Black Seas. Extensions from this ‘backbone’ would link with Ukraine, Moldova and Turkey, helping to integrate and stabilize Europe’s fragile periphery with the European Union’s core.

[Tweet "The North-South Corridor fits easily within the European Commission’s plan to generate 300 billion Euros"]The North-South Corridor fits easily within the European Commission’s plan to generate 300 billion Euros of public and private investment to strengthen infrastructure and jump-start a new European competitiveness. The Corridor would foster smart, sustainable, and inclusive economic growth, and help drive a re-industrialisation of Europe through lower energy prices, faster transportation links, and modern digital infrastructure. The new efficiency in Central European transport, and its greater use of natural gas, would also propel Europe towards its twin goals of cutting pollution and building a low-emission economy.

Central Europe Energy Partners, AISBL, sees no alternative to the Energy Union, but it surely requires all public authorities to have the courage to address the problems and to explain them to their populations. It especially requires them to act urgently, with determination, and be convincing about the relevance of these actions.

This welcome concept needs now to be translated into an action plan and the first step will be the adoption and presentation by the Commission on February the 25th, 2015, of a Communication describing the blueprint for the Energy Union. Ultimately, it remains a matter of political will of EU Member States to implement this truly New Millennium Project.