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Europe's Energy Predicament

Author: Toni Johnson
February 2, 2009

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The Russia-Ukraine energy dispute, which halted natural gas shipments to the rest of Europe in the first weeks of 2009, highlighted multiple dilemmas confronting the European Union as it seeks to carry out ambitious new "green" energy policies. The incident demonstrates the difficulty of coordinating energy policy--often dependent on outside actors--with climate policy, which mandates goals that might narrow energy options. Absent low-cost, reliable green energy technologies, EU members face limited options: further reliance on gas imports, maintaining old nuclear plants, or continuing with more coal power.

As the European Union moves forward with its climate change goals, natural gas supplies remain stuck primarily in regional distribution markets and relations with Russia have become a greater concern. Russia supplies about 40 percent of EU gas imports, making disruptions a constant threat. Yet a January 2008 report from the U.S. Congressional Research Service shows that natural gas (PDF) has "rapidly become Europe's fuel of choice for power generation." Some experts worry the dominance of Russian gas limits the EU's ability to act robustly on international security issues. During the conflict between Georgia and Russia in August 2008, some saw a direct relationship between gas dependency and the EU divide over sanctioning Russia, with the countries most dependent on Russian natural gas opposing sanctions (Times UK). The EU affairs website EurActiv.com says in a policy summary that the "the influence of energy dependence over decisions made by individual EU countries cannot be ignored, despite being difficult to measure."

EU officials also are looking to add more supply outside Russia through new pipeline deals with Caspian suppliers (EurasiaNet) and through increasing capacity to accept liquefied natural gas, which can travel large distances. But so far, countries such as Bulgaria continue to be exposed to significant energy security risks (IHT). A European Council on Foreign Relations November 2008 report calling for a single EU gas market found that the EU gas market is highly fragmented (PDF) with very little cross-border trading that could allow for redistributing supplies in times of disruption. The Economist says "a fully [liberalized] energy market, with better linkages between countries, offers all of Europe not only a more efficient energy future but also a more secure one."

In the face of the Russia-Ukraine dispute, several European countries are reexamining their nuclear power policies. Germany may reassess its plan to phase out unpopular nuclear power with an eye toward bolstering energy security (Reuters), and Bulgaria and Slovakia are already looking to restart Soviet-era reactors the EU considers unsafe. CFR Senior Fellow Charles Ferguson says these countries should avoid restarting old reactors and instead build new reactors and impose energy conservation measures.

Though the EU continues to be a global leader in producing alternative energy such as solar and wind power, overall it provides a small fraction of power generation. In November 2008, the European Commission noted that, despite plans to use 20 percent more renewable energy by 2020, net imports of fossil fuels were expected to remain constant through 2020 (Euractiv). The EU plan, which also includes reducing greenhouse gas emissions 20 percent by 2020, was ratified in December 2008 and came with a number of exemptions for heavy industry and coal production. "Europe was supposed to be the Great White Hope" for climate change, writes Energy Tribune's Peter C. Glover and Michael J. Economides, but instead "the [EU] leadership approved a document full of escape clauses." But Polish and German officials say the global economic downturn has made it harder to contend with the price tag for climate policy. Without such concessions to industry, coal consumption is likely to become more expensive. But a laxer climate policy also could hurt the economic viability of carbon capture and storage technology (Deutsche Welle) needed to make coal more climate friendly.

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