A new framework for EU energy security: Putting sustainability first

FILIPPOS PROEDROU

Short Bio

Filippos Proedrou is Visiting Lecturer in the International Hellenic University (IHU) in Thessaloniki, Greece, and Associate Research Fellow in the Institute of International Relations (IIR) in Prague, Czech Republic. His main research interests and areas of expertise are energy and climate politics, EU energy security and EU-Russia relations.

Correspondence Address: Filippos Proedrou, Institute of International Relations (IIR), Nerudova 3,MaláStrana,118 50, Prague, Czech Republic

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Abstract

The EU energy strategy is hard-poised to ensure energy security for the Union, mainly due to its fixation on fossil energy imports. This paper argues that energy security can holistically be addressed only in case sustainability becomes a priority goal. Such a re-conceptualisation does not only pave the way for a radical restructuring of the energy systems in Europe that can cater for the EU’s energy needs in a sustainable way, but also theorises energy as a scarce resource that hence should be highly priced. On the basis of a thorough ecological tax reform, energy prices can convey accurate signals to households and enterprises and allow for a smooth function of the economy that is today frequently upset by energy price hikes and slumps. The paper aims to make a timely contribution to the current debate on the shape and priorities of the Energy Union by making a strong case for a re-ordering of priorities in EU energy strategy.

Keywords

Energy Union, demand-side policies, de-carbonisation, low carbon security, renewables, ecological tax reform

Introduction

Security of supply concerns have been omni-present in European energy strategies and have driven policies to ensure that adequate quantities reach the European market on time, and at reasonable prices. From the initial efforts to create an energy community in the 1950s to the energy crises of the 1970s and the securitisation of Russia’s energy role since the 2000s, energy has been studied primarily through geopolitical and ‘high politics’ lenses. The empowerment of the European Commission in the energy field since the 1980s with the Single European Act marked a significant turn in European energy strategy with competitive integrated markets, common infrastructure and favorable contractual agreements becoming pillars of EU energy security (Maltby, 2013).

At the same time, the augmenting environmental concerns since the 1970s, the benchmark Brundtland Report of 1987 and the first Earth Summit in Rio de Janeiro in 1992 forced energy strategists to, at least nominally and rhetorically, incorporate environmental factors in their policy designs. The surpassing of critical planetary boundaries and, principally, climate change have led to new institutional structures and climate policies to deal with these problems. It is striking, nevertheless, how insufficiently integrated these policy fields have been in spite of the obvious linkages of energy and environmental issues; most importantly, instead of energy policy-making having been subdued to environmental policy-making, pro-environmental legislation and policy-making find themselves squeezed among what is considered first order energy goals (Held and Harvey, 2011). This is quite bizarre if one thinks of the hard evidence that connects climate change with the excessive carbon emissions in the atmosphere that are principally due to fossil energy.

External and seemingly unrelated events, such as the Ukrainian crisis that has led to a continuing falling out between Russia and the EU, play a crucial role in turning the emphasis on immediate energy needs rather than long-term goals, such as the stabilisation of global temperature and the preservation of the ecosystem. At the same time, these events highlight the exposure of the EU to significant energy supply risks and price volatility despite its energy strategies prioritising precisely a secure and affordable supply. While these persist, the European climate policy remains partial and ambiguous, since even if the EU’s climate goals for the benchmark years 2020 and 2030 are fulfilled, they are modest with regard to the magnitude of the climate challenge. As a result, the state of the EU’s energy security remains fraught with problems, risks and crises across its three dimensions.

A holistic approach that will address the synergies and linkages of primary energy security concerns is thus badly needed (Morata and Sandoval, 2012). The paper attempts to make a timely contribution to the current debate on the shape and priorities of the Energy Union by making a strong case for a re-ordering of priorities in EU energy strategy. It argues that prioritizing sustainability carries the potential both to ensure security of supply through a transformation of the EU’s energy systems, and to pave the way for an ecological tax reform that will keep energy prices high for the sake of the resilience of the European economy.

The paper proceeds as follows. The next section presents the new framework for energy security. The third section explores the concept of sustainability and depicts the unsustainable character of the EU energy strategy. The fourth section examines how security of supplies can be achieved within a sustainable European energy framework. Subsequently, we suggest that affordability in the energy sector should be critically re-conceptualised. The paper concludes with summarising the benefits of the suggested policy framework.

A new framework for sustainable energy security

Energy security has three main dimensions, security of supply, affordability and sustainability. Both as a strategy and an object of scholarly analysis, though, energy security is very often equated with security of supply, which boils down to ensuring adequate fossil fuel supplies against the backdrop of intensified competition for scarce natural resources, political instability in exporting countries, resource nationalism, a shortage of alternatives, etc (Umbach, 2010). Affordability of energy imports features second in the agenda, especially in periods of ascending prices,as has been the case since 2003. Although the ‘energy revolution’ in the US, combined with persistently low energy demand, has caused a slump in prices, a new price hike in the following years is anticipated as part of regular boom and bust energy cycles.Thirdly, sustainability, understood as energy use causing no further damage to the planet, has far from assumed the character of a priority, despite solid evidence-based argumentation regarding the damage the global ecosystem suffers due to extensive fossil energy use and the contrary recommendations of the most authoritative institutions, the UN-sposnsored Intergovernmental Panel for Climate Change and the OECD-sponsored International Energy Agency (IEA).

This has been so since energy security has traditionally been shaped in the European context by political and economic concerns. The latter have revolved around the need to ensure affordable prices and create a competitive and integrated single market for energy. The former initially reflected concerns over the growing unreliability of the Middle East; since the 2000s, they have basically to do with the perception of Russia as an unreliable partner. The 2004 enlargement had as a consequence that the traditional animosity and suspicion between ‘new’ Europe and Russia was transplated in the EU setting, while bilateral Russia-Ukraine friction, ensuing supply cuts and the recent historical low in EU-Russia relations over Ukraine have accentuated fears for Russian non-accomodating energy policies. While central and east European members have been faced with Gazprom’s blackmailing tactics and supply interruptions in several instances, this adding to and warrantingtheir polemical approach vis-à-vis Russia (Larsson, 2007), one cannot turn a blind eye to the steady EU-Russia oil and gas trade for decades, with only minor exceptions. The perception of Russia as a difficult but indipsenable partner in Europe is mirrored in the persistent political and corporate interest to further energy ties with Moscow, not least in plans to construct the Nord Stream 2 pipeline despite regulatory impediments in place(Casier, 2011; Proedrou, 2012, pp. 79-104; Proedrou, 2016)

What still characterises the energy security discourse is ‘the separation of energy and environment’, although ‘the consumption of one inexorably leads to the degradation of the other’ (Mulligan, 2010, p. 85).Climate change, moreover, remains significantly undertheorised in terms of both its impact on fundamental political premises (Creutziget al., 2014, p. 10), and its synergies with economic performance (Froggatt and Levi, 2009, p. 1140). Most importantly, the relevant theoretical work has not focused on how the energy security strategy can find a balance between its core priorities, security of supply, affordability and sustainability, and serve all of them simultaneously and consistently.

This tension is evident in the EU’s Energy Union, which remains ‘mostly an empty box in which every stakeholder tries to put whatever is on the top of their priority list’, from independence from troublesome exporters, security of imports, solidarity, and diversification to low energy prices, de-carbonisation and sustainability (Szuleckiet al., 2016, p. 1). In particular, the Energy Union package outlines five priorities:

  • Energy security (meaning in practice security of supply), solidarity and trust
  • A fully integrated EU energy market
  • Demand-side policies and improved energy efficiency
  • De-carbonisation of the economy and
  • Empowered research and innovation

Behind these different goals lie different players and interests, be they member-states, the corporate world and institutional infighting. In particular, the central and eastern European countries (the Visegrad Group, the Baltic states, Croatia and Romania) have been rather unaccommodating to the Commission’s plans for a green transition. Poland’s ample coal reserves render the biggest country of this group averse to an outstandingly green agenda; Poland hence has risen as the natural leader of this group against overt climate-friendly energy policies. In general, most of these states prioritize gas diversification options to clean solutions and remain locked-in in traditional, dirty systems of energy use (Dilbaet al., 2015). The fact that most EU Regional Development and Cohesion funds serve to reinforce such locks-in, rather than precipitate a green transition, speaks to the incongruence between the EU’s contemporary policy means and actual results. To the contrary, while south European states are increasingly pursuing green policies, it is the EU’s North that most impactfully pursues bold clean energy solutions, with Germany’s Energiewendestanding out as the most prominent example (Szuleckiet al., 2015).It hence remains questionable whether the EU will manage to make the transition to a fully climate-friendly energy strategy in the face of such stark competing priorities (Siddi, 2016, p. 132). Such ambiguity is illustrated in the Conclusions of the European Council on the Energy Union, where ‘the order of priority of … objectives is not specified … which leaves policy options and the very nature of the Energy Union open to future debate’ (Siddi, 2016, p. 141).

Environmental, diversification and liberalisation policies (Proedrou, 2012, 2016) to master energy and climate challenges have been on the agenda and/or implemented for more than two decades now. Not only do they not work synergistically, however, but they also undermine each other, not least since one dimension is often prioritised over the others, depending on international developments. Since energy is the backbone of the European economy, the EU energy strategy seems to work on the ostensible assumption that security of supplies is the foremost goal to be pursued, even if at the cost of the other two dimensions. In accordance with the level of security of supplies, a fluctuating balance between the three pillars of energy security is established. Priority shifting has thus been a steady feature of the EU energy security strategy.

In the 1990s, the EU focused on sustainability with the main rationale being, one could reasonably allege, not only to take up action against climate change after mounting evidence for its dramatic advent had been presented, but also to build up a green economy that would outcompete that of other economic powers, which would remain reliant on the more expensive and declining fossil energy in a peak-oil world (Helm, 2014). Security of supplies, nonetheless, made an impressive come-back with the gas crises of 2006 and 2009 that emanated from the Russo-Ukrainian disputes. In the meantime, the soaring of energy prices became all the more a significant concern with regard to their impact on a European economy that was gradually slowing down since 2008-09. Competitiveness had become the most astute priority by 2013, when the EU underlined the primacy of cheap energy, including an increased use of coal, even if this reasoning clearly contravened climate goals (European Council, 2013). The new crisis in Ukraine in late 2013 once again raised the stakes for energy security, as it alarmed the EU of the possibility of a new supply cut. In this turbulent context, supply security considerations and competitiveness concerns are very likely to outweigh the pro-environmental voices in the EU decision-making structures with regard to negotiations on the shape of the Energy Union and the respective EU energy and climate strategy.

It is exactly this assumption – that security of supply has to be pursued even at the cost of affordability and sustainability - that this paper aims to disprove. In doing so, it draws principally from the ecological and steady-state economics literature, but also from the mainstream energy security discourse utilizing several relevant insightsthat aim to respond to pressing sustainability needs. The main argument is that a better balance can be striken and a more efficient energy security strategy designed if we adjust an ecological lens on the energy security problems of the EU, re-conceptualise and re-organise accordingly the priorities of EU energy security, and make good use of a number of novel ideas on demand management and rationalization and alternative energy use. Inertia, lock-in effects, vested interests and established modes of policy-making warrant the current unsatisfactory, albeit evolving, energy and climate strategy of the EU. While acknowledging the multiple impediments a re-ordering of policy priorities entails, we are living through extraordinary times that compelus to ‘rework carboniferous capitalism into a more sustainable mode of political economy … [and] facilitate modes of production that replace fossil fueled capitalism quickly’(Dalby, 2015, p. 440).

In this new understanding, the overarching problem of the EU energy strategy is its unsustainability. We thus maintain that the goal of solving this problem must be the first to be pursued; security of supplies and competitiveness can then be accordingly adjusted to fit the primary sustainability end goal. Developing policies for sustainable energy, it should be underlined, carries the potential of sweeping, but far from necessarily adverse, effects on both the competitiveness of the economy, and security of supplies. Such argumentation also turns the critiques of such a radical thinking, which cast doubt on its feasibility and desirability (Lomborg, 2003; Helm, 2012), on their head.

Sustainability first

Sustainability is a normative concept that rests on two pillars. Firstly, it refers to a state of affairs whereby the needs of today do not come at the cost of the needs of tomorrow. Secondly, since sustainability is a prerequisite for the possibility of sustained life, the emphasis inadvertently lies on the least well-off, whose very existence is principally endangered. In both aspects, a sense of responsibility, equity and intergenerational justice constitutes the normative content of the term (Agarwal and Narain, 1991; Wackernagel and Rees, 1998). As Cherp and Jewell (2014) succintly argue, any theorisation of energy security cannot afford to ignore the referrent object (security for whom?) and the associated costs of contemporary energy strategies (security at what cost?). Both pinpoint to the need to incorporate concerns for the plight of the future generations, the energy security (and not only) of which is gravely compromised by contemporary energy strategies that prioritise supply security and affordability and perform poorly on the sustainability front.

It is difficult to see how current governments and citizens of the Global North are not complicit in this situation as perpetuators of unsustainable policies that impact heavily on both the least well-off and the forthcoming generations (Creutziget al., 2014, p. 7; Viktor and Jackson, 2015). The EU, in particular, is a major pillar of unsustainability, since it accounts for one fifth of the overall global energy usage (Oettinger, 2014, p. 7). Together with the rest of the developed world, it cannot but accept the burden of the highest contribution to both climate change and resource scarcity. These are, by their nature, global issues that do not recognise borders (the extensive global trade means that most resources are bought and consumed in the global market). If the EU is serious about following a sustainable energy strategy, reversing its share in global energy consumption and carbon emissions is the ultimate priority. This can only be achieved by bold measures. The 20-20-20 policy marked a decisive starting point and the EU is well placed to meet these goals. Two caveats, though, have to be pointed out. Economic activity, and thus also emissions, has been undermined both by the financial crisis-induced recession and sluggish growth ever since, as well as by its increasing outsourcing. While this brings the EU’s carbon footprint down, it does not add to the decrease of the global carbon footprint, which is the ultimate goal (Helm, 2012).