Energy Security in Europe – Prof. Mitat Çelikpala

Energy Security in Europe

The energy security became an issue on the eve of the World War I by the first lord of the Admiralty, Winston Churchill, made a historic decision on shifting the power source of the British Navy’s ships from coal to oil. This means a new strategy for the British decision makers and a new threat for the security structures. Thus from then on energy security became a question of national strategy and energy security means with Churchill’s words “safety and certainty in oil lie in variety and variety alone”.

Since Churchill’s conspicuous decision, energy security has repeatedly emerged as an issue of great importance, and it is so once again in today’s world. At present, the issue of energy security is not restricted to oil. High natural gas prices and the situation, in the gas sector, the electric power blackouts in the US and power cuts in Europe, hurricanes and their negative effects on supply, nuclear energy related issues together with alternative resources make the issue more complicated. So, currently, as well as traditional aspects of energy security, myriad of new aspects has emerged and continues to emerge: such as, tight oil and gas markets, increasing prices, alternative energy sources and their role, threat of terrorism, instability in some exporting and importing countries, geopolitical rivalries, use of energy as a weapon and the increasing need for energy to the economic growth.

Energy Security: Definition

How to define energy security? The concept of energy security is vague. Definitions range from uninterrupted oil supplies to the physical security of energy facilities to support for bio-fuels and renewable energy sources. Therefore, it is not wrong to say that the energy security is an umbrella term that covers many concerns linking energy, economic growth and political power. It is also very effective the actors’ position in the energy chain.

More narrowly, energy security is defined as the “reliable and adequate supply of energy at reasonable prices” or as “securing adequate energy supplies at reasonable and stable prices in order to sustain economic performance and growth.” Within this definition prices and supply diversity are critical components of energy security.

It should be stressed out that energy security (the continuous availability of energy in varied forms, in sufficient quantities and at reasonable prices) has several aspects. It means limited vulnerability to transient or longer disruptions of imported supplies. It also means the availability of local and imported resources to meet growing demand over time and at reasonable prices.

This perspective put forward of us four basic elements, essentially encapsulated in the energy security: availability, accessibility, affordability and sustainability. Among those four elements availability means availability on demand. We may clarify it as by saying that when a country needs or wants energy it should be available. Accessibility means the nation should be able to access energy source globally to ensure uninterrupted growth. And, affordability means the affordability of the energy being procured to ensure that the growth engine is not impacted by the price impact. This is also closely related with the sustainability which means that any actor would be able to reach energy resources sustainably.

What is Energy Security for the EU

Given the EU’s heavy reliance on imports, its current energy policy focuses on ensuring a stable flow of energy and affordable energy prices in the face of potential energy crises.

In the current European energy policy, the definition of energy security is in line with that of the International Energy Agency (IEA): “uninterrupted availability of energy at an affordable price.” There are number of communications and documents to define and shape the EU’s energy and climate policy.

• A Green paper was issued in 2000: “Towards a European strategy for security of energy supply,”
• Another one in 2006: “A European strategy for sustainable, competitive and secure energy,”
• The Third Energy Package entered into force in September 2009.

From these and other communications it becomes clear that supply security is important. This also includes the infrastructure of gas and electricity markets and gas corridors with key suppliers. EU has since long given importance to securing its increasing gas demand from a few neighboring countries in the long run.

From all those EU documents it must be stated that the focus of the Energy Union is to make energy sustainable, secure and affordable through implementing clean energy technologies, renewable energy production and renewed infrastructure. That will contribute to creating new jobs and skills, low household bills and low-carbon economy.

The Energy Union’s leading topics are security, solidarity and trust. The first priority is diversifying Europe’s sources of energy and ensuring energy security through solidarity and cooperation between EU countries. The second priority is the establishment of a fully integrated internal energy market enabling the free flow of energy through the EU through adequate infrastructure and without technical or regulatory barriers

The Third Energy Package

The Third Energy Package is a decisive step forward towards completing the Single European Market for energy. With that package the EU aimed higher standard of public service obligations and increased customer protection. Issued stricter rules for structural separation between transmission activities and production/supply activities of vertically integrated companies which is called unbundling.

The EU decided to establish national energy regulators across the Europe for having stronger powers serving independence of national energy regulators across the European Union. These are the new tools to harmonize market and network operation rules at Pan-European level.

There are two institutional frameworks: European Agency for the Cooperation of Energy Regulators (ACER) and European Network of Transmission System Operators (ENTSO). These are the frameworks for supply security and aims at diversifying Europe’s sources of energy and making better, more efficient use of energy produced within the EU.

European Agency for the Cooperation of Energy Regulators (ACER): ACER helps ensure the single European market in gas and electricity functions properly. It assists national regulatory authorities in performing their regulatory function at European level and, where necessary, coordinates their work.

European Network of Transmission System Operators (ENTSO):  the European Network of Transmission System Operators is the association for the cooperation of the European transmission system operators (TSOs). ENTSO-E and its members, as the European TSO community, fulfil a common mission: Ensuring the security of the interconnected power system in all time frames at pan-European level and the optimal functioning and development of the European interconnected electricity markets, while enabling the integration of electricity generated from renewable energy sources and of emerging technologies.

2020- 2030 Targets

The EEA report ‘Trends and Protections in Europe 2021’ estimated that the EU achieved its three 2020 climate and energy targets:

• reducing greenhouse gas emissions by 20% compared to 1990 levels,
• increasing the share of renewble energy use to 20%,
• improving energy efficiency by 20%.

And set new key targets for 2030:

• At least 40% cuts in greenhouse gas emissions(from 1990 levels),
• At least 32% share for renewable energy,
• At least 32.5% improvement in energy efficiency.

Russia as Challenge

Escalating dependence on handful number of supplier, especially Russian Federation. Following the invasion of Ukraine, the case for a rapid clean energy transition has never been stronger and clearer. The EU imports 90% of its gas consumption, with Russia providing around 45% of those imports, in varying levels across Member States. Russia also accounts for around 25% of oil imports and 45% of coal imports. In the last decade the EU (especially the Eastern member states) has found itself under the Russian vertical monopoly over the supply of natural gas, which discourages and undermines the European consumers’ drive for diversification efforts.

The European Commission proposed an outline of a plan to make Europe independent from Russian fossil fuels well before 2030 in March 2022. Through the Joint European action for more affordable, secure and sustainable energy (REPowerEU), the EU confirmed its objective to reach independence from Russian fossil fuels well before the end of the decade, replacing them with stable, affordable, reliable, and clean energy supplies for EU citizens and businesses.

As response there are several number of scenarios:

• A new gas hub in Southern Europe,
• Strengthening partnerships with Norway, key infrastructure projects enhancing Finland’s and the Baltic States’ energy security,
• Better use of regasification and storage capacity in the gas system,
• Developing new partnerships with the United States and Canada and removing obstacles to LNG imports from the US and other LNG producers,
• Advancing domestic production of oil and gas from unconventional sources such as shale gas (as long as public acceptance and environmental impacts are adequately addressed),
• Establishing strategic energy partnerships with important transit countries or regions such as Algeria, Turkey, Azerbaijan, Turkmenistan, the Middle East, Africa,

Joint Statement between the European Commission and the United States on European Energy Security signed on 25 March 2022 is one of the most important current documents. In the preamble, signatories declared their commitment to reduce Europe’s dependency on Russian energy and decided to establish a joint Task Force on Energy Security to set out the parameters of this cooperation and execute its implementation. The Task Force will be chaired by a representative from the White House and a representative of the President of the European Commission.

This Task Force will focus on the following urgent issues:

• The United States will strive to ensure LNG volumes for the EU market of at least 15 bcm in 2022 with expected increases going forward and affirm the joint resolve to terminate EU dependence on Russian fossil fuels by 2027 (LNG until at least 2030 of approximately 50 bcm/annum).
• Both parties will undertake efforts to reduce the greenhouse gas intensity.
• The EU is preparing an upgraded regulatory framework for energy security of supply and storage.
• Accelerating market deployment and utilization of clean energy technologies and measures including an expansion of solar and wind.

However, there are series of challenges and policy conflicts in front of European Union and its partners. First of all such a move requires massive investments in LNG terminals and infrastructure; not specified how the financing will be secured. Member states have very fragmented shale gas policies and do not agree on a common approach. Tax incentives and subsidies for unconventional fossil fuels in conflict with creating a more integrated, smoother energy market and potentially with renewable energy targets. A suggested voluntary demand aggregation mechanism for collective purchasing of gas already rejected by a majority of member states: better to pursue antitrust proceedings against Gazprom.