Blogging on Issues of International and European Security

Policy Briefs: European Energy Security in Light of the Ukraine Crisis

by Jared Brow

(mtnforum.org)

(mtnforum.org)

Escalation of the crisis in Ukraine has directly threatened energy security in Europe and is forcing policy makers to evaluate the lack of diversification among European energy sources. The conflict comes at a time when the EU is pursuing renewable resources and strengthening its commitments towards decarbonization and increasing energy efficiency. Because there are no current prospects of resolution, and considering unpredictable and belligerent Russian behavior, Europe must collectively define its environmental commitment and energy relationship with Russia to strengthen its energy security.

Introduction

This past June, conflict reached a new peak when already high tensions between Ukraine and Russia were further aggravated because Gazprom, a Russian energy company, cut off its energy supply to Ukraine due to unpaid Ukrainian debt. The dispute is one of many that have escalated tensions into an international crisis as the West tries, primarily through targeted economic sanctions against Moscow, to force Russian engagement in diplomacy with Ukraine. The United States has been a vocal proponent of greater economic punishments and has encouraged the EU to impose stronger sanctions against Russia. However, these efforts have been met with much hesitation from many member states due to their strong economic and energy ties with Moscow. Currently, the EU imports 53% of its energy supplies; 42% of natural gas imports and 33% of oil imports come from Russia. Of this, roughly 15% of all imported gas enters by pipes that pass through Ukraine.[i] Naturally, Russia’s move to shut off gas to Ukraine has Europe worried. While gas flows from Russia currently appear to be at normal levels, Europe is not so trusting.[ii] Energy-related conflicts between Russia and Ukraine are not new, and a similar situation occurred in 2009 when Russia cut off its energy supply to Kiev. During this incident, Slovakia lost its gas supply.[iii]

Increasing European uncertainty over Russian energy supply is Russia’s current rapprochement to China. Just as the EU is dependent upon Russian energy, so too is Russia dependent upon the European energy market. Moscow recognizes the consequences of such dependence and has diversified its energy markets, most recently with a 30-year, $400 billion energy agreement with China.[iv] The deal reflects Russia’s strained relations with the West in light of the Ukraine conflict and represents a significant investment in Chinese economic growth and strengthened Sino-Russian relations. Thus, Russia’s actions to shut off the gas supply to Ukraine coupled with its new energy focus on China directly threaten European energy security.

The crisis has served as a wake up call to Europe’s significant energy dependence especially on Russia and confirmed the need for member states to reduce and diversify this dependence. But what does energy dependence actually mean? It encompasses various dimensions but two are especially important when constructing effective energy policies. Security of energy supply refers to the continual availability of affordable energy sources while valuing environmental concerns. Energy and carbon intensity refers to the amount of energy used per unit of GDP; it links energy and economy and measures energy efficiency in relation to output. Improving this efficiency reduces energy dependence and offers economic and environmental benefits.[v] Russia’s decision to cut off gas supply to Ukraine has threatened both dimensions significantly as Europe worries about decreased energy security and the increase in energy prices that would result if states lost access to supply. Such threats have encouraged the EU to review its current policies and plan for a more stable energy future.

European Environmental Efforts

Prior to the Ukraine crisis, environmental issues had been of serious concern to the EU. In 2007, the European Commission introduced the 2020 climate and energy package, binding legislation for Europe to reach ambitious energy and environmental targets by 2020 including a 20% reduction in greenhouse gas emissions from 1990 levels, raising energy consumption from renewable resources to 20%, and improving energy efficiency by 20%.[vi] The legislation seeks to simultaneously combat climate change, enhance European energy security, and encourage job growth in the renewable energy sector by commercializing green energy technologies. Consulting a 2013 assessment of EU preparedness to meet these goals, 14 states will reach a 20% emissions reduction while the other 13 will not without implementing extra measures. Despite the high prices of renewable energy sources, all states are on track to increase their share of renewable energy consumption to 20%. However, with current measures, and especially due to the recent economic crisis and difficulties in developing renewable sources, the EU is unlikely to meet its goal of improving energy efficiency by 20%.[vii] While the 20-20-20 goals remain feasible, without implementing further policies and generating new infrastructures to address current policy and infrastructure shortfalls, the EU will very likely not be successful. However, because these goals are just the short-term ambitions of a greater EU energy strategy, it is crucial that they are met to ensure success in meeting future targets.

In 2009, the EU began developing an Energy Roadmap for 2050 to expand upon the 2020 legislation and create more defined and long-term energy goals to achieve a low-carbon, sustainable, secure, and competitive European economy. Most importantly, the EU seeks to limit global warming to 2 degrees Celsius above preindustrial temperatures to avoid catastrophic environmental consequences. To achieve this, the EU must decrease its carbon emissions by a minimum of 85% by 2050. Yet, with current measures, the EU is only on target to reduce emissions by 44%.[viii] Considering that the current European energy grid is in need of an upgrade, the EU must invest further in clean and renewable sources of energy to reduce its carbon dependency.

To better prepare for 85% reduction, the EU introduced a 2030 Framework for climate and energy policies in January 2014. The Framework outlines climate and energy policies to maintain a forward-thinking energy and environmental posture, decrease carbon dependency, and spur economic growth. Measures include reducing greenhouse gas emissions by 40%, increasing the share of used renewables to a minimum of 27%, and continuing its path of energy efficiency (with an official goal to be determined at a later date) for 2030. It also suggests a system in which member states create their own policies in conjunction with the Union regarding renewable energy targets.[ix]

While the 2030 goals are ideal next steps in the European energy and environmental commitment to decarbonize to meet 2050 goals, there is debate over the realistic ability of member states to achieve these goals with current EU infrastructures. Especially in comparison with the 20-20-20 goals, these are certainly more ambitious; by 2020, it will have taken thirty years for the EU to reduce greenhouse gas emissions by 20% from 1990. This framework hopes to double the reduction in just ten years by 2030. Considering that some member states rely more heavily on carbon energy sources for production than others and poorer member states lack necessary funds to produce renewable energy, there is debate regarding the feasibility of achieving these goals using Europe’s current mechanisms.[x] Due to rising energy prices, many member states are weary of risking their own productivity and industrial competitiveness by pursing more expensive “green” technologies. Any policy implemented must be mindful of these differences and account for differences in capabilities among states.

European Energy Security

Decarbonization and increased energy efficiency have long been main features of European energy strategies, and now, the Ukraine crisis has demonstrated an immediate need to more closely align these goals with energy security. In March 2014, the EU held a two-day summit that discussed energy and climate issues and tasked the Commission to orchestrate a plan to reduce high European dependence on energy imports especially from Russia. Leaders outlined goals for an energy policy that ensures competitiveness, security of supply, and sustainability. According to Council President Van Rompuy, if Europe does not act immediately to decrease its energy dependence especially from Russia, it would be dependent on foreign energy for up to 80% of its oil and gas supplies.[xi] “Today,” Van Rompuy concluded, “we sent a clear signal that Europe is stepping up a gear to reduce energy dependency, especially with Russia.”[xii]

Most recently in response to the Ukraine crisis, the Commission released the European Energy Security Strategy to compliment 2030 goals that highlights short-term and medium and long-term energy and environmental challenges on the horizon. Most imperatively, the strategy aims to launch stress tests that simulate disruptions in gas supply if Russia continues to restrict gas to Ukraine. These tests also seek to develop and strengthen emergency plans to address a potential gas shortage this upcoming winter. In the longer term, the strategy suggests five additional areas of action:

  1. Increasing energy efficiency to meet the 2030 goals;
  2. Increasing energy production within the EU and diversifying energy sources;
  3. Building a stronger internal energy infrastructure to respond to disruptions in supply;
  4. Having one European energy voice;
  5. Strengthening emergency response mechanisms and protecting energy infrastructure.

Energy policy has clearly come to the forefront of European concern as the EU seeks policies to coordinate energy security and sustainability. However, are all member states actually prepared to cut their energy ties with Russia and other energy exporters in favor of pursing diversified and renewable energy sources? Currently, the EU spends €1 billion every day for imported fossil fuels and six states rely on Russia as their sole external energy supplier of natural gas. Despite rhetoric that Europe must end its energy dependence on Russia in light of the crisis in Ukraine and pursue renewable resources instead, it remains to be seen whether all member states are prepared to sacrifice this relationship and make a significant investment in decarbonization.

In late April 2014 after the EU and US issued further sanctions on Russia, Austria signed a deal with Gazprom, a Russian energy company headquartered in Moscow, to build the Austrian portion of South Stream, a pipeline from Russia to Southern Europe through the Black Sea, bypassing Ukraine.[xiii] Ironically, Austria has also encouraged Ukraine to reduce its dependence on Russian energy. Since then, however, the EU has made plans to obstruct this construction, citing that support of South Stream does not align with Ukrainian energy interests and gives Russia substantial leverage over European energy.[xiv] Different energy interests risk destabilizing a coordinated and already fragile EU energy policy and give Russia considerable opportunity to further fracture divisions among member states. Because national energy policies cannot generate the changes the EU hopes to see, member states must commit themselves to highly coordinated and binding energy policies that reflect a collective interest a stable future energy environment.

Conclusion

Europe has an aging carbon-reliant energy grid that is in need of an inevitable and costly update, and modernizing infrastructure is a balancing act between sustainability and maintaining energy security and competitiveness. As Europe moves closer to 2050, it must create a comprehensive EU-wide energy policy that addresses the increased costs of renewable energy investment as well as disparities in member states’ financial resources and preparedness to decrease carbon dependency. A focus on renewable resources not only prepares the grid for current and future use but is also imperative to achieving long-term environmental goals. And, decarbonization efforts lead to decreased dependence on external energy resources and stronger internal energy infrastructures.

Reducing dependency on Russian gas and pursuing renewable energy resources cannot solve the Ukraine crisis, but such actions send a clear message to Putin in more permanent ways than sanctions. The EU is no longer willing to accept such unpredictable and aggressive Russian behavior and views the situation as its cue to become more energy self-sufficient. Gazprom’s decision to cut off gas to the Ukraine has shown that energy security and energy efficiency are complimentary goals and that efforts to achieve one coincide with the other as well. As the EU continues its plans to meet 2050 carbon reduction levels, decreased vulnerabilities to energy disruption will make Europe a more stable, secure, and energy efficient Union.

———-

[i]European Commission. Paving the Way for European Energy Security. 05 May 2014. Web. <http://europa.eu/rapid/press-release_IP-14-585_en.htm&gt;

[ii]“Russian EU-bound Gas Flows via Ukraine Normal on Monday-Gazprom.” Reuters. 30 June 2014.

[iii]Blair, David. “Analysis: After Months of Threats, Russia Uses Gas Weapon against Ukraine.” Telegraph. 16 June 2014.

[iv] Lain, Sarah. “Russia’s Gas Deal with China Underlines the Risks to Europe’s Energy Security.” The Guardian. 26 May 2014. <http://www.theguardian.com/commentisfree/2014/may/26/russia-gas-deal-china-europe-energy-security-danger&gt;.

[v]Member States’ Energy Dependence: An Indicator-Based Assessment. European Commission, 2013.

[vi]“The 2020 Climate and Energy Package.” European Commission. 26 June 2014. <http%3A%2F%2Fec.europa.eu%2Fclima%2Fpolicies%2Fpackage%2Findex_en.htm>.

[vii]Ibid.

[viii]Neslen, Arthur. “EU Study Predicts Clean Energy, Climate Failure by 2050.” EurActive. 08 Jan. 2014. <http://ec.europa.eu/clima/policies/g-gas/progress/index_en.htm&gt;.

[ix] “2030 Framework for Climate and Energy Policies.” European Commission. 26 June 2014.

[x]Turner, Sharon. “Good Governance Is Vital to Realising the EU’s 2030 Clean Energy Ambition.” EurActiv. 10 Apr. 2014. <http://www.euractiv.com/sections/energy/good-governance-vital-realising-eus-2030-clean-energy-ambition-301452&gt;.

[xi]“EU Plans to Reduce Russian Energy Dependence.” EurActiv. 21 Mar. 2014. <http://www.euractiv.com/energy/eu-leaders-discuss-reducing-ener-news-534344&gt;.

[xii] Ibid.

[xiii]Dempsey, Judy. “Europeans Are Prolonging Their Dependence on Russian Gas.” Carnegie Europe. 08 May 2014.

[xiv]Rettman, Andrew. “EU Commission Scales up Rhetoric against Russian Gas Pipeline.” EU Observer. 03 June 2014.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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