Juncker’s Mission to the New Energy Team: Avoiding the hard choices. CEPS Commentary, 24 September 2014

In his mission letter to Arias Cañete, Jean-Claude Juncker asked the designated Commissioner for Climate Action and Energy to focus on further developing EU policy for renewables in order to “be a world leader in this sector” and on promoting the EU Emissions Trading System “to ensure that we reach our climate goals in a cost-effective way”. Furthermore, he would like Alenka Bratušek, the designated Vice-President for Energy Union, to focus on “completing the internal energy market” and on “increasing competition”. In assessing the feasibility and desirability of this remit, this commentary finds these objectives to be very ambitious but more importantly, partially conflicting, given the state of play in EU energy markets.

The 2030 framework on climate and energy - Getting Europe on the right track? EPC Commentary, 30 January 2014

Climate vs competitiveness? The European Commission published its proposal on the 2030 climate and energy framework on 22 January. Reflective of the current economic climate, it was accompanied by a report on energy prices and the Commission decided not to propose regulation on shale gas but to issue recommendations on environmental standards. The same day also saw the publication of a communication “For a European Industrial Renaissance”. Climate considerations no longer drive the agenda. The enthusiasm of 2007, when the “20/20/20” climate and energy targets were set for 2020, has diminished. The new reality has brought competitiveness to the top of the EU’s priority agenda.

Russian belligerence and Europe's energy security. EPC Commentary, 19 March 2014

Recent Russian actions have unequivocally underlined that it does not play by the rules. This provides a wake-up call and should alert not only the countries of the former Soviet Union, but the EU as a whole. For the EU, this has one clear implication: it cannot continue to depend on an unreliable energy supplier, which is prone to use energy as a political tool. Luckily for the EU, summer is approaching and Europeans will need less Russian gas for heating. However, potential gas supply disruptions remind Europe of its energy vulnerabilities, and of the 2006 and 2009 winters, when Russia’s decision to stop the flow of gas to Ukraine led to supply crises in a number of EU Member States. As the EU’s heads of states and governments gather in the European Council on 20 and 21 March, the developments in Ukraine and the possible Russian illegal annexation of Crimea will undoubtedly dominate the discussions. Securing energy supply will figure on the agenda, but energy should also be seen as a means to pressure Russia. It is important that the Member States use the occasion to commit to working together on energy security. If this is addressed in a holistic way, it can also support European industry and climate policy – the other issues on the Council agenda that run the risk of being forgotten.

Integrating Ukraine and Moldova in EU's energy security plans. EPC Commentary, 23 June 2014

Vulnerability in the EU’s internal energy market has been made starker since the Russia-Ukraine crisis, highlighting specifically the importance of upstream energy linkages. March this year saw the European Council calling for a comprehensive plan to reduce the EU’s energy dependence. The European Commission responded to this call with a communication on Energy Security published on 28 May, in time for another European Council at the end of June, at which a decision is anticipated.

Energy and climate - What is the new European Commission thinking? EPC Commentary, 30 September 2014

A visible change of priorities and re-structuring of portfolios in the new European Commission have raised questions about related policy implications especially for climate and energy policies. On the one hand, it is seen that the new structure with Vice Presidents as team leaders for groups of Commissioners could encourage much needed policy coordination between policy areas, such as climate and energy policies. At the same time there are questions over what this could mean for political priorities, to what extent the Vice Presidents will be able to guide policy-making and how responsibilities will be divided. No matter what the structure of the Commission, it is in the EU’s interest to ensure that its climate and energy policies form a framework for action that helps to reduce global emissions, fight climate change locally and globally, secure energy supplies, promote wider socio-economic interests and increase competitiveness – all at the same time.

Too high and too low: The problems with energy prices in the EU. OSW Commentary No. 122, 03.12.2013

On 11 October, the top executives of ten European energy companies, which jointly own about half of the European Union’s electricity generating capacity, warned that “energy security is no longer guaranteed” and once again called for changes to EU energy policy. Due to persistent adverse conditions in the energy market (linked to, for example, the exceptionally low wholesale energy prices) more and more conventional power plants are being closed down. According to sector representatives, this could lead to energy shortages being seen as early as this winter. Meanwhile, in an interview with The Daily Telegraph published in September of this year, the European industry commissioner Antonio Tajani warned – in a rather alarmist tone – of the disastrous consequences the rising energy prices could have on European industry. Amongst the reasons for the high prices of energy, Tajani mentioned the overambitious pace and methods used to increase the share of renewables in the sector. In a similar vein, EU President Herman Van Rompuy has highlighted the need to reduce energy costs as a top priority for EU energy policy1. The price of energy has become one of the central issues in the current EU energy debate. The high consumer price of energy – which has been rising steadily over the past several years – poses a serious challenge to both household and industrial users. Meanwhile, the declining wholesale prices are affecting the cost-effectiveness of energy production and the profits of energy companies. The current difficulties, however, are first and foremost a symptom of much wider problems related to the functioning of both the EU energy market as well as to the EU’s climate and energy policies.

Rethinking the external dimension of the European Energy Policy. OSW Report, January 2011

The external dimension of the EU Energy Policy, the question about the challenges regarding the effectiveness of the actions in this field and the search for innovative solutions are now one of the key-issues being raised during European energy policy discussions. The European Commission brought up the issue in the "Energy 2020 - A strategy for competitive, sustainable and secure energy" and questions about the most important directions, goals and tools of the external energy policy are the subject of public consultations announced in December 2010 by DG Energy (the final effect of the consultation and the EC’s work in this field is to be published by in 2011). The external dimension of the EU’s energy policy is also set to be one of the priorities of the Polish Presidency of the EU Council in the second half of 2011.

Between energy security and energy market integration. Guidelines for the future development of the EU’s external energy policy in Europe’s neighbourhood. OSW Report, June 2011

For many years the European Union has been improving the efficient use of energy resources and yet the demand for energy in the EU continues to increase. When Europe belonged to one of the world’s key energy markets with relatively easy access to energy resources, growing energy needs were not seen as a source of concern. Today, however, as the competition for energy resources is intensifying and the global position of the EU energy market is being challenged by growing economies in the developing countries, above all China and India, the EU needs to adopt bold policies to guarantee the sustainable supply of energy. This report argues the EU needs to develop a fully-fledged external energy policy; i.e. a common, coherent, strategic approach that build bridges between the interests and needs of the EU integrated energy market on the one hand and supplier countries on the other. The EU’s external energy policy has two main objectives. The first one is to ensure a sustainable, stable and cost-effective energy supply. The second is to promote energy market integration and regulatory convergence with neighbouring countries (often but not always this supports the achievement of the first objective). However, in order to improve its effectiveness, the EU’s external energy policy needs to be seen in a broader economic and political context. Any progress in energy cooperation with third countries is contingent upon the EU’s general stance and offer to those countries.

Germany's energy transformation: difficult beginnings. OSW Report, March 2013

Initiated in May 2011, several months after the Fukushima nuclear disaster, Germany’s energy transformation (Energiewende) has been presented as an irrevocable plan, and – due to the speed of change required – it represents a new quality in Germany’s energy strategy. Its main objectives include: nuclear energy being phased out by 2022, the development of renewable energy sources (OZE), the expansion of transmission networks, the construction of new conventional power plants and an improvement in energy efficiency.The cornerstone of the strategy is the development of renewable energy. Under Germany's amended renewable energy law, the proportion of renewable energy in electricity generation is supposed to increase steadily from the current level of around 20% to approximately 38% in 2020. In 2030, renewable energy is expected to account for 50% of electricity generation. This is expected to increase to 65% in 2040 and to as much as 80% in 2050. The impact of the Energiewende is not limited to the sphere of energy supplies. In the medium and long term, it will change not only to the way the German economy operates, but also the functioning of German society and the state. Facing difficulties with the expansion of transmission networks, the excessive cost of building wind farms, and problems with the stability of electricity supplies, especially during particularly cold winters, the federal government has so far tended to centralise power and limit the independence of the German federal states with regard to their respective energy policies, justifying this with the need for greater co-ordination. The Energiewende may also become the beginning of a "third industrial revolution", i.e. a transition to a green economy and a society based on sustainable development. This will require a new "social contract" that will redefine the relations between the state, society and the economy. Negotiating such a contract will be one of the greatest challenges for German policy in the coming years.

Turcja - korytarz transzytowy dla surocow energetycznych do UE? Prace OSW 17/2005. = Turkey - an energy transit corridor to the EU? OSW Study 17/2005

1. The priority of Ankara's energy policy is to make Turkey an important transit corridor for energy resources transported to the EU. Turkey wishes to play an active role in the distribution and sale of gas and oil flowing across its territory. 2. Transit and sale of energy resources, and gas in particular, are expected to provide a major source of income for Turkey and a tool by which Ankara will be able to build its position in the region and in Europe. 3. Since Turkey is an EU candidate country, Brussels will probably welcome Turkey's role as a transit corridor as much as Ankara will. 4. The success of Ankara's energy strategy hinges on developments in Turkey's internal energy market. 5. It also depends on a number of external factors including: - Export policies and internal situation in producer countries. Most importantly, it depends on: a. Russia and its energy policy priorities b. Stability in the Middle East. - Policies of consumer countries, including the EU in particular. - Policies of world powers present in the region (USA).

Energy Union: Can Europe learn from Japan’s joint gas purchasing? CEPS Commentary, 11 December 2014

Japan’s two major electricity producing companies reached a preliminary agreement recently to establish a joint venture for the procurement of fossil fuel resources, primarily liquefied natural gas (LNG). The authors of this commentary ask whether this commercial initiative could serve as an example to Europe of how to increase the negotiating power of individual EU member states. They conclude that a private joint gas procurement company may indeed offer a solution for EU member states in Central and Eastern Europe, instead of yet another source of confrontation. Given the political volatility in the region, it could well be the key to balancing out the need for security of supply with an offer to guarantee security of demand, thereby creating the climate for stable commercial relations.

The natural resources deficit: the implications for German politics. OSW Commentary No. 46, 2011-02-08

Falling amounts of natural resources and the ‘peak oil’ question, i.e. the point in time when the maximum rate of extraction of easily-accessible oil reserves is reached, have been among the key issues in public debate in Germany on all levels: expert, business and – most crucially – the government level. The alarming assessments of German analysts anticipate a rapid shrinkage of oil reserves and a sharp rise in oil prices, which in the longer term will affect the economic and political systems of importer countries. Concerns about the consequences of the projected resource deficit, especially among representatives of German industry, are also fuelled by the stance of those countries which export raw materials. China, which meets 97% of global demand for minerals crucial for the production of new technologies, cut its exports by 40% in summer 2010 (compared to 2009), arguing that it had to protect its reserves from overexploitation. In 2009 the value of natural resources Germany imported reached €84 billion, of which €62 billion were spent on energy carriers, and €22 billion on metals. For Germany, the shrinkage of resources is a political problem of the utmost importance, since the country is poor in mineral resources and has to acquire petroleum and other necessary raw materials abroad1. In autumn 2010, the German minister of economy initiated the establishment of a Resources Agency designed to support companies in their search for natural resources, and the government prepared and adopted a national Raw Material Strategy. In the next decade the policy of the German government, including foreign policy, will be affected by the consequences of the decreasing availability of natural resources. It can be expected that the mission of the Bundeswehr will be redefined, and the importance of African states and current exporter countries such as Russia and China for German policies will increase. At the same time, Germany will seek to strengthen cooperation among importer countries, which should make pressure on resource-exporting states more effective. In this context, it can be expected that the efforts taken to develop an EU resource strategy or even a ‘comprehensive resource policy’ will be intensified; or at least, the EU’s energy policy will permanently include the issue of sourcing raw materials.

Bulgarian-Russian games in the energy sector: an outcome is getting closer. OSW Commentary No. 61, 2011-10-5

Bulgaria and Russia are entering the final phase of setting the conditions of their co-operation in the energy sector. A new gas contract is being negotiated because the currently applicable agreements will have expired by the end of 2012. The fate of two major energy projects – whose implementation depends on good co-operation between Sofia and Moscow: the Burgas– –Alexandroupolis oil pipeline and the construction of a Bulgarian nuclear power plant in Belene with Russian participation – is currently being decided. Another issue ever-present on the agenda is the future of the South Stream gas pipeline promoted by Russia, which is to run through Bulgarian territory. The outcome of all the aforementioned discussions and negotiations will determine for years the model of Bulgarian-Russian relations and may strongly affect the shape of the oil, gas and electricity markets in South-Eastern Europe.

The expensive energy revolution in Germany. The implementation of the Energiewende is behind schedule. OSW Commentary No. 77, 2012-05-10

One year after the events of Fukushima the implementation of the new German energy strategy adopted in the summer of 2011 is being verified. Business circles, experts and publicists are sounding the alarm. The tempo at which the German economy is being rearranged in order that it uses renewable energy sources is so that it has turned out to be an extremely difficult and expensive task. The implementation of the key guidelines of the new strategy, such as the development of the transmission networks and the construction of new conventional power plants, is meeting increasing resistance in the form of economic and legal difficulties. The development of the green technologies sector is also posing problems. The solar energy industry, for example, is excessively subsidised, whereas the subsidies for the construction of maritime wind farms are too low. At present, only those guidelines of the strategy which are evaluated as economically feasible by investors or which receive adequate financial support from the state have a chance of being carried through. The strategy may also turn out to be unsuccessful due to the lack of a comprehensive coordination of its implementation and the financial burden its introduction entails for both the public and the economy. In the immediate future, the German government will make efforts not only to revise its internal regulations in order to enable the realisation of the energy transformation; it is also likely to undertake a number of measures at the EU forum which will facilitate this realisation. One should expect that the German government will actively support the financing of both the development of the energy networks in EU member states and the development of renewable energy sources in the energy sector.

A New Euro-Mediterranean Energy Roadmap for a Sustainable Energy Transition in the Region. MEDPRO Policy Paper No. 3, February 2013

This paper addresses the urgent need for a sustainable energy transition in the southern and eastern Mediterranean region. It analyses the unsustainable burden of universal energy subsidies and calls for new development paths unlocking the huge potential for low-cost energy efficiency and demand-side management as well as for renewable energy. It argues that a new structure of regional and interconnected energy markets is needed. It then proposes some original approaches regarding the financing of this sustainable energy transition and finally calls for an ambitious, Euro-Mediterranean Energy Roadmap, which should contribute not only to the economic and environmental development of the region, but also to its social and political stability.