German companies strengthen their cooperation with Russian gas suppliers. OSW Commentary No. 64, 2011-10-24

Germany’s decision to give up the use of nuclear energy will force it to find a conventional low-carbon energy source as a replacement; in the short term, in addition to coal, this is likely to be gas. Due to their continued high debt and the losses associated with the end of atomic power, German companies will not be able to spend large funds on investing in conventional energy. First of all, they will aim to raise capital and repay their debts. The money for this will come from selling off their less profitable assets; this will include sales on the gas market. This will create opportunities for natural gas exporters and extraction companies such as Gazprom to buy back some of the German companies’ assets (electricity companies, for example). The German companies will probably continue to seek to recover the costs incurred in the investment projects already underway, such as Nord Stream, the importance of which will grow after Russian gas imports increase. At the same time, because of their debts, the German companies will seek to minimise their investment costs by selling some shares on the conventional energy market, to Russian corporations among others; the latter would thus be able to increase their stake in the gas market in both Western (Germany, Great Britain, the Benelux countries) and Central Europe (Poland, the Czech Republic). It is possible that while establishing the details of cooperation between the Russian and German companies, Russia will try to put pressure on Germany to give up competing projects such as Nabucco. However, a well-diversified German energy market should be able to defend itself against attempts to increase German dependence on Russian gas supplies and the dictates of high prices.

A Life Cycle Approach to Investor Protection. ECMI Working Paper No. 1/September 2014

The market for investment products, including both securities and investment funds, is fraught with difficulties for consumers in terms of the ease of comparing products, trust in suppliers and consumer satisfaction. A comprehensive approach to investor protection, developed around the lifecycle of a financial product, may offer the investor greater protection during an investment’s life span. This paper proposes a new approach to investor protection, building on a review of major market failures affecting the origination, distribution and sale of financial products and based on a review of the relevant scientific literature and country experiences. The application of a ‘know-your-product’ principle at origination, a narrower ‘default rule’ for best execution and an ex-ante distinction between advice and ‘information-only’ services are among the options discussed in this paper to enhance the investor protection framework over the lifecycle of a financial product.

Security of Russian gas supplies to the EU - the question of infrastrucutral connections. OSW Point of View, February 2005

The energy security of countries importing energy resources depends largely on the shape and quality of operational transport connections. This is particularly important in the case of natural gas supplies. Natural gas is transported mostly by gas pipelines which permanently connect gas producers and consumers. Thus Europe as a consumer is "tied" to certain gas suppliers for anywhere between a dozen and several tens of years. As their own resources are becoming depleted, the EU Member States get increasingly dependent on import of natural gas. The present paper discusses the existing and projected gas transport routes from Russia to the EU. The first part deals with the importance of gas exports to the economy of the Russian Federation, and the second delves into the EU Member States' dependence on gas imports. Then this paper examines the differences in perceiving the energy security issue between the old and the new Member States, those differences stemming from the different degrees of their dependence on Russian supplies. In the third part, two new transport route projects for Russian gas supplies to the EU are compared and it is argued that from the point of view of the Community's interests, the Yamal gas pipeline is a better solution than the North European (Trans-Baltic) gas pipeline.

The EU internal market - a stake or a tool in European-Russian gas relations. OSW Commentary No. 54, 2011-06-24

Since 2010 we have observed a new quality in EU energy policy. It is related to the European Commission’s more or less direct engagement in the bilateral gas relations of a part of the new member states – Poland, Bulgaria and Lithuania – with Russia. Although the long term outcome of this activity of the EC is as yet unclear it seems to be important for several reasons. Firstly it might increase the possibilities of the enforcement of the EU’s directives liberalising the internal gas market and specifically their implementation in individual gas agreements with suppliers from third countries (Gazprom). The consistency and determination of the EC in this field may be decisive for the future direction and depth of the liberalisation of the EU gas market. Furthermore, present developments may lead to an increase in EU and specifically EC competence in the field of energy policy, especially its external dimension. So what lessons can we draw from recent Commission activities on the following issues: – Implementing EU gas market 2nd and 3rd liberalisation packages and their main provisions – EU energy policy and its external dimension – recent developments and the EU’s role – EU-Russia gas relations – where Russian and EU interests diverge.

Riding or Reaping the Whirlwind? An Account of the EU’s Engagement with Insecurity in Northern Nigeria. EU Diplomacy Paper No. 9, November 2014

The relations of the European Union (EU) with Africa are increasingly spreading beyond the domain of humanitarian and development cooperation. The continent’s growing potential is producing vast webs of interlinkages in the realms of energy and commerce, among others. At the same time, such interdependencies bring with them increased vulnerabilities to insecurity on the continent. Nigeria exemplifies such a dilemma. The country has just taken the top spot as Africa’s largest economy. Of late, however, violent Islamic extremism ravages the north of the country, threatening the stability of one of Europe’s foremost energy suppliers and a growing trade partner. Thus, this paper sets out to uncover the EU’s response to such a crisis, as well as examining the factors lying behind this response. While the study argues that the issue is potentially ‘Europeaniz-able’ from a member state perspective, deep engagement is seen to be held back by the absence of an effective entry point for securitization with this important ally, as well as the intractability of the EU’s purported multi-functional approach to the idiosyncrasies of the conflict in question, in which not only transnational terrorist groups, but also the central government are centrally implicated in deepening insecurity.

Energy efficiency: the ever neglected priority of the European energy strategy. Egmont Paper No. 66, June 2014

Summary. Energy saving has been a stated policy objective of the EU since the 1970s. Presently, the 2020 target is a 20% reduction of EU energy consumption in comparison with current projections for 2020. This is one of the headline targets of the European Energy Strategy 2020 but efforts to achieve it remain slow and insufficient. The aim of this paper is to understand why this is happening. Firstly, this paper examines the reasons why public measures promoting energy efficiency are needed and what form these measures should optimally take (§ 1). Fortunately, over the last 20 years, much research has been done into the famous ‘energy efficiency gap’ (or ‘the energy efficiency paradox’), even if more remains to be done. Multiple explanations have been given: market failures, modelling flaws and behavioural obstacles. Each encompasses many complex aspects. Several types of instruments can be adopted to encourage energy efficiency: measures guaranteeing the correct pricing of energy are preferred, followed by taxes or tradable white certificates which in turn are preferred to standards or subsidies. Information programmes are also necessary. Secondly, the paper analyzes the evolution of the different programmes from 2000 onwards (§ 2). This reveals the extreme complexity of the subject. It deals with quite diverse topics: buildings, appliances, public sector, industry and transport. The market for energy efficiency is as diffuse as energy consumption patterns themselves. It is composed of many market actors who demand more efficient provision of energy services, and that suppliers of the necessary goods and know-how deliver this greater efficiency. Consumers in this market include individuals, businesses and governments, and market activities cover all energy-consuming sectors of the economy. Additionally, energy efficiency is the perfect example of a shared competence between the EU and the Member States. Lastly, the legal framework has steadily increased in complexity, and despite the successive energy efficiency programmes used to build this framework, it has become clear that the gap between the target and the results remains. The paper then examines whether the 2012/27/EU Directive adopted to improve the situation could bring better results. It briefly describes the content of this framework Directive, which accompanies and implements the latest energy efficiency programme (§ 3). Although the Directive is technically complex and maintains nonbinding energy efficiency targets, it certainly represents an improvement in several aspects. However, it is also saddled with a multiplicity of exemption clauses and interpretative documents (with no binding value) which weaken its provisions. Furthermore, alone, it will allow the achievement of only about 17.7% of final energy savings by 2020. The implementation process, which is essential, also remains fairly weak. The paper also gives a glimpse of the various EU instruments for financing energy efficiency projects (§ 4). Though useful, they do not indicate a strong priority. Fourthly, the paper tries to analyze the EU’s limited progress so far and gather a few suggestions for improvement. One thing seems to remain useful: targets which can be defined in various ways (§ 5). Basically, all this indicates that the EU energy efficiency strategy has so far failed to reach its targets, lacks coherence and remains ambiguous. In the new Commission’s proposals of 22 January 2014 – intended to define a new climate/energy package in the period from 2020 to 2030 – the approach to energy efficiency remains unclear. This is regrettable. Energy efficiency is the only instrument which allows the EU to reach simultaneously its three targets: sustainability, competitiveness and security. The final conclusion appears thus paradoxical. On the one hand, all existing studies indicate that the decarbonization of the EU economy will be absolutely impossible without some very serious improvements in energy efficiency. On the other hand, in reality energy efficiency has always been treated as a second zone priority. It is imperative to eliminate this contradiction.