Energy Policies of the EU: The Dilemma of Sovereignty and Unity

The European Union, rooted in coal and steel which are the main raw materials of industry, was founded in the wake of the Second World War. During this process, the EU developed a common market and a complex structure within enlarged union borders, as well as made efforts to increase its competitive capacity. In this period, environmental problems, the development of common and competitive market dynamics, and the resolution of the supply problem were the central concerns in the Union’s policies. According to a report prepared by the Robert Schuman Center in 2010, these three main factors were described as the “three mantras” of Kyoto, Lisbon, and Moscow.

These three mantras are prominent in terms of understanding the EU’s present energy policies. First, as far as the Kyoto Protocol is concerned, the signatory EU member countries promised to cut carbon emissions by 20% as compared to the 1990 standards. Then, the EU more ambitiously set the goal of cutting them by 30%, and by 2050, the EU is planning to cut its carbon emission rates by 80-90%. Therefore, as the largest economic bloc in the world, the EU has to pursue common central policies in agriculture, aviation, industry, as well as innovation technologies. In that respect, the competitive and active market which lies at the roots of the EU has considerable importance, and is also related to the second mantra referring to the Lisbon Process.

Parallel to the development of common market efforts, the EU has undergone a liberalization process which was carried out throughout the 1990s and expanded on in the 2000s. In this period, concrete measures with regards to the transit passing of electricity and natural gas plus the promotion of a competitive market were decisively adopted. Legal regulations which will strengthen competitiveness have started to take shape within this context. There were also two related articles in the Lisbon Treaty which came into force in 2010. The first of them was the assurance of market operation and the other was the interconnection of energy infrastructures.

In addition, the last mantra Moscow indicates high levels of EU dependence and its quest for new policies in this regard. The risks of nearly 80% of EU gas passing through Ukraine as well as Russia’s efforts to strengthen its monopolistic position can be counted as the main elements of that dilemma.  

Hybrid Structure of EU Energy Policies

Within the latest enlargement waves, the EU has partially transformed into a hybrid structure. Until 2004, the 15 most developed countries and developing countries came together under the EU umbrella. As a result of this, differences in economy and foreign policy in particular have become more explicit. The economic and political cost of those differences was limited for France and Germany compared to Eastern and Central European countries, as the latter faced crucial problems.

There is a similar picture in energy policies, where economy and foreign policy dimensions more clearly come to the fore. While Eastern European countries were forced to prompt transformation in energy policies within environmental considerations; on the other hand, politics being pursued by Brussels remain notably weak in terms of foreign policy coordination.

One of the most fundamental problems in coordination is the relations with Russia. There are clear distinctions in the ways of searching for alternatives among countries such as Poland, which gets nearly 65% of its natural gas from Russia, and Germany which successively achieved its supply diversification. Considering the fact that Poland needs to increase its natural gas consumption as a result of new-term environmental policies, it has to diminish coal related energy production. Warsaw’s desire to turn to non-Russian suppliers brings a significant dilemma, because locomotive powers such as Germany and France show an indifferent stance toward Poland in alternative projects. Energy diplomacy among Russia and Germany is the best example of this situation. In this new period, Germany wants to be an important energy hub via the North Stream, which enables Russia to reach Europe through the Baltic Sea. As a consequence, while Russia achieves direct entrance into Europe, in the long term, Eastern and Central European countries will be the sides that are negatively affected by this close relationship. Russia, as a country that diversified its customers, will be in less need of Eastern and Central European countries, and will therefore have the power to impose the exact cost that it wants when signing new contracts with those countries.

Considering the advantageous bilateral relations between Russia and Germany, Berlin is generally giving more importance to its own interests rather than EU interests. By the way of new contracts, German-Russian relations have prospered. However, instead of negotiating with the EU as a monopsony power, Russia strengthens its monopolistic role within the help of expanding bilateral relations through energy contracts. Second, Russia, as an energy supplier of Germany which is the locomotive of the EU, can also find appropriate ground for lobbying to make Brussels indifferent to alternative projects such as Nabucco.

According to the 2010 European Commission report, the EU has the goal of cutting carbon emissions without any increase in costs by 40% in 2030 and 60% in 2050 compared to the levels of the 1990s. In order to attain those goals, apart from renewable energy technologies, natural gas stands as a vital conventional resource. Regarding natural gas, under present technological capabilities, today it seems quite difficult to find other alternatives to supplement Russia. However, it does not mean that there are no other ways that help to diminish Russian bargaining power. Especially when taken account into account the fact that Middle Eastern countries, Iran, and Iraq, have not integrated into the West, it is clear that there would be prominent developments in the following period. The problematic issue is that despite foreign policy mechanisms which were intended to govern the EU after Lisbon having formed institutionally, they are still quite far from active operation.

As a consequence, although the EU has ambitious goals in terms of energy policies, it shows a weak stance, especially in diplomatic channels. In other words, although the EU aims to attain harmony in its energy policies as in Beethoven’s Ninth Symphony, it only comes into a picture prevailing in cacophony. May be the European Energy Community can be a successful initiative in this sense, but it is up to the political will that shape the effectiveness of this mechanism.

Hasan Selim Özertem

Center for Energy Security Studies

This peace was translated by Betul Buke Karacin.

Note: This analysis is an expanded version of the article, which was published in Analist, August 2011.