Memo: A Washington View on Europe’s Energy Union
WASHINGTON—The United States has long had a strong interest in Europe’s energy security as an essential component of our security alliance. Washington worked closely with Europe in the creation of the International Energy Agency in 1974 to coordinate a collective response to oil supply disruptions. They partnered in promoting oil and gas flows from the Caspian through non-Russian routes to Europe, and have collaborated on energy security and climate in the G7 and G20. They also established the U.S-EU Energy Council that fosters cooperation on energy policies and research on clean energy technologies. While Europe has made great progress in enhancing its energy security, the conflict in Ukraine has highlighted remaining vulnerabilities, with U.S. Vice President Joe Biden calling out “Russia’s track record in using the supply of energy as a foreign policy weapon” in November.
It is natural that Washington should support the goals of the Energy Union, one of the top priorities of the European Commission under the leadership of Vice President Maroš Šefčovič. The Energy Union is meant to achieve a more competitive, secure, and sustainable European energy policy, reforming how Europe produces, transports and consumes energy. It will help complete Europe’s internal market, reduce import dependence, boost energy efficiency, and increase its use of renewables.
Šefčovič intends to deliver a framework strategy for the Energy Union on February 25 with completion of the EU’s internal energy market as its backbone, and a strong governance system to ensure its implementation. While non-members of the EU are not involved directly in shaping the content of the Energy Union, a formal contribution by Washington to the debate would likely include:
- A strong call to expeditiously complete the internal energy market outlined in the EU’s Lisbon Treaty. Šefčovič rightly views the EU as too fragmented into national silos, meaning that some parts of the continent remain insufficiently integrated into the energy system.
- Urging prioritization of a handful of energy infrastructure projects that would make a real difference, such as a Croatian liquefied natural gas terminal, the Greece-Bulgaria gas interconnector, and electricity interconnectors in the Baltics — rather than the 30-odd priorities currently on the table — and ensure they are funded.
- Advising the Europeans to speed up the finalization of simple, harmonized rules for gas and electricity trading in Europe and ensure they are implemented.
- Reminding EU member states of the value of a truly integrated European energy market. It would benefit all Europeans by increasing competition, which puts downward pressure on prices and increases energy security by diversifying sources, delivery routes, and types of energy.
- Recommending more transparency in opaque import contracts, especially of natural gas from Russia, and to end once and for all Gazprom’s discriminatory pricing and market abuse. When Gazprom becomes an ordinary supplier, with its prices determined by market conditions and without political surcharges, Europe will have made a huge leap forward in energy security.
While Washington might be reluctant to weigh in directly regarding how the EU organizes itself to address these issues, it would likely encourage Europeans to strengthen their work on common policies. As Biden noted last November, the EU’s energy stress tests last year “underscored the importance of coordination.” Stronger regional cooperation arrangements would mitigate energy security risks and more evenly distribute the costs of decarbonization of the energy sector.
In that vein, Washington would applaud the decision to create a working group on energy security in Central and Southeast Europe following Russia’s announcement that it was cancelling its South Stream pipeline project. This working group is to develop an action plan for advancing cooperation, integrating gas markets and enhancing physical interconnections in Central and Southeast Europe (where linkages are the weakest in the EU), and how to finance the work. If this plan provides clarity on infrastructure priorities and identifies funding, it could become a model for other regions, and perhaps for Europe as a whole. As for the much-touted common purchasing of gas to enhance the negotiating power of EU members, its objectives could be met largely by greater contract transparency, effective enforcement of EU rules (including an end to prohibitions on re-export of gas), and continued movement toward hub pricing.
Above all, Washington would be pledging its continued support as Europe’s closest partner in addressing our common energy challenges. A more resilient European energy market is a core security objective for the transatlantic community.
The views expressed in this GMF publication are the author’s views alone and are not those of GMF, the Department of State, or the U.S. Government.
The views expressed in GMF publications and commentary are the views of the author alone.