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The Warsaw Voice » Business » August 1, 2014
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The European Energy Union: Revitalizing Debate
August 1, 2014   
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By Friedbert Pflüger

At the end of March, as a result of developments in Ukraine that are of particular concern to Poland, Prime Minister Donald Tusk called for the establishment of a European Energy Union intended to better face emerging energy challenges. According to Tusk, the main rationale behind such an institution would be to confront the Russian dominance on the gas market with a strong European counterpart in charge of resource purchases—thereby establishing a balance.

To this end, Tusk presented six goals of the envisaged European Energy Union: conducting joint negotiations with outside energy suppliers, enhancing solidarity mechanisms, improving energy infrastructure, making full use of fossil fuel sources available in Europe, diversifying oil and gas imports, and contributing to the energy security of EU neighbors. While this call for a European Energy Union is still far from finding the broad support it needs to become the foundation of a new European institution, it has already achieved a great accomplishment—it has revitalized the debate on a common energy policy and a European energy market. The jury is still out on its future impact.

At the Energy Security Summit of the Munich Security Conference held at the end of May in Berlin, German Foreign Minister Frank Walter Steinmeier addressed and qualified the Polish proposal. While Minister Steinmeier underlined that currently the most important element of the plan is completing the single European energy market, he warned against measures that could impair competition by reinvigorating nationalized energy agencies and the creation of cartels. Speaking at the same conference, European Energy Commissioner Günther Oettinger acknowledged that a policy aiming at a uniform gas price in the common market is desirable. However, he was cautious about embracing the idea of establishing a single institution regulating gas imports as the best course of action to reach this goal. Rather, in his speech, Mr. Oettinger put an accent on the need for increasing storage and diversification—which are both also constitutive parts of the Tusk plan.

Tusk’s keystones are definitely important aims of a European energy policy and I am confident that they have the potential to contribute to improving energy security. But probably not even Tusk himself expected all of his proposals to be immediately and wholly adopted by European national governments and Brussels. For European politics, the two most important factors for energy security seem to remain competition and diversification—even going beyond the Southern Corridor and the Caspian Sea Region, as Commissioner Oettinger suggested.

In the medium to long run, the Trans-Adriatic Pipeline (TAP), Azerbaijan, the Eastern Mediterranean, Iraqi Kurdistan, Iran and even U.S. liquefied natural gas might offer viable alternatives to Russian gas. Not only will such diversification reduce the reliance on single suppliers, it will also strengthen European bargaining power and lower prices. It should be the role of the EU to support such developments without infringing on competition or alienating long-standing partners—despite advances in renewables and diversification, Russian gas will remain essential for covering European energy demand for years to come.

Both articles were originally published in the June 2014 CEEP Report.
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