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The Warsaw Voice » Business » August 29, 2014
Central Europe Energy Partners
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Speaking With One Voice
August 29, 2014   
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Daniel Gros, director of the Centre for European Policy Studies in Brussels, talks to Marek Orzechowski.

Diversifying external energy supplies, upgrading energy infrastructure, completing the EU’s internal energy market, and saving energy—these are the main points of the comprehensive strategy put forward by the European Commission to strengthen the security of supplies. These “new aspects” of the strategy sound good compared to the old ones. However, what is really new in the EU Commission’s paper entitled A New Energy Strategy?
Nothing, the usual mixture of analysis and good intentions. The problems are well known and it is, anyway, difficult to say anything new.

The strategy also highlights the need to coordinate national energy policy decisions, and the importance of speaking with one voice when negotiating with external partners. Yet experience shows that this is not easy to achieve. Is the EU really able to speak with one voice on the crucial issue of energy security?
The problem is well known. But getting the EU to speak with one voice is a long-term process that will take, in the best forecasts, over a decade. The interests of various member states are very different. Most of the EU-15 older member states are nicely diversified, while some of the new member states are over-dependent on Russia, through no fault of their own (those in the Baltics). Others are, at least to a good degree, responsible for their own high dependence, because they are only now starting to think about diversification of sources or fuels (for example, nuclear). Poland is an example of this, but one can also list Bulgaria, Slovakia, and Hungary in this regard.

EU Energy Commissioner Günther Oettinger has famously said: “We must avoid falling victim to political and commercial blackmail... Only concrete actions will help us.” What specific, concrete steps would you recommend to the commissioner?
In theory, the first step should be to develop new critical infrastructure to link markets and open new supply routes. This would mean, however, EU money and the political will to overcome a “NIMBY” (Not In My Back Yard) attitude in terms of power interconnectors. Both are unlikely to be forthcoming.

This is why I feel that one should go for “demand aggregation.” The Poles call this an “Energy Union,” but that is too big a concept. I would plump for an EU EEA-wide gas import agency which would be the only one to make (new) contacts with Gazprom (existing contracts would just run their course). This EU agency would then sell to anybody at the same price (via a pipeline at the EU border). This should increase competition and might trigger more private investment in infrastructure. The task for the European Commission would then be to ensure that the dominant importers do not continue to carve up the market by undermining new infrastructure.

FACTFILE
Daniel Gros is the director of the Centre for European Policy Studies (CEPS) in Brussels. He was an advisor to the European Parliament (1998 to 2005), and a member of advisory bodies to the French prime minister and finance minister—the Conseil Economique de la Nation (2003 to 2005), and the Conseil d’Analyse Economique (2001 to 2003). Since 2002, he has been a member of the Shadow Council organized by Handelsblatt, and for the last nine years, he has been President of San Paolo IMI Asset Management. Gros worked at the International Monetary Fund in the European and Research Departments (1983-1986), then as an economic advisor to the European Commission (1988-1990). He is editor of the journals Economie Internationale and International Finance.
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