International Energy Security Challenges for Europe in the Coming Years

Abstract:The European Union's approach to "energy security" has strongly focused on diversifying its gas import sources and routes, and mitigating the risks of supply disruptions from Russia at home. Yet gas markets have changed dramatically recently: Liquefied Natural Gas trade and new suppliers of gas have emerged. The shale gas revolution in the United States has made markets more liquid. Today's key energy security challenge is domestic: increased recourse to intermittent sources of renewable energy has destabilized electricity markets and blackouts cannot be excluded. To prepare for the future, the EU will need to introduce coherence in its climate change policies, as recourse to coal - the most CO2 emitting of all fossil fuels - is rising again. It could also engage more closely with China and India to deal with shared concerns about rising oil and gas import dependency and pollution from coal, and rethink its approach to Russia and other energy suppliers in its neighborhood.The international and European energy landscape has significantly changed in the last five years. The European Union's approach to "energy security," strongly focused on diversifying its gas import routes and sources and mitigating the risks of supply disruptions from Russia, its main supplier of hydrocarbons, is now facing new market realities.The deepening economic and financial crisis in the EU, the so-called "shale gas revolution" in the United States, deepening rifts over nuclear power in Europe after the 2011 nuclear power plant accident in Fukushima Daiichi [Japan], the rising recourse to coal in the emerging economies and to some extent in Europe, and the accelerating shift of the world's economic and geopolitical gravity to the Asia-Pacific are questioning some key assumptions underpinning some of Europe's current energy policies.If energy security is defined as the ability for an energy system to "keep the lights" on - in other words to ensure an uninterrupted supply of energy at stable and affordable prices - then a shift of policy priorities will need to occur soon. That shift will also require to integrate climate change and cost issues.Recent approach to energy security in Europe and its broader policy contextAn energy "security" policy cannot be conceived in isolation from wider considerations on the energy mix of an economy, energy-related environmental issues (notably climate change] and the overall structure and functioning of energy markets. There needs to be internal coherence in the way these policies are conceived. In the EU, this is not an easy task to as the treaties leave energy supply strategies and energy mix decisions to the member states, while market regulation, and, increasingly, climate policy, are dealt with at EU level.Brussels' recent main focus on the energy policy front has been the completion of the single market in energy and fighting climate change through mandatory C02 and renewables targets. The 2009 Third Energy Package epitomizes this approach. The most notable measure in the Third Energy Package has been the obligation for vertically integrated energy companies in the gas and electricity sector to break up ("unbundle"], their production, transmission and distribution activities. On the climate policy front, the package included the introduction of binding targets for renewable energies and C02 emissions to 2020 (20 per cent of the energy mix and 20 per cent reduction compared to 1990]. Previous measures have included the introduction of a C02 emissions trading scheme (ETS).EU energy policies are projected into the bloc's international engagements.`One international dimension of the EU's approach to energy market regulation has been the expansion of the energy body of rules - acquis communautaire - to its neighbors in the Balkans (since 2005] and the Eastern partners more recently via the Energy Community. In return the partners gain access to the EU's markets and to financial and other assistance, for example to finance for infrastructure development. …