Tuesday, September 30, 2014


Commentary

Energy-Hungry Europe Misses Another Wake-Up Call

Gas pipeline at a compressor station in Boyarka, Ukraine
Gas pipeline at a compressor station in Boyarka, Ukraine
By Alexandros Petersen
It has become cliche to say that the latest natural-gas row between Russia and Ukraine should be a wake-up call for the EU in its sluggish struggle to secure energy supplies devoid of Kremlin control.

A similar flap between Moscow and Kyiv in 2006 was supposed to have set off alarm bells. But, it did not. And, this latest crisis will not either.

Last week's Nabucco summit in Budapest was a case in point: lots of talk, but no action toward developing the natural-gas route that would bring Caspian resources to the EU via Turkey. Concerted political will from Western European governments to realize such projects faces formidable obstacles: powerful business interests in Germany; personal relationships at the highest political levels in Italy; "France-first" policies emanating from Paris; and a general suspicion across the board of potential alternative suppliers like Azerbaijan, Turkmenistan, and Iran.

A major shift in Europe-wide energy policy must include the powerful Western European governments. It will also require a strategic shift in the long-term calculations of European decision-makers. Such a shift, however, may not be far off. Even though it was largely eastern EU member-states that froze due to gas cut-offs this time around, future cuts may affect the entire union.

It is not only that Russia's Kremlin-controlled energy monopoly Gazprom has the power, for example, to shut off the heat in 40 percent of German homes. Europe's growing supply problem lies in Russia's gross energy inefficiency. The world's greatest natural-gas exporter is also the world's most energy intensive (i.e. wasteful) developed economy.

Add to that Russia's growing domestic energy demand and declining production in every major gas field. According to the World Bank, these trends are likely to continue and Russia will not be able to continue gas exports to Europe at current levels. The continent as a whole is set to suffer.

Prudence, Not Geopolitics

Greater European unity on energy security may not, however, require a more confrontational foreign policy approach to Russia -- a prospect dreaded by key Western European capitals. Overall, the problem is not too much Russian gas, but rather an inadequate supply route through Ukraine in the short term and uncertainties about Russian resources in the long term. The development of alternative routes should not be seen in Berlin, Paris, and Rome as a geopolitical chess game to outsmart Vladimir Putin. Rather, it is merely an extension of prudent energy policy: ensuring stable supplies for consumers.

Even with a dire economic environment in which energy prices (and oil-company cash) have reached extraordinary lows, pipeline development to the Caspian region does not remain out of reach. After all, this has been done before. The one alternative route in existence: the Baku-Tbilisi-Ceyhan (BTC) oil pipeline from the Caspian to Turkey, was originally considered a pipedream. But, canny U.S. and regional decision-makers brought it to commercial viability with a mixture of development incentives, seed funding, reputational clout, and political backing.

It is not beyond the abilities of the Elysee or Bellevue Palaces to allow for the European Bank for Reconstruction and Development or national-development agencies to take part in a BTC-style package for Nabucco or a trans-Caspian gas pipeline. EU development aid to the countries of the Caucasus and Caspian is already substantial. Both European consumers and regional producers would benefit were that aid geared toward securing energy supplies.

The EU's response to its territory's energy woes will have to be dynamic and multifaceted. It will have to include renewable technologies, an expansion of nuclear power generation, and consideration of climate change. That said, prudent energy policy will first and foremost require securing supplies for consumers. Those consumers are also voters, and in the context of upcoming European and German polls, it ought to be a cliche that elections are the most powerful wake-up call of all.

Alexandros Petersen is a fellow for trans-Atlantic energy security at the Atlantic Council of the United States. The views expressed in this commentary are the author's own and do not necessarily reflect those of RFE/RL.

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