Europe’s economic, geopolitical, and climate objectives converge in the current debate over EU energy policy. This was most recently on display at the European Parliament hearing of the Energy Commissioner-designate Kadri Simson on 3 October, during which she repeatedly stated that President-elect Ursula von der Leyen’s Commission aims to foster a successful energy transition that is in accordance with the common long-term climate objectives in a way that also ensures reliability of supply and affordability of prices. To guide the EU towards its climate ambitions within these parameters, the European Commission must take swift action to nurture stronger transatlantic cooperation on the energy sector.
Energy security can be understood as the affordability, availability, and reliability of energy. As things stand, the EU is responsible for approximately 12% of the global energy consumption, while producing around 5.5% of the global energy in return. This dependency on energy imports makes it particularly important for the EU to diversify its supply to counter overreliance on specific energy forms and suppliers, which would otherwise be damaging to all three components of energy security. This is particularly important in Central and Eastern Europe (CEE), which is looking to reduce its dependence on Russian-imported energy.
European energy security can also be improved by greater cross-border interconnectivity of transmission infrastructure between the Member States. Crucially, greater interconnectivity relying on a greater number of sources of supply would ensure a more resilient European energy field able to adapt to regional geopolitical and economic challenges affecting the sector. The EU currently maintains a 15% interconnectivity target by 2030, which is a component within the Energy Union legislative package based on energy security, competitiveness, and decarbonisation. The implementation of said union is listed as a key priority of the new European Commission.
On 3 October, Commissioner-designate Simson identified lack of investment as the “biggest obstacle” to the EU’s energy sector objectives. For the United States to contribute towards closing this investment gap would be greatly beneficial to the mutual interests of the transatlantic partners.
There are obvious economic gains for the US to be made from promoting further liberalisation and integration to boost competition in the European energy market, while assisting the EU with its interconnectivity targets. Such projects could be supported by using the US International Development Finance Corporation (USDFC) to mobilise private investment, for example. Legislation on this new federal agency to financially support the US’s foreign policy priorities was signed on 5 October 2018.
US engagement with the EU’s energy security would also compliment the strategic priorities of the transatlantic partners vis-à-vis the regional ambitions of China, for instance. In addition to providing an alternative to China’s Belt and Road and 16+1 initiatives through more transparent and reliable financing programmes, the EU and US should coordinate screening rules on foreign investments on energy and infrastructure sector projects. Ideally, such common measures should form a part of a wider transatlantic plan on strategic investments.
Nowhere is the need for transatlantic energy and investment cooperation as pressing as in the CEE region. A region showcasing the imbalances present in the EU energy sector, the CEE Member States are particularly dependent on extremely carbon-intensive coal-based energy production as well as on gas supplies from the Russian state-owned Gazprom and would therefore benefit from increased gas supply and diversification of sources. Considering the current geopolitical tensions in Eastern Europe, Member States such as Poland are already looking to the US to provide reliable energy to reduce both their greenhouse gas emissions and dependence on Russia.
Deepening the ongoing transatlantic trade on liquefied natural gas (LNG) would thus be a natural starting point towards strengthening the transatlantic energy cooperation to foster both EU security of supply and energy transition. Natural gas emits around 50% less CO2 than coal when producing the same amount of energy and the commercial availability of the technology makes it one of the most cost-effective alternatives to achieve considerable short-term emission reductions in the EU. The European Commission has also recognised this role of gas on LNG and bio-methane especially in its A Clean Planet for All (2018) strategic vision for 2050. Therefore, such cooperation would allow the EU to directly contribute to the decarbonisation targets embedded in its Energy Union legislation and climate objectives.
Moreover, further LNG terminal projects in Croatia, Lithuania, and Poland would allow the CEE region in particular to continue to diversify its sources of supply. In 2014, the then President of Lithuania, Dalia Grybauskaite, even went as far as to say that the ability to import LNG would curb the “existential threat” of having to rely on Russian supply. In fact, Lithuania managed to lower their overall energy costs and negotiate a 20% price reduction with Gazprom for the following year after the new LNG infrastructure pressured the Russian energy supplier to compete in the market.
To make the overall cooperation more effective, however, investments must be made available beyond terminals and towards supporting interconnected infrastructure projects to avoid congestion in some Member States and lack of supply in others. Washington must also demonstrate that it has sufficient capacity to deliver the necessary quantities of LNG at a competitive price to further encourage this development. Such reliable access to gas supply would grant crucial support to both energy transition and security of the most carbon-intensive EU regions in particular – also in Member States without a coastline.
There are numerous reasons for why the transatlantic ties between the EU and US should be reinvigorated, and energy security offers one of the most compelling ones. Providing transparent and reliable alternatives to Chinese investment programmes and Russian energy supplies through greater transatlantic cooperation should thus feature strongly on the agenda at the next EU-US Energy Council.
This article is of original work. The opinions expressed in the article are those of the author personally and not tied to the interests of any specific stakeholder or sector.
