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    "Energy 2020" - A Move to Energy Security

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On 10 November 2010, the European Union (EU)'s energy strategy for the next decade was unveiled by Energy Commissioner Guenther Oettinger. Mr...

by: C_Ladd

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"Energy 2020" - A Move to Energy Security

On 10 November 2010, the European Union (EU)'s energy strategy for the next decade was unveiled by Energy Commissioner Guenther Oettinger. Mr Oettinger said that the overall aim of the strategy ("Energy 2020") was for "an efficient, competitive and low-carbon economy". The measures proposed to achieve this aim include: greater efficiency in the transport sector and incentives for homeowners and local authorities to improve the insulation of buildings as a means of reducing energy consumption; projects to improve energy efficiency, such as the development of electricity storage technologies, new types of biofuels and smart grids; and working together to secure energy supply contracts to achieve greater bargaining power and lower costs.



The most important proposal, however, is the plan for a 'single energy market' consisting of a shared gas and electricity supply network. Mr Oettinger said that this would require an investment of 1 trillion euros (US$1.3 trillion), the money for which would primarily come from taxpayers and energy companies. Although similar proposals have been discussed in the past, the endorsement of Mr Oettinger is significant given that he comes from Germany, which has previously lobbied hard against a single market for energy.

A shared energy network would help to improve energy security, particularly against reliance on Russia for energy supplies. Concerns over the dependence on gas supplies from Russia stem from recent disputes that have seen Russia cut gas supplies to Europe, most notably in January 2009 when Russia fell out with the Ukraine (link to related Maplecroft article on the gas dispute between Russia and the Ukraine).

The dependence on Russian gas accounts for the ranking of a number of European Union states as 'extreme' or 'high risk' in Maplecroft's Energy Security (short term) Index: Italy (ranked 2 of 184 countries), Lithuania (7), Spain (16), Slovakia (17), Finland (18), Greece (21), Portugal (22), Latvia (24), Germany (29), Hungary (30), Luxembourg (43), France (44), Belgium (55), Bulgaria (62), Poland (64), Austria (72), Malta (98), Ireland (99), Cyprus (101), Estonia (102) and Romania (106). The Nabucco pipeline development, to bring gas to Europe from the Caucasus and the Middle East bypassing Russia, and renewable energy projects will also help to enhance the security of energy supplies in these countries.

It may be some time before a fully integrated energy network is realised, given several financial and political obstacles. Chief amongst these is hesitation from some individual member states, including Germany, who are fearful of exposing their national energy companies to greater competition. Furthermore, the need for the private sector to cover investment costs may ultimately lead to energy companies passing on the cost to consumers in the form of higher energy bills. These issues may be ironed out at a special EU energy summit, which is set to be held in February 2011.

Source: Maplecroft



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