Bursting the Bubble

EU’s single energy market: two sides of the coin

9 December 2013 | by and

As already highlighted in a previous article dealing with the internal energy market in the EU, the European Commission has announced a list of 248 energy projects of common interests, which have been presented during the conference “Completing the Internal Energy Market: Building an Integrated European Energy Network”. We have previously discussed the various perspectives on energy security which can serve as a prism when analysing this particular issue.

Today, however, we will look into the advantages and disadvantages of such energy collaboration. For such a titanic task, we will confront the views from two of our contributors: Lesia, from Eastern Europe and Juan from Western Europe. We invite you to a debate involving current trends in the prospective EU internal energy market, presented through two conflicting viewpoints.

Olesia Ogryzko:

According to the President of Lithuania, Dalia Grybauskaite, who spoke in the above conference; a fully integrated energy market would save tens of billions Euros a year in electricity costs. As she indicates, this would contribute to lowering consumer prices, hence it benefits the consumers. Worth mentioning here is the financing of the projects due to be executed between 2014-2020 with a general budget of 5.85 billion Euros. Provided Grybauskaite’s predictions will come true, today’s huge investments in the internal energy market of the EU will pay off European citizens quite quickly.

Moreover, a common internal energy market would enhance competitiveness and thus increase transparency across the sector. Again, with larger competitiveness, European citizens are those who benefit: the more diverse the supply, the lower the consumer prices.

Furthermore, the creation of local manufacturing facilities is undoubtedly one of the most efficient ways of reducing European dependence on external suppliers. As known, energy dependence on suppliers remains one of the major energy problems of many European countries regardless of its geographical location. Richness of energy resources remains a trump card in the hands of suppliers, often used as a foreign political tool to manipulate others. Thus, the bigger the coherence among each other in a single market – the closer the energy interests and the more coordinated the responses to energy suppliers.

The previous note is closely connected with the next advantage: the elimination of the so-called “energy-islands” or energy-isolated regions. Some examples of such islands were the centre of Commissioner Oettinger’s speech:

“Our aim is that EU member states such as Lithuania and Poland, Romania and Bulgaria gain access to at least two alternative sources of gas.” Thus, by creating a common infrastructure that would penetrate the whole European continent with a single pipeline and interconnectors system, the EU abandons these islands and invests into its energy independence. And although the authors doubt the probability of a rapid realisation of the above, it was stipulated by the European Council that the internal energy market has to be finalised by 2014 and no energy-isolated spots should remain after 2015.

Lastly, since the projects are cross-border in nature, this enhances a specific type of European cooperation, contributing to a common sense of necessity of the reforms. Consequently, these actions shall be viewed through the prism of the collective rather than individual interest.

Juan Pavon Losada:

After a quick overview of the information provided by the EC, there is no need to be an expert to realise that there are significant flaws in the design of the Projects of Common Interest (PCIs) model.

Starting from the beginning, PCIs seems to be an unbalanced policy which tends to reinforce energy consumption in the core productive areas of Central/Eastern Europe. They have put the focus on fostering areas where the cheaper workforce is, instead homogenizing the energy fabric of the whole European population. It seems for the Lithuanian President that southern countries do not suffer from energy isolation or lack of productive infrastructures and investments which, indeed, would have supported a real common market in Europe. Therefore contrary to the above elimination of energy-islands/gaps, they are creating new ones in Southern Europe, contributing to the productive and the economic isolation. This leads me to the second point, lack of policy coherence.

From the environmental point of view and taking into account the vast amount of EU legislation on environmental protection, EU statements and International Conventions, I regret there isn’t more of a significance onf sustainable energy projects, especially based on renewable energies all over fashionable PCIs. A vast majority of these projects are carbon-based traditional energy sources.

From the economic perspective – and soon from the development aid perspective – it is clear to everyone that Southern states need further aid in order to play a balanced role in the European Economic Arena. Please, not in direct supply of liquidity towards inoperative “only-profit-seeking” credit entities. There is no need for more bail-outs if they are not accompanied with the correspondent policy shape of the different aspects of an economic and productive model. Furthermore, in addition to the relief that cheaper energy markets might have represented the requirements of the already battered pockets of families in crisis areas, and the additional amount of money available for internal consumption; they might have represented a positive stimulus to the Green Jobs policy. Providing an extra demand, necessary for healthy job markets, to incorporate young people ending a second level studies recently auspicated by the European Commission last summer, and bringing equilibrium to social security arcs.

Last point, dark, murky tenebrous side conclusion: the current European Commission is fostering a de-facto two speeds European Union. The PCIs, could indeed have been projects of common interest. However, they have become a tool for segregation, establishing a fractious scenario which will prevent investment flow towards national economies in crisis (there is also gas supplies in Northern Africa which are all but neglected by the current PCIs). This fracture will leave a sweet aftertaste for Eastern citizens since all of the mainstream economic figures will rise healthily. However, beware my eastern friends! As your market would be spoilt and pillaged, and central European retirees require further cheap workforces to feed their pensions, life would become bitter. In 10 years or so the EU will most probably be staring at Turkey, like a zombie babbling and gibbering for new markets and cheap workforce in exchange for democracy, wealth and eliminating the so called “energy-islands”.

As we see, opinions on the success and efficiency of these projects vary. But it also highlights a similarity in interests: both sides are engaged, both are debating and both will be affected. What is your opinion on this matter? Please feel free to contribute to the debate.

 

 

Olesia & Juan:

Both Olesia and Juan have energy. Wherever life brings them together – be it Netherlands, Belgium or Spain – they usually use it in a very efficient way: to fight with each other. Today they outclassed themselves and used their energy to fight about energy.

What do you think?