Thursday, March 9, 2006
Yesterday, the European Commission published a Green Paper on developing a European Energy Policy. EU Energy Green Paper The green paper will be reviewed by EU energy ministers on March 14 and by EU heads of state on March 23-24. EU green papers are discussion papers, though, not concrete legislative proposals. Nonetheless, since the EU has 50% more energy consumers than the US, everyone is watching as Europe attempts to develop an energy strategy.
Energy is a realm traditionally reserved to the national policy of EU member states. Two previous green papers were largely ignored. However, because the EU member states unanimously requested preparation of this third green paper, many hope that a unified European energy strategy is in the making. Furthermore, a recent Eurobarometer poll indicated that a sizable majority of Europeans consider energy policy to be best handled at the EU level. The green paper responds to this by proposing a new EU energy regulatory body, measures to complete the EU single energy market, energy efficiency measures, and research on renewable energy sources.
The green paper establishes sustainability, competitiveness, and supply security as the primary goals for European energy policy. However, the emphasis of strategies in the paper is on the latter two as opposed to the environment.
The first priority is completion of the EU single market, currently liberalized to allow business to choose suppliers throughout the EU. However, lack of interconnections and supply lines prevent completion of the market. The green paper suggests an energy "grid" code, a priority European interconnection plan, i.e. constructing natural gas pipelines, a European energy regulatory agency, and mandatory unbundling of networks.
The second priority is security of supply in the internal energy market and a commitment to "solidarity among member states." The green paper proposes a European Energy Supply Observatory and revision of the existing EU oil and gas legislation to deal with potential supply disruptions.
The third priority is external EU energy policy, including long-term agreements with Russia, which currently supplies most of EU's natural gas.
While the EU has had remarkable decreases in energy intensity and increases in GDP, EU energy demand and energy imports continue to grow. Energy Demand, Intensity and GNP in EU25 Although EU energy efficiency is extremely high, the green paper on energy efficiency proposed improving it by 20%.
But overall the EU will need to move towards renewable energy sources. According to the Eurobarometer polls, EU citizens favor solar and wind, with nuclear a very distant third. Ironically, the green paper provided supporters of nuclear power with solace when it noted that national energy supply decisions (alluding to bans on nuclear power in Germany, Austria, Italy, Ireland, and Spain) can interfere with EU supply security and reduction of greenhouse gas emissions.
Many EU citizens are willing to pay a small premium for renewable energy sources, up to 5%. But that limited willingness to pay underscores the need for research and development that will provide renewable energy sources at prices that Europeans are willing to pay.