Opinion

A new way to approach Europe’s gas security, beyond the usual Russian obsession

Instead of doing everything to reduce gas supplies from key suppliers, gas supply security could more effectively be safeguarded by ensuring that unused alternatives are maintained so that they can be tapped into for in case of supply disruption.

By: Date: February 3, 2016 Energy & Climate Tags & Topics

This op-ed was originally published in Dienas Bizness, Kauppalehti,and Sina. It was also published in Hospodarske NovinyDziennik Gazeta Prawna, Diario EconomicoEl Economista and Il Sole 24 Ore.

Dienas Bizness logo

Kauppalehti

Sina

HOSPODARSKE_NOVINY_logo

el economista logo

Il Sole logo

diario economico logo

Dziennik-Gazeta-Prawna-2011_ok_CMYK_bez_cienia-300x65

European citizens remain vulnerable to another gas crisis, ten years after Russia cut off gas supplies to Ukraine and Europe in the winters of 2006 and 2009.

The events ten years ago revealed European vulnerability and sparked demands to increase Europe’s energy security.

In response to the crisis, European leaders planned to reduce Europe’s dependence on Russian gas via supply diversification and import dependency reduction. However, this strategy soon proved expensive and insufficient to provide a systemic response to Europe’s energy security vulnerability.

Ten years after that first gas crisis, the European approach to security of gas supply has somehow remained unchanged. But Europe cannot afford another ‘lost decade’ in energy security. In fact, due to rapidly declining domestic production, Europe’s gas import requirements will grow over the next few decades.

In the Netherlands, gas production dropped from 70 billion cubic metres (bcm) in 2010 to 56 bcm in 2014, and this declining trend is set to accelerate. The United Kingdom’s gas production volume declined from 57 bcm in 2010 to 37 bcm in 2014, mainly because of the rapid depletion of resources in the North Sea.

According to the International Energy Agency (IEA, 2015), the EU’s import requirements will increase in all scenarios. This means that a new strategy is urgently needed to structurally tackle the challenge of the continent’s security of gas supply.

Russia (or any other pivotal supplier) should not be considered a threat to European security of gas supply. Europe can safely import a consistent share of its gas requirements from Russia at a low cost, as long as it has at its disposal alternative supplies that can be used if supply is cut off.

Instead of doing everything to reduce gas supplies from key suppliers, gas supply security could more effectively be safeguarded by ensuring that unused alternatives are maintained so that they can be tapped into for an indefinite period in case of supply disruption from a key supplier.

Finding alternative suppliers is challenging at national level, but simple at the European level. European gas import infrastructure is currently largely underutilized, with only 58% of pipelines and 32% of LNG capacity currently in use.

By acting together European member states could make use of this margin of flexibility, and create a kind of EU-wide insurance system that might be activated in the case of a disruption in supply. This can be done by legally requiring all European gas importers and domestic producers to have available a certain amount of alternative resources, for example 20 percent of contracted demand for 1 year, to make the European gas system more secure, flexible and interconnected.

Although technically and economically feasible, this option is politically challenging. Most European member states currently regard security of gas supply as an issue exclusively for central and eastern European countries that heavily rely on Russian gas, such as Poland or the Baltic states.

However, energy security is an issue for all European member states, not just in central and Eastern Europe. The complex and volatile geopolitics of the European neighbourhood mean that other key suppliers might unexpectedly and unpredictably become a threat.

For instance, a traditionally secure supplier as Norway might need to reduce its gas exports in the future simply because of depleting resources, or Algeria, another traditionally secure supplier, might cut its supplies in case of unpredictable regional political turbulence. Security of gas supply is therefore an issue that concerns all EU member states.

There is also a risk that market conditions drastically change, as happened in the liquefied natural gas (LNG) market after the Fukushima nuclear disaster, when demand for gas soared. In this context, an EU member state that today might not perceive security of gas supply as a direct threat could become vulnerable in the future.

It is this unpredictable nature of security of gas supply, combined with its increasing importance in the European energy system, that calls for a new approach to European security of gas supply beyond the traditional obsession with Russia.

Gas supply security should be addressed at EU level because a joint solution would be cheaper, national approaches could undermine the internal energy market and have adverse effects on other countries, and the EU Treaty explicitly calls for energy solidarity.

The security of the European Union’s gas supplies is crucial to ensuring that supplies to households are not disrupted in freezing winters, that industry can flourish and that the EU cannot be blackmailed in vital foreign policy questions. If European policymakers act quickly to ensure energy security, both Europe and European citizens will benefit.

 


Republishing and referencing

Bruegel considers itself a public good and takes no institutional standpoint.

Due to copyright agreements we ask that you kindly email request to republish opinions that have appeared in print to communication@bruegel.org.

View comments
Read article More on this topic More by this author

Opinion

Georg Zachmann

Nord Stream 2: a bad deal for Germany and Eastern Europe

Georg Zachmann argues that the Nord Stream 2 project is a danger to the European consensus on relations with Russia. What is more, it could undermine efforts to diversify Europe's gas supply and might risk higher prices for Eastern Europe.

By: Georg Zachmann Topic: Energy & Climate Date: July 18, 2016
Read article Download PDF More on this topic

Working Paper

cover

The China-Russia trade relationship and its impact on Europe

This paper analyses empirically how increasingly close trade relations between China and Russia might affect the European Union.

By: Alicia García-Herrero and Jianwei Xu Topic: Global Economics & Governance Date: July 14, 2016
Read article Download PDF

Parliamentary Testimony

GasEuropean Parliament

Rethinking the security of the European Union's gas supply

Presentation at the EPP hearing on the “Winter Energy Package” on 29 June 2016.

By: Simone Tagliapietra and Georg Zachmann Topic: Energy & Climate, European Parliament, Parliamentary Testimonies Date: June 29, 2016
Read about event More on this topic

Past Event

Past Event

China-Russia relations and their impact on Europe

The economic ties between China and Russia are growing. How will this relation affect Europe?

Speakers: Marek Dabrowski, Zsolt Darvas, Alicia García-Herrero, Vasily Gavrilov, Eric Girardin, Matteo Governatori, Iikka Korhonen, Heli Simola, Laura Solanko, Mingxi Sun and Jianwei Xu Topic: Global Economics & Governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: June 21, 2016
Read about event More on this topic

Past Event

Past Event

Euro-Mediterranean energy talks

The energy landscape of the Southern and Eastern Mediterranean is inefficient and unsustainable. Yet there is much potential for cooperation. How could the EU work with this region to improve energy systems?

Speakers: Ali Aissaoui, Houda Allal, Ahmed Badr, Moncef Ben Abdallah, Jorge Borrego, Claudia Brandus, Uri Dadush, Karim El Aynaoui, Angelo Ferrante, Francesco Giunti, Ali Hached, Manfred Hafner, Ezzedine Khalfallah, Stefano Manservisi, Mehmet Öğütçü, Francis Perrin, Sabina Ratti, Edoardo Reviglio, André Sapir, Simone Tagliapietra, Hans van Steen, Guntram B. Wolff and Georg Zachmann Topic: Energy & Climate Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: May 31, 2016
Read article More on this topic More by this author

Opinion

Simone Tagliapietra

EU must step up energy cooperation with southern Mediterranean countries

Furthering energy cooperation between the EU and countries in the Southern Mediterranean is a challenge, but also a great opportunity. Supporting sustainable energy projects in partner countries could make them more economically stable and help safeguard the EU’s security of gas supply.

By: Simone Tagliapietra Topic: Energy & Climate Date: May 4, 2016
Read about event More on this topic

Past Event

Past Event

Will China's slowdown bring headwinds or opportunities for Europe and Central Asia?

After years of rapid growth, China's GDP is expanding more slowly. There are fears about the global impact, but could there also be opportunities for Europe and Central Asia?

Speakers: Maurizio Bussolo, André Sapir and Jianwei Xu Topic: Global Economics & Governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: April 29, 2016
Read article Download PDF More on this topic

Policy Brief

ENERGY ACROSS  THE MEDITERRANEAN:  A CALL FOR REALISM

Energy across the Mediterranean: a call for realism

After almost two decades of unproductive regional cooperation attempts, the EU should reshape its energy cooperation efforts in the Mediterranean through new bilateral approaches

By: Simone Tagliapietra and Georg Zachmann Topic: Energy & Climate Date: April 28, 2016
Read article More on this topic More by this author

Blog Post

Simone Tagliapietra

Iran faces a bumpy road back to global energy markets

Iran’s energy sector is vital for the country’s economy. Now that sanctions have been lifted, the government must reform the oil sector to encourage investment from international oil companies.

By: Simone Tagliapietra Topic: Energy & Climate Date: February 9, 2016
Read article More on this topic More by this author

Blog Post

Canete Image

Speech by Miguel Arias Cañete on EU’s climate and energy policies after COP21

Speech held at Bruegel event on "How will the Paris agreement impact EU climate and energy policies?", on 8 February 2016.

By: Miguel Arias Cañete Topic: Energy & Climate Date: February 8, 2016
Read about event More on this topic

Past Event

Past Event

How will the Paris agreement impact EU climate and energy policies?

The COP21 negotiations in Paris resulted in ambitious targets but little detail on implementation. Which measures should the EU now take? Bruegel was pleased to welcome Commissioner Cañete for a discussion on the proposed Commission Work Programme for 2016.

Speakers: Hendrik Bourgeois, Miguel Arias Cañete, Ewa Krukowska, Giacomo Luciani and Georg Zachmann Topic: Energy & Climate Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: February 8, 2016
Read article Download PDF More on this topic More by this author

Policy Contribution

Belarus at a crossroads

Belarus at a crossroads

Despite the slow pace of market reforms, the Belarusian economy recorded quite impressive growth until recently. However the Belarus growth ‘miracle’ cannot be continued, and the reforms that are needed might be difficult to implement. The potential hardship facing Belarus could be at least partly cushioned by external assistance.

By: Marek Dabrowski Topic: Global Economics & Governance Date: January 21, 2016
Load more posts