US, EU must prioritize energy security in policy discussions

US, EU must prioritize energy security in policy discussions

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BY BRENDA SHAFFER, OPINION CONTRIBUTOR - 02/10/17 10:11 AM EST

The Trump administration has stoked intense discussion about America’s relationship with Europe. Largely lost amid the talk of defense budgets and trade issues has been one of the most historically important areas of cooperation — energy security.   

Europe’s energy security is important for its national security and prosperity, both of which are in the U.S. national interest. For good reason, successive U.S. administrations have devoted high level attention to European energy security and  this policy has enjoyed wide bipartisan support. Today, even as both sides evaluate their respective energy policies, continued cooperation — and learning from each other’s policy experiences — should be a top priority.

For this reason, it’s important to look at the European Union’s Energy Union policy, which was launched in 2015 following the recent Ukraine crisis. The effort was aimed at harnessing Europe’s collective market power to have better leverage with its main supplier, Russia, and to create mechanisms for sharing energy supplies between states during times of supply crunches.

 

Despite good intentions and high level EU policy attention, security of energy supply is still a major challenge in the EU, as stated in the EU Commission’s recently-released report on the status of the Energy Union. EU member states remain quite fragmented when it comes to security of energy supply, as witnessed by their behavior during the current cold spell afflicting Europe.

Moreover, as the energy report points out, vast areas of the EU remain physically disconnected to each other by pipelines. Even if there was a will to share gas supplies during disruptions, there are really no options to do so in many parts of Europe.

The recent report’s findings are especially astonishing — and instructive — in the field of climate change policies. Despite extensive EU regulations and proclamations, the region’s carbon emissions actually increased in 2014-2015. The report tends to treat this as a glitch as it looks at the overall emissions decline since the 1990. 

But if we remove the impact of the collapse of heavy industry in Eastern Europe following the fall of the Communist regimes, it is questionable if Europe had any meaningful gains from the 1990 baseline.

This finding has led the European Parliament to debate the utility of the EU Emissions Trading System, which has attempted to use market mechanisms to lower carbon emissions. The fact that the ETS seems to have achieved few, if any, results should be an important lesson for states in the U.S., China and other countries contemplating similar mechanisms.

A straight carbon tax would be much more effective than a trading scheme and the concept enjoys wider bipartisan support in the U.S. In fact, for over a decade, most of the major U.S. oil and gas companies have advocated for such a tax, which could offer the long-term financial predictability needed to plan investments in lower carbon producing energy sources. 

The recent study also points out that EU countries have successfully integrated higher proportions of renewal energy into the fuel mix. But, counterintuitively, this has contributed to Europe’s climate problems — in order to meet requirements to produce electricity from renewable energy, financially strapped utilities in many markets have turned to coal over natural gas for their remaining power production.

While gas has a lower environmental and climate impact, coal has a lower price. In the U.S., where there has not been similar government intervention, the opposite has happened — lower gas prices have led to increasing power plant conversion from coal to natural gas.  

Of course, we know that the U.S. has not gotten its energy policy exactly right, nor has the EU’s entirely failed. But there is one clear message here — energy policy is simply too important and there are too many valuable lessons to be learned for either the U.S. or the EU to abandon their long-standing cooperative approach. 

Brenda Shaffer is a specialist on energy and foreign policy. She is a visiting researcher and professor at Georgetown University’s Center for Eurasian, Russian and East European Studies, and a senior fellow at the Atlantic Council’s Global Energy Center. She is the author of  several books, including "Partners in Need: the Strategic Relationship  of Russia and Iran" and "Energy Politics". 

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