European Energy Treaty: Right Problems Wrong Answer The Energy Editorial, April 2010
Jacques Delors’ Notre Europe has rendered a considerable service to European energy policy thinkers, but his proposed European Energy Treaty is the wrong answer.
Notre Europe has well identified the challenges of the next decades in energy policy and the weaknesses of current European practices. While some considerable progress has been made in Community level convergence where European-level policies and directives are clear, much remains to be done. Energy - in particular grid energy - has always been a national-level concern and we all still operate as if we should be able to close our borders in a security melt down and get along with national-based utilities.
Europe is on a collision course with market realities. Take just two dimensions:
1. Throughout Europe, policy makers and politicians are pressing for greater deployment of renewable energy. The effort is yielding results in improved technologies and better prices. But it is also leading to large isolated islands of renewable energy that fit poorly into grids, whose intermittence is not efficiently managed and which ultimately will destabilize electricity reliability if collective action is not taken to integrate a European grid. Yet countries resist common European approaches, grid operators are still national level, regulatory functions at a European level are virtually non-existent. It can’t work.
2. Europe has turned the corner in fossil fuel consumption. Oil consumption in particular will begin to decrease - basically a good thing, but with some negative consequences. Europe’s share of global primary energy will diminish over time as emerging countries grow and replace Europeans (and Americans) as the big oil, gas and coal buyers. Political clout follows financial clout. What voice does a single European country have in this kind of world where a collective Europe will need to struggle to be heard?
So Notre Europe raises the right issues at the right time. While it is true the Lisbon Treaty obliges energy policy makers to search its general provisions for authority to do practically anything in energy - and energy policy is already complicated by the fact that energy policy has for some time been driven more by the politics of environmental and competition concerns while oil and gas markets have weathered recent security challenges rather well. No petrol queues - no political profile for oil.
But is negotiating a European Energy Treaty the right approach? Does anyone believe the EU members who have so tenaciously clung to their sovereignty in energy matters will take a different approach to a draft treaty? There was plenty of time to manifest any such willingness in drafting the Treaty of Lisbon, but no one stepped forward. On today’s most difficult energy security issue - gas - does anyone believe that European gas companies are going to subordinate their strategic commercial positions to a common European gas buying function? The proposed collective demand aggregation mechanism for Trans-Caspian gas will already face heavy sailing.
Europe has not exhausted its existing mechanisms for enhanced co-operation. What it has lacked is the political mandate for leaders to do so. It is indeed 1951 again as Europe seeks solidarity on vital energy issues and the articulation of the challenges by Notre Europe is welcome. But the solutions do not need to be as grandiose as they were in 1951 nor as the Treaty proposed by Notre Europe. Europe already has a great deal of cohesion, shared policy goals and institutions to achieve a greater convergence of practices. All it needs is the political will to use them.