Analysis of EU Energy Diversification and Reduction of Russian Dependency

By Jared Angle

Despite the lack of a cohesive energy policy encompassing all member states, the European Union has several options when it comes to seeking new energy alternatives to counteract Russia’s predatory ‘energy diplomacy’ of the past decade. Diversification of energy sources has sparked intense controversy in the EU, as strict regulations and public opposition have made several promising energy options unviable in a number of member states. While renewable energy technologies satisfy the concerns of European environmentalists, sources such as solar energy simply cannot meet the energy requirements of Europe’s densely populated countries, with current systems providing energy for less than three percent of households, according to a September 2013 press release by the European Commission. Although energy diversification is not universally popular, it has become increasingly clear since the mid-2000s that Europe must address the challenges presented by Russian energy policies and the current inadequacies of alternative energy infrastructures.

A range of options

In addressing these issues, the EU can tap into a variety of regional energy resources to implement a common energy policy that promotes a strong European utility infrastructure (one that is tailored to each member state, taking into account local regulations and concerns over nuclear power and fossil fuels) and enables vulnerable Eastern member states to eliminate dependency on Russian energy supplies. In the immediate future, the EU can benefit from working with Norway, as well as North African and Middle Eastern nations, to arrange new energy imports from those countries and construct new pipelines that bypass Russian territory. These fossil fuel imports should be prioritized toward member states that are unwilling to build or maintain nuclear facilities and/or have bans against domestic natural gas extraction. After securing alternative fossil fuel imports, member states should make significant investments in their domestic oil and natural gas industries to expand energy infrastructures in those nations. In the longer term, the EU should expand safety and maintenance oversight of nuclear power facilities, support the continued operation of Western European reactors and allocate funds to sponsor the construction of Central and Eastern European reactors.

Expanding non-Russian energy imports

New fossil fuel import routes that bypass Russia could give the EU the opportunity to strengthen relations with its Eastern partners and build regional fuel transport systems that cater to individual member states. For example, coordination with Norway to further develop the North Sea oil fields would provide partial (but not total) relief to Germany, which is facing a period of energy infrastructure transition due to its decision to end its nuclear program, as well as nearby Sweden, Finland, Poland and the Baltic countries. Further south, the EU could strike new deals with Turkey and member state Cyprus to establish new pipelines for Israeli gas exports through Turkey and into the Russian-dependant Balkans, as well as by sea to the Mediterranean states. Similarly, the EU could engage North African countries including Algeria and Libya to replace the smaller, but still considerable Russian exports to the EU’s Mediterranean members. Some member states have been looking westward toward the U.S. for support; Italy has begun building terminals to accept tanker ships carrying liquefied natural gas in anticipation of American exports. Engaging Norway should be a high priority, considering that the Nordic and Baltic countries are heavily dependent on imported Russian energy, according to recent analysis by Eurostat. One possible option, politics and finances permitting, would be for the EU to expand investments into Norwegian energy firms and make a significant contribution to the construction of a new pipeline network to move Norwegian gas and oil exports to the east. New trade routes with North Africa are less foolproof; oil and gas from Libyan and Algerian reserves may not provide a consistent energy supply for Southern European countries due to periodic disruptions of energy facilities arising from violence in both countries.

Developing domestic energy

The development of domestic energy reserves can also reduce or eliminate the EU’s dependence on energy imports from Russia. Most importantly, it will diminish the role of Russia’s divide-and-conquer energy tactics and will eliminate Russian gas shutoffs, which pose a significant economic and security threat, because European countries will simply no longer need to purchase Russian fuels; coercive tactics will no longer have a significant influence on the decisions of the EU’s eastern members due to the absence of a Russian market presence. Foremost among the EU’s largely untapped resources are its vast natural gas reserves, which amount to roughly 75 percent of the size of American gas fields, according to British Prime Minister David Cameron. Development of American reserves has led the United States to reach 87 percent self-sufficiency for natural gas; similar development could achieve the same positive results for EU member states. According to a map using statistics compiled by the International Energy Agency and KPMG, shale gas reserves cover broad areas of Central and Eastern Europe, including the countries that have a near-complete dependency on Russian energy; developing these resources, which cover the entire territory of some countries, would likely reduce the need for Russian gas imports to zero for most EU member states. While it could be one possible answer to Europe’s energy deficit, natural gas extraction would specifically help the EU’s eastern member states distance themselves from Russia.

Environmental obstacles to diversification

Despite the opportunities afforded by development of domestic energy sources, environmental regulations will deny many European nations the chance to develop these natural resources, assuming that the regulations remain in effect for the foreseeable future. While highly dependent Slovakia and Romania have issued hydraulic fracturing (fracking) permits, neighboring Bulgaria, which depends on Russia for 90 percent of its energy imports, has banned the practice. France has also banned fracking, and while Germany has issued permits, the country’s natural gas reserves may not meet future needs following its decision to shutter its nuclear energy program following the 2011 Fukushima Daiichi nuclear disaster in Japan. The bans in France, Czech Republic, Luxembourg and the Netherlands are the result of concerns over water contamination.

A second chance for nuclear

New research and development for nuclear energy is necessary to diversify EU energy options and fill in for any excess demand that fossil fuels and alternative energy sources cannot fulfill. New power stations are being established in places such as Finland, but these sources are facing legal and regulatory gridlock. France, a nuclear powerhouse in Europe, has moved to close some of its aging nuclear reactors as part of a deal by the country’s left-wing parties, although pro-nuclear comments by Industry Minister Arnaud Montebourg have conflicted with President François Hollande’s 2012 campaign platform, which suggested cutting French nuclear capacity by a third. Neighboring Germany, as mentioned earlier, is ending its nuclear program and returning to coal and renewable energy sources. Mediterranean nations are also reducing their dependence on nuclear power, leaving the United Kingdom and Eastern European member states as the lone holdouts. The growing rejection of nuclear energy in the EU’s more affluent members is concerning because these countries have large, dense populations with significant energy demands. A transition to fossil fuels during a time of energy insecurity in Eastern Europe could have the added consequence of diverting vital fossil fuels away from countries that do not have the resources or capital to build nuclear facilities or develop domestic fossil fuel extraction industries. As such, EU member states should instead place an emphasis on the safety and maintenance of nuclear facilities so that domestic fossil fuel resources and diversified imports can be targeted toward vulnerable member states along the European Union’s border with Russia and the former Soviet bloc nations.

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