EU needs new approach to gas energy supply security

Written by Jerzy Buzek on 19 April 2016 in Feature
Feature

Europe needs a new approach to energy security that allows it to remain resilient in the face of supply disruptions, writes Jerzy Buzek.

Energy crises transgress boundaries. A single country can disrupt supplies but a single country certainly cannot overcome such disruptions or prevent them alone. 

This is evident for any country that depends on energy imports, but even more so for countries that are integrating their energy markets. This is why the approach to energy security in the EU has changed so much over the past decades - moving gradually from the regional to European level. This is the only way forward for us.

We began with the gas security directive of 2004, which obliged member states to cooperate in emergency situations. This directive was repealed by the 2010 gas security regulation. The regulation represented more than a formal upgrade into binding law; it also explicitly stated that energy security is a shared competence of national authorities and the EU. 


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This is in line with Lisbon Treaty's Art. 194. It foresees a common energy policy that aims to ensure - in the spirit of solidarity - security of energy supply while maintaining the right of member states to shape their energy mixes. 

The first regulation has certainly improved energy security in Europe. Yet stress tests carried out in the aftermath of subsequent supply crises - crises that were more political than technical in nature – show that country-level measures are not sufficient. 

Eliminating barriers between member states, lowering the costs of prevention and maximising effectiveness of mitigation all clearly require greater cooperation, coordination and transparency within and between countries and regions.

These requirements become all the more critical given the ongoing integration of EU gas markets and the corridor-based approach to gas supply and reverse flows.

Our task in working on the new gas supply security regulation is to strengthen the law we have had since 2010. This will allow effective use of the tools for preventing and overcoming supply crises that the EU internal gas market currently provides. 

It should improve the resilience of European regions against external supply disruptions, harmonise infrastructure and supply standards, as well as definitions of protected customers and increase the transparency of contracts.

We need a bottom-up approach. We must build on successful national measures and complement them with regional or even pan-European ones; measures that will work for entire EU as well as for the EU's neighbours in the Energy Community. 

Hence, the regional approach to planning with the use of harmonised templates. This will assess the risk, put in place the plans to help prevent crises and reduce the impact of crises if they do happen.

Experience has taught us that instability of energy supply in one country or region affects whole EU right along the supply chain. As a consequence, transnational solidarity cannot be an optional privilege; it must be an obligation.

However, it should be a rule of last resort, meaning that it should not replace any country's own work on improving its resilience and diversifying supplies and energy sources.

Secure energy supply also requires transparent, free-market rules in energy trade. In central and eastern Europe, gas is still 20-25 per cent more expensive than in the west of Europe. To a great extent, this is due to non-transparent contracts. 

We need to make sure that the entire EU and Energy Community (subject to compliance) is covered by supply contracts that are fully in line with EU law as well as the principles of our energy policy. The purpose is to create a true level playing field for businesses across the EU, including energy companies.

On the last issue, of coordinated gas purchasing, I am convinced that voluntary demand aggregation can significantly improve our negotiating position towards external suppliers, resulting in lower prices for consumers.

This should be properly reflected in EU legislation. We already see bottom-up initiatives, such as an LNG purchasing group that is being set up in central Europe.

What is at stake is not only the security of supply of one particular energy source; it also concerns the competitiveness of our entire economy, the EU's growth and jobs for our citizens. It is, moreover, important for our relations with neighbouring countries, in particular members of the Energy Community that have been implementing the same EU energy rules. 

Lastly, with our ambitious climate policy, secure gas supplies mean stable backup for other sources of energy, including renewables. We need to keep all of the above in mind when negotiating the new regulation.

It can provide a springboard for the secure and sustainable growth of the EU, as well as underpinning our role within our immediate neighbourhood and beyond. It offers the key to our next integration project we urgently need; a common European success story to build on for decades.

 

About the author

Jerzy Buzek (EPP, PL) is Chair of Parliament's industry, research and energy committee and rapporteur on measures to safeguard security of gas supply

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