Energy union: what's in it for gas?
Dods EU Monitoring's Sofia Kalogeraki looks at the state of play for gas in the European Union's future energy mix.
Being economically attractive for investors and the cleanest of the fossil fuels, natural gas is expected to play a central role in the EU's efforts to achieve secure, sustainable, competitive and affordable energy supplies.
The energy union strategy presented by the European commission on 25 February recognises this role for gas and puts forward a number of proposals to create a well-functioning internal market for gas while simultaneously developing a coherent external supply strategy.
Under the energy union, the implementation of existing legislation – the third energy package – clearly takes priority. With this in mind, the commission proposes to strengthen the decision making powers of the agency for the cooperation of energy regulators (ACER) and allow it to deal more effectively with cross border issues.
Key legislation in the pipeline
- • 2015 (Q1): Communication on electricity and gas retail markets
- • Autumn 2015: Review of the regulation on security of gas supply
- • Autumn 2015: Second list of PCIs
- • 2015: Memorandum of understanding on the trans-Caspian pipelines with Azerbaijan and Turkmenistan
- • 2015/2016: LNG and storage strategy
- • 2015/2016: Review of ACER
- • 2016: Review of the directive on measures to safeguard security of supply
- • 2016 and every two years after: commission analysis on energy prices and costs
- • 2016: Review of the decision on information exchange mechanism with regard to intergovernmental agreements between member states and third countries
Moreover, a communication on the gas retail market is expected in the near future. To boost interconnection, the commission will also support the implementation of major infrastructure projects, particularly the projects of common interest (PCIs).
A list of priority projects has been identified; these are mainly located in eastern and south western Europe and include interconnectors, liquefied natural gas (LNG) terminals, reverse flow investments, new pipelines and pipeline upgrades.
- The balancing act of energy union
- MEPs give cautious welcome to energy union
- Energy union will need 'European approach'
On the supply side, diversification of routes has been prioritised in light of developments in Ukraine. The commission will work with member states to develop access to alternative suppliers, including from the southern gas corridor route, the Mediterranean and Algeria, in order to decrease existing dependencies on individual suppliers.
Yet, experts have expressed concerns that alternative supply projects, such as the trans-Adriatic and trans-Anatolian pipelines, will be hard to finance. The political instability in these regions and the risk of a new geopolitical clash over gas resources has also been raised as a potential issue.
Finally, in a bid to build a single voice in energy matters, the commission plans to seek a more active role in the negotiations between member states and third partners. The aim would be to ensure that all agreements with external suppliers that may affect EU energy security conform to EU law.
The proposal has not been popular with national capitals and Hungarian prime minister Viktor Orbán has openly expressed his opposition to the plans, saying the EU is "heading into an energy union that hinders national sovereignty".
Orbán has agreed with Putin to extend a Russian-Hungarian long-term gas supply contract, securing major gas price discounts for Hungary. With this in mind, the commission seems to have abandoned its plans to come up with proposals on a common gas purchasing mechanism.
The communication says that the EU executive will assess the options for a voluntary scheme, given the strong opposition of western member states to a mandatory mechanism.
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