The security of gas supply (SoS) regulation is an important step towards achieving true energy security and solidarity in Europe. It illustrates a deeper understanding of energy geopolitics and, following a fundamental paradigm shift introduced in the 2010 security of gas supply regulation, introduces precise instruments for risk management and emergency response.
Energy union is one of the most ambitious projects undertaken by the EU in recent years. It paves the way for an integrated and fully transparent energy market that will benefit citizens and businesses.
It contains emergency solidarity mechanisms that will reinforce Europe’s resilience against energy blackmail. It could also enhance the EU’s leading role on the international stage and contribute to a more stable and prosperous neighbourhood on our doorstep.
The SoS regulation is the centrepiece of these efforts. Its underlying principles are straightforward: market transparency, emergency solidarity and rule of law.
To counter the information asymmetry that facilitates abusive market practices by external state monopolies, the EU needed more transparency, through the creation of an information exchange mechanism concerning all major gas contracts.
To ensure solidarity and efficiency of preventive and emergency action plans, member states must start operating on a regional level - connect their network, plan together and ensure mutual legal compatibility to avoid national protectionism. Parliament has reinforced the mechanisms presented by the Commission.
The regions, which grouped countries with the very aim of ensuring market interoperability and functioning of solidarity mechanisms (such as grouping Spain and France together or creating a centre-east region comprised of Germany, Czech Republic, Poland and Slovakia) were further reinforced by emergency supply corridors. This could, in time of crisis, provide energy to the targeted member state.
The regional preventive action and emergency plans - the main tool of European preparedness - have initially been foreseen as an intergovernmental tool. To avoid gridlocks, Parliament wanted to empower the Commission with the authority to act, if capitals were unable to do so. A similar mechanism was prepared for a voluntary joint purchasing mechanism.
The proposed information exchange mechanism was not without fault. Initially, the Commission sought to limit the transparency of gas contract volumes, conditions, duration and prices to only the biggest contracts in the most unequal markets, i.e. those reliant mostly on a single supplier.
In consequence, massive Gazprom contracts with well-diversified importers in the west would not be disclosed; any discrimination or abuse of market position by Russians would therefore still escape Commission’s gaze. Parliament’s foreign affairs committee (AFET) sought to give the Commission more access to the contracts by applying the absolute volume criteria.
These proposals gained almost unanimous support in AFET, despite ideological and national differences.
Our final report ultimately adopted a different mechanism, but maintained automatic information exchange.
Finally, MEPs praised cooperation with the energy community, crucial in light of Russia’s energy blackmail of eastern partnership countries.
Without ensuring proper response mechanisms in the transit countries, guaranteeing security of supply for end user is virtually impossible. This sign of solidarity could be one of the most enlightened examples of EU neighbourhood policy. It would level the playing field between EU, Russia and countries like Ukraine and Moldova and help avoid the energy crises of 2006, 2009 and 2014.
Unfortunately, the compromise agreed in the trilogues was not as ambitious. Some elements were watered down; others such as the risk groupings were redesigned thanks to Parliament and
Commission efforts without affecting the crucial regional approach. The Council submitted to pressure of some national governments, which in turn played a subservient role to energy corporations.
While it is hard to blame industry for its sole focus on short-term profits, we as Europeans should demand more foresight, solidarity and geopolitical wisdom from the elected representatives in the capitals.
There is also some lingering doubt as to whether newly available transparency mechanisms will be properly utilised. After all, as the anti-monopoly case against Gazprom shows, the legal instruments are not sufficient if there is no will to act accordingly on the political level.
Nonetheless, despite its shortcomings, the adopted regulations represent a major shift in thinking. Regionalisation and ‘Europeanisation’ of energy security represents a move from a two-speed Europe of energy security, in which the low prices of some states are subsidised by the unfair market practices enforced on central and eastern Europe.
For the first time, we have not only talked about geopolitics of gas but actually acted in a way that was inconceivable just a few years ago, when the naive consensus in Brussels did not differentiate normal market competition from using energy instruments for political blackmail.
What is most important now is the implementation phase – in which the member states must fully comply with rules they might have initially been sceptical about.
That would require not only a policy change but also a shift in the way rules and principles of the energy union are observed, leading to the rejection of dangerous national egoisms (such as the Nord Stream 2 project) in favour of a cohesive regional and European approach.
And then, when the time for the regulation review comes, let us hope we are ready to take next steps in building the energy union.