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29Pomorski zbornik Posebno izdanje, 29-62

ISSN 0554-6397PREGLEDNI RAD(Review)

Branko Bošnjaković1

Château de Tannay, CH-1295 Tannay, SwitzerlandTel: 0041227769416; Email: branko.bosnjakovic@bluewin.ch

1 Dr.BošnjakovićisformerRegionalAdviserforEnvironmentoftheUNEconomicCommissionforEurope,Geneva.

Europe Between Climate and Energy Insecurity: Geopolitical Aspects

Abstract

EUseesitselfasaworldleaderincopingwiththechallengeofclimatechange.Atthesametime,theUkrainecrisishasdemonstratedhowvulnerableitsenergysupplysecurityisduetoEU’sdependenceonimportoilandgas.ThepaperaddressestheinterlinkagesandprospectsofEU’sclimateandenergypolicieswithrespecttoethicalandsecuritydimensions.Theethicaldimensionisaddressedintermsofhowtofairlyallocateresponsibilityamongnations,regionsandstatestoreduceGHGemissionstonon-dangerouslevels,acentralissueattheupcomingUNsummitinParis.Theproposedprinciples,suchasthecommonbutdifferentiatedresponsibility,arediscussedinviewofagrowingliterature,politicalcontroversiesandconvergingdiplomaticmoves.AtthesametimethefundamentalvaluesoftheEUmaybeatstakeifthesecuritydimensionofallEUmemberstatescannotbeguaranteed.BothethicalandsecuritychallengesEUisconfrontedwithpointsstronglytowardsacceleratedintroductionofalow-carboneconomyandcorrespondinginfrastructure,withrenewablestoplayacentralroleinthemedium/longterm.Areviewoftheliteratureshowsthatcontinuingimportdependenceonoilandgas,includingfromRussia,isariskfactorbothineconomic,politicalandenvironmentalterms.Somerecentlyproposedpolicyresponses,suchasthecreationofanEUenergyunion,arereviewedand critically evaluated.

Key words:Climate,Energy,EU,Geopolitics

1. Introduction: European Union as the leading “soft” world power

TheprecursorofthepresentEuropeanUnionwastheEuropeanEconomicCommunity, established in 1957, when the foundingmembers, during theIntergovernmentalConferenceontheCommonMarketandEuratom,adoptedtheTreatiesofRome.Sincethen,theEUhasestablishedandextendedanunprecedentedeconomicandpeaceorderinalargepartofEuropebasedonacultureoftransnationalcooperationandsolidarity.Atthesametime,extensiveEUlegislationandpolicieshave

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beendevelopedensuringtherespectandimplementationofarangeofbasicvaluesandprinciples.TojointheEU,anewMemberStatemustmeetthreecriteria:(1)political:stabilityofinstitutionsguaranteeingdemocracy,theruleoflaw,humanrightsandrespectforandprotectionofminorities;(2)economic:existenceofafunctioningmarketeconomyandthecapacitytocopewithcompetitivepressureandmarketforceswithintheUnion;(3)acceptanceoftheCommunityacquis:abilitytotakeontheobligationsofmembership,includingadherencetotheaimsofpolitical,economicandmonetaryunion.TheprosperityandtheuniqueeconomicandpeaceorderoftheEuropeanUnionhaveexerciseduptonowanirresistibleattractiontoanincreasingnumberofEuropeancountries,wishingtojointheUnion.

WhereastheenvironmentalprotectionwasnotatstakeatthetimeoftheadoptionoftheTreatiesofRome,resourcesandenergysecurityissuesdefinitelywere.TestimonytothataretheEuropeanCoalandSteelCommunity(1951)andtheEuratom(1957).ThedevelopmentoftheEUenvironmentalandclimatepolicysincethe1970s,itsimpactbothatthenationalandatthepan-Europeanlevels,aswellastheemergenceoftheEUasaworldenvironmentalleader,hasbeenbroadlydescribedanddiscussedby the author [1].

Bothwithrespecttotheclimatechangepolicy,aswellastotheenergysecuritypolicy,theEUhasbeenconfrontedagainandagainwithethicalandgeopoliticalaspects.Thepresentpaper,largelyanupdatedversionofapreviouspublicationbytheauthor[2],attemptstotakestockoftherecentdevelopmentsofEUclimateandenergypolicies,takingintoaccounttheongoingpowershiftstakingplaceworld-wideandatthepan-Europeanlevel,andhowtheyposeconsiderablechallengestotheindividualEUmemberstates,andtotheEUasawhole.

2. Political and ethical dimensions of climate policy at the global level

Theglobaldevelopmentoftheclimatepolicyhasgivenlittlereasonforoptimismsofar.TheinitialhopesconnectedwiththeKyotoProtocolundertheUnitedNationsFrameworkConventiononClimateChangeUNFCCC(withthesecondcommitmentperiodendingin2020)haveevaporatedsincetheglobalGHGemissionsgrewbymorethan60%inthelast20years.AfterthetheCopenhagenconferencein2009,seenbymanyasfailure[3],alleyesarefocusednowontheworldclimatesummittobeheldinParisinDecember2015whereacredibleandconvincingsuccessoragreementtotheKyotoProtocolshouldbenegotiated.TheCopenhagenconferencedemonstratedhowgeopoliticalinterestsofgovernmentsprevailedovertheethicalones.WhereastheEUwasstrivingtoachieveconsensusonbindingemissionlimitsforallcountries,thebiggestemitters,USAandChinainparticulardidnotconsent.

Inthemeantime,theIntergovernmentalPanelonClimateChange(IPCC)hasinitslatestreportarticulated,forthefirsttimeindepth,thesignificanceoftheethical,justice,andequityissuesentailedbyclimatechange[4].Itcontainstodatepossibly

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themostelaboratedclarificationofconceptsandmethodsinethicsthatarerelevanttoclimatechange.Twomainissuesconfrontingsocietiesare:whatconstitutesdangerousinterferencewiththeclimatesystemandhowtodealwith.Ethicsinvolvesquestionsofjusticeandvalue.Economictoolsandmethodscanbeusedinassessingthepositiveandnegativevaluesthatresultfromparticulardecisions,policies,andmeasures.TheIPCCarguesthateffectiveclimatechangemitigationwillnotbeachievedifeachagent(individual,institutionorcountry)actsindependentlyinitsownselfishinterest,suggestingtheneedforcollectiveaction.Someadaptationactions,ontheotherhandhavecharacteristicsofaprivategoodasbenefitsofactionsmayaccruemoredirectlytoindividuals,regions,orcountriesthatundertakethem.Nevertheless,financingsuchadaptiveactivitiesremainsamajorissue,particularlyforpoorindividualsandcountries.Fromapublicgoodperspective,globalcoordinationmaybelessimportantformanyformsofadaptationthanformitigation.Analysiscontainedintheliteratureofmoralandpoliticalphilosophycancontributetounderstandingethicalquestionsthatareraisedbyclimatechange,including:howmuchoverallclimatemitigationisneededtoavoid“dangerousinterference”;howtheeffortorcostofmitigatingclimatechangeshouldbesharedamongcountriesandbetweenthepresentandfuture;howtoaccountforsuchfactorsashistoricalresponsibilityforemissions;andhowtochooseamongalternativepoliciesformitigationandadaptation.Ethicalissuesofwellbeing,justice,fairness,andrightsareallinvolved.Dutiestopayforsomeclimatedamagescanbegroundedincompensatoryanddistributivejustice.Fromtheperspectiveofcountriesratherthanindividualsorgroupsofindividuals,historicemissionscanhelpdeterminecausalresponsibilityforclimatechange.TheIPCCreport[4]doesnotattempttoanswerethicalquestions,butratherprovidespolicymakerswiththetools:concepts,principles,arguments,andmethods.

NumerousacademicpapersonclimatejusticewerewritteninthewakeoftheCopenhagenconference2009.Müller,HöhneandEllerman[5]considerthepoliticallysensitiveissueofdifferentiating(historic)responsibilityfor,andnotmerely(causal)contributiontoclimatechange.Theyhighlightthefactthat,whilerelated,thetwoissues(‘contributionto’and‘responsibilityfor’)arefundamentallydifferentandshouldnotbeconfused.Theyalsoproposeamethodologyforcalculatingsharesofresponsibilityasopposedtothesharesincausalcontribution.TheratherlargedifferencebetweentheresponsibilitiesunderbothconceptionsgivespauseforthoughtastowhatsortsofburdenscanjustlybedemandedinanyapplicationoftheUNFCCCprinciple of common but differentiated responsibilities.

Thecumulativesumofacountry’shistoricalemissionsisoneindicatorthattriestocapturethecontributionacountryhasmadetotheclimatechangeproblem.Inmostcasesacountry’shistoricshareofglobalemissionsdiffersfromitscurrentshare.Formostindustrializedcountries,thehistoricshareishigher,inmanycasessignificantlyso.Baumertetal.[6]discussvariousapproacheshowtoassesshistoriccontributions.Theoutcomesdependonmanyassumptions,inparticularwhetherCO2fromland-usechangeistakenintoaccount,andthetimeperiodchosen.Proposalsthatrelyon

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historicalemissionspriorto1990areunlikelytoreceivewidespreadsupport,inpartduetodataconstraints.Noofficialcountry-leveldataexistspriorto1990.Baumertetal.conclude“thatitisunlikelythatthisconceptcanformthecoreofanagreement,orcouldbeassessedinamannerreliableenoughtobethebasisforlegalobligations”.

Dellinkatal.[7]arguethatclimatechangemaycausemostharmtocountriesthathavehistoricallycontributedtheleasttogreenhousegasemissionsandland-usechange.Theyidentify‘consequentialist’and‘non-consequentialist’ethicalprinciplestoguideafairinternationalburden-sharingschemeofclimatechangeadaptationcosts.Usingtheseethicalprinciples,theyderivepoliticalprinciples–historicalresponsibilityandcapacitytopay–thatcanbeappliedinassigningashareofthefinancialburdentoindividualcountries.Theythenproposeahybrid‘commonbutdifferentiatedresponsibilitiesandrespectivecapabilities’approachasapromisingstartingpointforinternationalnegotiationsonthedesignofburden-sharingschemes.AnumericalassessmentofseveralscenariosshowsthatthecountriesofAnnexIoftheUNFCCCwouldbearthebulkofthecostsofadaptation,butrespectivecontributionsdiffersubstantiallysubjecttothechoiceofacapacitytopayindicator.AssumingcostsofclimateadaptationofUSD100billionperyear,thetotalfinancialcontributionbytheAnnexIcountrieswouldbeintherangeofUSD65–70billionperyear,givingarangeofUSD43–82percapitaperyear[7].

Morerecently,Leal-Arcas[8]arguesthatamoreeffective(andpresumablyfairer)waytotackleclimatechangetodayisbybringingonboardthemajorGHGemitters,irrespectiveoftheirGDP,andaskingthemtoreducetheirGHGemissionsinanequitablemannerwithoutignoringthehistoricresponsibilitiesonthepartofdevelopedcountries.TheKyotoProtocol’sstipulationthatonlyAnnexIcountriesreducetheirGHGemissionsdoesnotreflecttoday’sortomorrow’sclimatechangereality,norisitactingfastenoughtoreduceGHGemissionsattheagreedlevels.ItisnotenoughtoaskonlyAnnexIcountriestoreducetheirGHGemissionsiftheaimistosolvetheclimatechangeissue.ThismeanstheBRICScountries(Brazil,Russia,India,China,andSouthAfrica)arepartofthesolutiontoclimatechangemitigation.ClimatechangewillhaveasignificantimpactontheBRICS.Conversely,theexpectedimpactoftheBRICSonclimatechangeisconsiderable.ThesizeandrateofgrowthoftheBRICS’seconomies,oftheirenergydemand,oftheirenergyimports(forinstance,inthecaseofChinaandIndia),andoftheiratmosphericemissionsofvarioustypesmakethesecountriesessentialmajorpartnersinanyregionalorglobaldiscussionsrelatingtoclimatechangeortheproductionandconsumptionofenergy.

However,theBRICSstateshaveverydifferentattitudestowardstheissueofclimatechange,andhowtocopewithit.WhereasRussia,oneofthebiggestexportersoffossilefuels,mayhopethatclimatechangewillbringeveneconomicandpoliticaladvantages[9],ChinaandIndiaarenetimportersoffossilebasedenergyandmoremotivatedtodeveloprenewablesources.AreportbytheInternationalEnergyAgency(IEA)hasdevelopedamatrixthatsituatesclimatechangemitigationeffortsofcountriesintheglobalcontextaccordingtothenationalenergysecurityconcernsandproactive

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measurestoharnessbenefitsofrenewableenergytechnologies[10].Thekeypointisthatdeploymentofrenewables–akeyfactorinclimatechangemitigationefforts-dependscriticallyontwofactors:theGDP and the energyimportdependence. With regardtothechangeofenergyimportdependenceovertime,countriescanbegroupedintofourcategories:(a)stableimportersthattrytocontainorreducedependence(Germany);(b)formerexportersthattrynottobecomedependent(China);(c)formerimportersthatweresuccessfulinbecomingindependent(Denmark);(d)exportersthatarenotconcernedduetolargeresources(Russia).Correspondingly,asdescribedbyHolslag[11],“theChinesegovernmentclearlyintendstocloseexistingtechnologygapinthecomingdecade”.

NeithertheIPCCnorthenumerousacademicanalyseshaveprovidedready-madesolutions–therewillbenoclimatejusticewithoutcorrespondingnegotiationsattheinter-governmentallevel.Theprocessofnegotiatingaglobalclimateagreementforthepost-2020periodaimstolimittheriseoftheglobalaveragetemperaturetobelow2degreesabovepre-industriallevels.AkeycomponentofthesenegotiationswillbetheIntendedNationallyDeterminedContributions(INDCs),ornationalplansforactiononclimatechange,asrequestedbyUNFCCCfromallsignatories.DevelopedcountriesproposethattheINDCsmustfocusonmitigation,haverobusttransparencyandMonitoring,ReportingandValidation(MRV)mechanisms,andthatallpartiesincludingdevelopingcountriesshouldcommittoemissionstargets.DevelopingcountriesontheotherhandexpressthatINDCsshouldvaryaccordingtonationalcircumstancesandincludeclimatechangeadaptation.Theyalsoproposethatdevelopedcountriesshouldleadtheprocess,andincludesupporttodevelopingcountriesforcapacitybuilding,technologyandclimatefinance.AfteraninitiallackofclarityofwhatconstitutesanINDC,developingcountriesarebeginningtounderstandthatthemainfocusofINDCsshouldbeacountry’scontributiontowardsaglobalmitigationgoal,whichcanbeframedasareducedgrowthinemissionsfordevelopingcountries[12].

AllnationswererequestedtosubmitanINDCbeforetheendofMarch2015,withanabsolutedeadlineofendOctober.ByOctober6,2015,therehavebeen110submissionsfrom137countries(EUcombines28countriesin1submission)[13].However,themostsignificantstepwastheJointAnnouncementonClimateChangebytheUSPresidentObamaandChina´sPresidentXi,inNovember2014,andtherecentUS-ChinaJointPresidentialStatementinSeptember2015withnewpolicycommitmentsandacommonvisionforanambitiousglobalclimateagreementinParis[14].TheUSiscommittedtoreduceitsoverallGHGemissionsby26to28%until2025incomparisonwith2005;Chinatookuptheobligationtoreduceitscarbonintensity(CO₂emissionsperunitofeconomicoutput)by60to65%until2030incomparisonwith 2005 [15, 16].

TheClimateActionTracker(CAT)isanindependentscientificanalysisproducedbyfourresearchorganisationstrackingclimateactionandglobaleffortstowardsthegloballyagreedaimofholdingwarmingbelow2°C,since2009[17].ItconcludesthatsubmissionsmadeuntilearlyOctobercover86%ofglobalemissionsin2010

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and86%ofglobalpopulation.SomeINDCsassessedbyCATsofarincluderatingsfortheEU(medium),USA(medium),RussianFederation(inadequate),Canada(inadequate),Ethiopia(sufficient),China(mediumwithinadequatecarbonintensitytarget),SouthKorea(inadequate),Japan(inadequate),Australia(inadequate),SouthAfrica(inadequate).CATconcludesthat“theunconditionalpledgesorpromisesthatgovernmentshavemade,asof1October2015,wouldlimitwarmingto2.5to2.7°Cabovepre-industriallevels.Inotherwords,thereisstillasubstantialgapbetweenwhatgovernmentshavepromisedtodoandthetotallevelofactiontheyhaveundertakentodate”.

3. Towards an EU 2030 climate package: challenges, dilemmas and dividing lines

Whereastheoutcomesofthe2015Parissummitlookhopefulbutstilluncertain,theEuropeanCommissionproposedinJanuary2014a“Policyframeworkforclimateandenergyintheperiodfrom2020to2030”[18],andtheEUCounciladoptedinOctober2014the“2030ClimateandEnergyPolicyFramework”[19].ThetwodocumentsmaintainEU´sambitiousrolewhencopingwiththechallengesofclimatechange.TheyreflectnotonlythedifferentpositionsamongMemberStates,butalsotheimpactofthedramaticdevelopmentsintheneighbouringUkraine.AsfarastheCO2emissiontargetisconcerned,thedivisionlinesrunroughlybetweenEasternEuropeancountriesledbyPoland(advocatingalessstringenttarget),theWesternandScandinaviancountries,whichareinfavourofsharp,nationallybindingtargets,whileFranceis(still)endorsingnuclearenergy1, and Germany and Denmark demand additionalpoliciesfavouringrenewableandcorrespondinginvestmentsinelectricitynetworks[21].TheimpactoftheeventsintheUkraine,andthevulnerabilityoftheEUduetoitsdependenceontheenergyimportsfromRussia,willbeaddressedindetailinsubsequentchapters.

The2030ClimateandEnergyPolicyFrameworkmaybeseenasanintermediatestepbetweenthe2020package(abbreviatedas20-20-20targets,presentlyunderimplementation),andtheveryambitiousEuropeanambitionsforreachingin205080%to95%lessCO2emissionsthanin1990,aspresentedintheEU2050Roadmap[22].

Beforeturningtothe2030policyframework,letusconsidertheachievementsofthecurrent2020package.TheUnionhassetitselfthreetargetstobeattainedby2020forgreenhousegasemissionsreductions(20%),theshareofrenewableenergy(20%)andimprovementsinenergyefficiency(20%).Progresstowardsthese20/20/20targetsincludes[18]:

1 TheFrenchministerresponsiblefortheenvironment,SégolèneRoyal,announcedthegreeningoftheenergysector,implyingthatthenuclearcontributiontoelectricityproductionshouldbereducedfrom75%nowto50%in2025[20].

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• Greenhousegasemissionsin2012decreasedby18%relativetoemissionsin1990andareexpectedtoreducefurtherto24%lowerthanin1990by2020.

• Theshareofrenewablesinfinalenergyconsumedhasincreasedto13%in2012andisexpectedtorisefurtherto21%in2020.

• The EU had installed about 44% of the world’s renewable electricity(excludinghydro)attheendof2012.

• TheenergyintensityoftheEUeconomywasreducedby24%between1995and2011whilsttheimprovementbyindustrywaseven30%.

• Less successful has been progress in improving energy efficiency [23]:energy savings will amount to 18-19% in 2020, with one third of thisprogressduetothelowerthanexpectedgrowthduringthefinancialcrisis.

ThepoliticalprocesswithintheEUleadingtotheadoptionofthe2030targetforrenewablesandfortheemissionsreductionrevealedtwomaindividinglines.

First dividing line: renewables’ target

Intherecentyears,renewableenergyhasbeenagreatsuccessworld-widebutinsomewaysalsoadisappointment,dependingonthepointofview.Itwasasuccess,becausein2013itcontributednearlyahalfofallnewlyinstalledenergyproductioncapacity[24].Itscontributionrosefrom7.8%to8.5%in2013alone,correspondingtoworld-wideinvestmentsof214billionUS$.Itwasadisappointment,becauseworld-wideinvestmentsintorenewablesdecreasedintwosubsequentyears2012and2013.InvestmentsintheEUwentdownby44%to48billion$in2012only,whereasin2013,Chinainvested56billionUS$,thusbecomingworldheadrunner.Whereasthecostpriceofsolarandwindelectricityhasbeendecreasingsharplysince2009,bothsourcesarestilldependentonstatesubsidies.Atthesametime,itshouldbekeptinmindthatworldwideannualsubsidiesforfossilenergyarestillintheorderof500billionUS$.

Renewables’possiblecontributiontotheCO2emissionreductionhasdisappointedrecentlybothattheworldandtheEUlevel.Attheworldlevel,becauserenewables’growthcouldnotcompensatetheevenlargergrowthoffossilutilisationintherapidlygrowingemergingeconomies.IntheEU,theinitiallyspectacularroleofrenewableshasbeenslowingdownforsomeveryspecificreasonsthatcanbeexemplifiedbythedevelopmentinitslargesteconomy–Germany[25].

TheGermanenergypolicyconceptEnergiewende of2010decidedtophaseoutnuclearenergyandintroducedanumberofambitiousquantitativetargetsonGHGemissionsreductionrelyingheavilyontheroleofrenewables.Itwasbasedonanumberofpoliticalandsocietalmotivations:(1)improveprospectsforindustryandemployment;(2)ensureenergysupplysecurity;(3)reduceGHGemissions;(4)profitability;(5)ethicalconsiderations.

TheGermansustainableenergypolicyhasbeenconfrontedwithseveralseriousproblemssince2012:(1)increasingsubsidycostsofrenewableelectricityandhowto

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allocatethem;(2)consequencesoftherapidlyincreasingsolarandwindcontributionsforthefunctioningoftheelectricitymarket;(3)increasingGHGemissionsfromtheelectricitysector.Anadditionalrootproblemwithrenewableelectricityis(4)inadequacy,inbothqualitativeandquantitativeterms,ofthepresenttransmissionanddistributionnetworks,andofstoragecapacities,tocopewiththerapidextensionoftherenewableelectricity.Thefluctuatingandirregularproductionofsolarandwindelectricitywascausingrepeatedlydestabilisationofelectricgrids,thusincreasingtheriskofdamagetoindustrialinstallations.InGermanytheincidenceofgridperturbationsincreased by 30% between 2010 and 2013 [26].

Inonewayoranother,severalEUMemberStateslikeSpainandItalyhavebeenexperiencingsimilarproblemswiththesubsidisedintroductionofrenewableenergy[27].RecentproposalsconcerningtherevisionoftheGermanlegislationarenotlikelytogiveananswertotheincreasingCO2emissions.OnewayoutoftheproblemswouldbeastricterETS(EmissionTradingSystem)regimeattheEUlevel.Initspresentform,withatoolowpriceoflessthan10Euro/tforCO2emissionsunderthepresentETS,therearepracticallynoincentivestoswitchoverfromfossiltorenewableenergy.

Moreover,anumberofEUstateslikeUKandtheNetherlands,whichexploitandexportnaturalgas,haveinfinancialrespectnostrongincentivetoadoptnationallybindingtargetsforrenewables.Thismayexplainarecentposition[28]byPrimeMinisterCameronwherehe,inresponsetodependenceonRussiangasimports,refersnotonlytothepossibilityofimportsfromUSandIraq,butalsoformoreEuropeanshalegasandnuclearenergy.Poland,withpresumablylargestshalegasreservesinEurope,isanotheradvocateofshalegas.

Second dividing line: CO2 emission reduction target

In2012,withrespectto1990,GHGemissionsintheEUdecreasedby18%-partlyduetotheeconomicrestructuringinEasternEuropeandtheeconomiccrisis.Beingpresentlyresponsiblefor11%oftheannualglobalemissions,afurtherreductionof40%by2030wouldcontributeonly4.5%totheglobalemissionsin1990–andrelativelyevenlessinviewoftheworryingrapidincreaseofemissionsworld-wide.ConservativeEuropeanpoliticiansarguethatsincecopingwithglobalwarmingcanbereachedonlythroughglobalaction,Europeshouldnotadoptambitioustargetsaslongasaglobalagreementhasnotbeenreached(“worldwouldstillbegettingwarmer,butEuropepoorer”).Greenandalliedpoliticians,onthecontrary,arguethatEuropemustshowleadershipbydemonstratingthatanambitiousclimatepolicycandelivergreengrowthandemployment,thussettinganexamplefortherestoftheworld.WithintheEU,moststatesandtheEuropeanParliamentsupportedthe40%reductiontarget.Forcountrieslike Denmark, Germany and The Netherlands, this was the minimum. Poland did not agreeandfindssupportofmostcountriesofCentralandEasternEurope.Finally,twoargumentsactedinfavourofa40%reductiontarget:(a)emissionreductionoflessthan40%wouldmakeatargetofemissionreductionby80%or95%in2050evenless

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credible;and(b)reducedavailabilityofRussiangasduetothecrisisintheUkraine,strengthenedtheadvocatesofamorerapiddecarbonisationofeconomy.

Thekeyelementsofthe2030 Climate and Energy Policy FrameworkadoptedbytheEUCouncilon23October2014areasfollows[19].

A binding greenhouse gas 40% reduction target below the 1990 level, to be met throughdomesticmeasuresalone;thereductionsintheETSandnon-ETSsectorsshallamountto43%and30%by2030comparedto2005,respectively.

A well-functioning, reformed Emission Trading System (ETS). The annual reduction inthe‘cap’onemissionsfromEUEmissionTradingSystem(ETS)sectorswillbeincreasedfrom1.74%nowto2.2%after2020.

Renewables and energy efficiency.AnEU-widebindingtargetofatleast27%issetfortheshareofrenewableenergyin2030.ItwillnotbetranslatedintonationaltargetsthroughEUlegislation,thusleavingflexibilityforMemberStatestotransformtheenergysysteminawaythatisadaptedtonationalpreferencesandcircumstances.Theintegrationofrisinglevelsofintermittentrenewableenergyrequiresamoreinterconnectedinternalenergymarketandappropriatebackup.AnindicativetargetattheEUlevelofatleast27%issetforimprovingenergyefficiencyin2030.Itwillbedeliveredinacost-effectivemanneranditwillfullyrespecttheeffectivenessoftheETS-systemincontributingtotheoverallclimategoals.Thiswillbereviewedby2020,havinginmindanEUlevelof30%.

Achieving a fully functioning and connected internal energy market isoffundamentalimportanceandamatterofurgency.PreventinginadequateinterconnectionsofMemberStateswiththeEuropeangasandelectricitynetworksandensuringsynchronousoperationofMemberStateswithintheEuropeanContinentalNetworksasforeseenintheEuropeanEnergySecurityStrategywillalsoremainapriorityafter2020.

Governance.TheEuropeanCouncilagreedtodevelopareliableandtransparentgovernancesystemensuringtomeetenergypolicygoalsfacilitatingcoordinationofnationalenergypoliciesandfosteringregionalcooperationbetweenMemberStates.

Energy security.TheEuropeanCouncilendorsedfurtheractionstoreducetheEU’senergydependenceandincreaseitsenergysecurityforbothelectricityandgas,andrecognisedthatitcanbeincreasedbyhavingrecoursetolowcarbontechnologies.Itemphasisedtheimportanceofcriticalprojectinthegassector,suchastheNorth-SouthCorridor,theSouthernGasCorridor,aswelltheneedtoensurediversificationofenergysuppliersandroutes,andmarketfunctioning.ItalsorecalleditsgoaltobuildanEnergyUnion.

Theissueofenergysecuritywillbeaddressedinmoredetailinsubsequentchapters.

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4. Current status of european energy policy and supply security

4.1. European energy policy in crisis

TheenergypolicyoftheEUisbasedonthreemainpillars:sustainability(theclimatecomponentofithavingbeendiscussedinprevioussections);securityofenergysupply;andcompetitivenessthroughmarketliberalisation.Duetopresentfinancialandeconomicpressures,allthreepillarsarefullofuncertainties.Energysecurity is additionallythreatenedbythegeopoliticalfactorsandthelackofacoherentexternalenergypolicy.Marketliberalisation and thus competitivenessareunderpressurebyprotectionism.Environmental sustainabilityisputinquestionbyrelatedcosts.Thethreechallenges–competitiveness,sustainabilityandenergysecurity–aremutuallypartiallysupporting,butpartiallycontradicting.ongoingenergymarketreformwillbecrucial.

4.2. Reform of the European energy market

EvenbeforetheUkrainecrisis,theEUenergysectorpolicyhasbeenundergoinganevolutionaryreformprocess.WithreferencetothefundamentalprinciplesoftheEU(freemovementofgoods,capital,services,andpeople),theEChasbeenpromotingmarketliberalisationasthebasisfortheefficiencyoftheenergysectorandthecompetitivityoftheeconomyasawhole.Ontheonehand,theenergysectormustconformtothegeneralprinciplesofthefreemarket,inparticulartothegeneralanti-monopolylawssuchasthosereferringtofreepriceformationandprohibitionofpricefixingbymonopolisticinterestgroups.Ontheotherhand,between1996and2003,severaldirectivesandregulationsaimingspecificallyatgasandelectricitysectorswereadopted,requiringthattransmissiongridsbebemanagedindependentlyfromproduction and supply.Thesedirectivesaimatthoroughlytransforminggasandelectricityindustriesfrommonopolisticconglomeratesintocompetitivemarkets.Stillin2007,theCommissionreported“seriousproblems”intheunbundlingofgasandelectricitymarkets,asthestillverticallyintegratedcompaniesdominatedstateorregionalmonopolies.Rapidascentofdecentralisedelectricityproductionfromsolarandwindwasanadditionalreasonforspeedingupthereformofenergymarketsandcorrespondinginfrastructures.Theliberalisationofenergymarketshasemergedaskeyconditionandfactorintheprocesstomakethemmatureforalargercontributionofrenewables.

ThecorrecttranspositionoftheEuropeanelectricityandgaslegislationinallMemberStatesisstillnotcomplete.Becauseofthis,theThird Internal Energy Market Package wasadoptedin2009toaccelerateinvestmentsinenergyinfrastructuretoenhancecrossbordertradeandaccesstodiversifiedsourcesofenergy.Itconsistsoftwodirectivesandthreeregulations[29].Thethreemainoptionstoweakenthemarketpowerofthebiggestgasandelectricityfirmsinclude:ownership unbundling;

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independent system operator (ISO); and independent transmission operator (ITO). Ownershipunbundlingisintendedtosplitelectricitygenerationfromtransmission,thusensuringthatthemarketdoesnotsufferfromverticalintegration.Anotherpossibilityistoletthetransmissionnetworksremainundertheownershipofenergygroups,buttransferringoperationandcontrolofday-to-daybusinesstoanindependentoperator.Athirdoption,theITO,envisagesenergycompaniesretainingownershipofthetransmissionnetworks,withtransmissionsubsidiariesbeinglegallyindependentjointstockcompanies,underastrictlyautonomousmanagementandunderstringentregulatorycontrol[29].

TherehavebeendividinglineswithintheEUbetweentheCommission,Parliament,theMemberStatesandvariousinterestgroupswithrespecttoseveralissuesofenergysectorliberalisation.France,andpartlyGermany,wereagainstdismantlingofbig(national)energycompanies;andtherewasnocommonwilltoreducethegenerousallocationsofindustrialemissionsundertheETS.Severalgassupplycrises(2006,2009)ledtotheguidelinesfortrans-Europeanenergyinfrastructurein2013[30].Ontopofthat,afternumerousfailedattemptstofinalisebilateralenergyco-operationagreementswithRussia,theCommissionhasproposedatough‘reciprocityclause’forenergyrelationswiththirdcountries.ThemoveiswidelyseentobetargetedatRussianstate-controlledenergygiantGazprom.Thereciprocityclausewasinsertedasanapparentresponsetofearsthatownershipunbundling-theseparationofintegratedenergyfirms’productionassetsfromtheirtransmissionassets-wouldleadtotheindiscriminateacquisitionofEUenergygridsbythirdcountries.“Toprotecttheopennessofourmarket,toprotectthebenefitsthatunbundlingwillbring,weneedtoplacetoughconditionsonownershipofassetsbynonEUcompaniestomakesurethatweallplaybythesamerules,”CommissionPresidentJoséManuelBarrososaidinastatementon19September2007,thedaytheCommissionunveileditsnewproposals[31].Aswillbeseen,this“Gazpromclause”isplayingakeyroleintheresponseoftheEUtotheUkrainecrisis.

NeitherofabovementionedinstrumentswasabletogiveadefinitiveandeffectiveresponsetoanumberofsignificantchallengesanddevelopmentswithinandbeyondthebordersoftheEU.Theseinclude:(1)thecontinuouslyincreasing import dependency oftheEU(54%ofinternalenergyconsumptionofEU-27in2010isbasedonimports;thedependencyisincreasing);(2)technological improvements of the main competitors (explorationandhorizontaldrillingindeepocean,“fracking”technologyforshalegasand oil); (3) new directions of energy supply(newgasandoilpipelinesfromCentralAsia;cheapergasintheUSA,andthuscheapercoalfromtheUSA;USAonthewaytoUSenergyimportindependence;plansfortheexplorationanddrillingintheArcticOcean);(4)ascent of new energy producers:Africa,LatinAmerica.AllthesechallengeswillremainunansweredunlesstheEUsucceedsinadoptingacommonandcoherentexternalenergypolicy.

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4.3. Current European security of energy supply: the broad picture [32]

Total demand for energyhasbeenincreasingslowlyintheperiod1995-2006,butsincethenhasbeengraduallyfalling.Itisnowmorethan8%belowits2006peakduetoacombinationoffactors(economiccrisis,structuralchanges,efficiencyimprovements).Thecompositionofgrossinlandconsumptionchangedslowly,withtheshareofgasgoingupfromaround20%to23%betweenthemid-1990sand2012,theshareofrenewablesmorethandoublingtoalmost11%in2012.Sharesofsolidfuelsdeclinedfrom21%to17%,oilfrom37%to34%,whilstnuclearremainedstableat13%.

Overaperiodof20years, import dependency has increased by almost a quarterduetodeclineofEUproductionofoil,gasandcoal.However,since2006,theincreasingshareofrenewablesaswellasthereductionofoveralldemandcontributedtoastabilisationofimportdependency.Oilconstitutesatalmost90%oneofthelargestsharesofimportdependency,followedby66%forgasand62%forcoal.Thelowestimportdependencyof4%occursforrenewableenergy.NearlyallMemberStatesareheavilydependentas18ofthemimportmorethan50%oftheirenergy.PolandandUKhavegonefromhavinganenergysurplustoasignificantdeficit,Denmarkhaschangedfromdeficittoslightsurplus.

Crude oil:risksofsupplydisruptionaremitigatedbyliquidglobaloilmarketsandregulatedstocks,buthighimportdependencycanleadtopriceshocks.

Gas:developmentofmarketsandgasinfrastructure(interconnectors,reverseflowsandstorage)areimprovingresilience,butashorttermwintersupplydisruptionthroughUkrainetransitroutesmayposesignificantchallenges,inparticularforBulgaria,Romania,HungaryandGreece.TheBalticStates,Finland,SlovakiaandBulgariawereuntilrecentlydependentonasinglesupplier–Russia’sstate-ownedGazprom-fortheirentiregasimports(Fig.1).

Theflexibilityoftransportinfrastructureintermsoflocation,numberandavailablecapacityofpipelinesandLNGterminals,undergroundstorageandthewayinfrastructureisoperatedallplayanimportantroleinshapingtheresilienceofthegassector.Thepotentialtooperatepipelinesintwodirectionsincreasestheresilienceincaseofsupplydisruption.Furtherinvestmentinphysicalreverseflowsisthereforeimportant.EUimportpipelinecapacityisequivalentto8776GWh/day,roughlycomparabletothecapacityofLNGterminals(6170GWh/day).ThescopeforusingmoreoftheLNGcapacitydependslargelyontheirlocationandinfrastructure.ThereismorescopeontheIberianpeninsulaandlessforsuppliesinEasternEurope.TheEuropeanNetworkTransmissionSystem-GasestimatedthatpotentialdisruptionsofpipedRussiangaswillaffectamajorityofEUmemberstatesdirectly,exceptforFrance,SpainandPortugal.

Solid fuels:increasingimportdependence,liquidmarkets,butlowlevelofmodernisation,ageingcoalpowerplants,lowefficiencyandlackofdiversificationleadtohighcarbonintensityinsomecountries.Between1995and2012,thedemanddeclinedbyalmost20%,fallinginnearlyallMemberStates.Theimportdependency

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hasbeenincreasingalsoduetotheclosureofuncompetitivemines,andcurrentlystandsat42%.Forhardcoal,thisfigureincreasestomorethan60%,withRussiabeingthemain source.

Nuclear:supplyofuraniumisdiversified,butfinalfuelassembliesarenot,notablyforRussianreactorsinBulgaria,CzechRepublic,Finland,HungaryandSlovakia.

Renewable energyisthemostindigenousresourcewithgreatestfueldiversity,butwithconcernsregardingthevariablenatureofwindandsolarpower,creatingchallengesintermsofreliability,andrequiringadaptationofthegrid.

Electricityisanincreasinglydiversefuelmixwithhighsystemreliability,butmoreintegratedandsmartinfrastructureisneededtoenhancemarketfunctioning,improveefficiencyandtheintegrationofrenewableanddistributedgeneration.Thelimitedstoragecapabilitiesposeparticularchallengestothetransmissionanddistributionnetworkinfrastructure.

Fig. 1: Dependency of EU member states on natural gas supplies from Russia (2014). Horizontal axis: % of natural gas in the energy mix; vertical axis: % of

Russian natural gas in national natural gas consumption; size of circles: volume of imported Russian natural gas. [33]

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Existing measures on energy capacity, transport and storage: for oil,followingIEApractice,theEUhasoilstockstoragerulesanddemandrestraintactionplansthatcanhelpimproveshorttermresilienceintheeventofapriceorsupplyshock.Inthegassector,EUrulesforrespondingtoshocksareweaker.RecentEUinfrastructurepolicymeasuresimprovedreversegasflowoptionsandreducedtheweaknessofresilience.Adequateinventoriesmakeashortageofnuclearfuelhighlyunlikely.

TheCommission“Policyframeworkforclimateandenergyin theperiodfrom2020to2030”[18][proposestoincreaseindigenousenergysourcesreduceenergyconsumption.Theproposedgovernancescheme,basedonnationalplansforcompetitive,secureandsustainableenergy,shouldincreaseregionalcoordinationandcoherencebetweenEUandnationalpolicies.Successindicatorsinclude:diversificationofenergyimportsandincreaseofindigenousenergysources;deploymentofsmartgridsandinterconnectionsbetweenMemberStates;andtechnologicalinnovation.Theprojectedreductionintotaldemandisimportantfromanenergysecurityperspective,butalsofromaneconomicperspectivetoreducethetotalimportbill.

5. Energy in the post-cold-war confrontation

5.1. The Ukraine crisis

AsstatedbyTimothySnyder,ahistorianandexpertonEasternEurope[34],theRussianinvasionandoccupationoftheUkrainianprovinceCrimeawasafrontalattackontheEuropeansecurityorderandontheUkrainianstate.Putin’sstatementin2005that“disintegrationoftheSovietUnionrepresentedthelargestgeopoliticalcatastropheofthe20thcentury”[35]impliestwothings:(a)underpinningofRussia’saimtoregainlostterritoriesandinfluence,e.g.throughtheemergenceoftheEurasianUnion;and(b)thehighpriorityRussia’sleadershipassignstogeopoliticalconsiderations.Ukrainehasbecomeaplaceofconfrontation,withenormousconsequences,betweenthe“softpower”EUandPutin’s“hardpower”ofoldnationalistictype[36].AccordingtoBrunoTertraisoftheFondationpourlarecherchestrategiqueinParis,asquotedbyBridel[37],“PutinmakesthesynthesisofTsarismandStalinism”.ThemostprobableRussiangoalremainstokeepUkraineparalysed,andassuchunsuitableformembershipinbothNATOandtheEU[38].Inthisconfrontation,thewholespectrumofweapons-military,political,economic,andpropagandistic–maybeused.

WhatcanbeorwillbearesponseoftheWesttoRussia’sconfrontationalcourse?AccordingtotheformerGermanforeignaffairsministerJoschkaFischer[39],thekeytotheUkrainiancrisisliesintheEU.Putincannotbeimpressedbysanctions,butonlybyapowerpolitical(machtpolitisch)consensuswithintheEU,wherebyajointenergypolicywouldbethefirststrongsign.TheUkrainecrisisthusfocusedtheattentionupontheroleofGazprominEuropeannaturalgassupplies[40],themoresoasoilandgasare,apartfrombeingpotentialpoliticalandeconomicweapons,thedominantmaterialexportproductofRussianFederation.

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5.2. Energy/gas as weapons in the post-Cold-War confrontation

ThecollapseoftheSovietUnionanditssatellitegovernmentsinCentralandEasternEuropeopenedupthoseeconomiestoglobalizationandmadetheirenergy-relatednaturalresourcesavailableonglobalmarkets.Developed,yetenergy-poor,Westerneconomiessawopportunitiestoenhancetheirenergysecuritythroughthoseeconomies.AccordingtoLeal-ArcasandFilis[41],theEUhassoughttoentanglethoseenergy-richstates(orotherwise‘energy-significant’,e.g.,regardingenergytransit)intomultilateralregimes–suchasthosebasedontheEnergyCharterTreaty(ECT)2 andtheEnergyCommunity(EnC)3.WhileboththesespecialregimescountamongtheirnumbersseveralpartiesthatarenotEUmemberstates,theyarenotneutralin their raison d’être,giventhattheseregimeswereinherentlylinkedtotheenergyinterestsofanincreasingnumberofEUeconomies.TheECTwasatimelyresponsetosignificantgeostrategicevents–thecollapseofthebureaucraticregimesintheeasternandcentralpartofEuropeandthere-shapingofmachtpolitikregionally–thathadenhancedopportunitiesfortheindustriesofthedevelopedWesternEUmemberstatestoaccessenergyresourcesinthoseregions,whilsttheEnCcameafewyearslatertoplaceonamoreinstitutionalizedfootingtheintegrationofenergymarkets–chieflygasandenergy–throughregulatoryconvergenceacrossEnCmembers.InthecaseoftheEnC,theEUisaffordedaprominentpositioninthatcertainareasofitsacquis are inductedintotheEnC’slegalorder,theEUhasmoreinfluencethanitsEnCpeersinthehighestdecision-makingbodiesoftheEnC,andtheEnCisessentiallytherealizationofEUexternalenergypolicywiththosestatesbetweenitanditsmainenergysupplier,namely Russia [41].

Inthelastfewyears,however,EUhasbeenconfrontedwithaRussiausingitsenergyexportsasapoliticalweaponagainstitspoorermembersthatwerepreviouslyunderSovietdomination.Putin’sRussiaattempted“toplayoffwealthyWesternEuropeagainstpoorerEasternmembersbyofferingpriceflexibilitytoFranceandGermanywhiletreatingaPoland,aBulgaria,oranEstoniaasiftheystillfellundertheBrezhnevDoctrine.ThatwastheSovietUnion’snotionofitsimmediateneighbours’limitedsovereignty,reiteratedbyPresidentDmitriMedvedevafterRussiantroopsenteredGeorgiain2008”[42].InresponsetothatdevelopmenttheEuropeanCommission

2 TheEnergyCharterTreatywassignedinLisboninDecember1994.Formembership,see:http://www.encharter.org/index.php?id=61&L=1%2Ffileadmin%2Ftemplate%2Ftypo3conf%2Fext%2Fdropdown_sitemap%2Fpi1%2Fplus.gif.TheRussianFederationhassignedECT,butdidnotratifyit.Itwasapplyingitprovisionallyuntil18October2009inclusive.

3 TheEnergyCommunitywasestablishedbyaninternationallawtreatyin2005inAthens,Greece.See:http://www.energy-community.org/portal/page/portal/ENC_HOME/ENERGY_COMMUNITY/Who_are_we.ThePartiestotheTreatyarepresently(status1Jul2013):EuropeanUnionandeightContractingParties,comprisingAlbania,BosniaandHerzegovina,Kosovo*,fyRofMacedonia,Moldova,Montenegro,SerbiaandUkraine.Armenia,Georgia,NorwayandTurkeytakepartasObservers.GeorgiaispresentlyintheprocessofjoiningtheEnergyCommunityasafullfledgedmember.

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openedformalproceedingsagainstGazpromon31August2012,whichresultedinApril2015inaStatementofObjectionstoGazpromallegingthatsomeofitsbusinesspracticesinCentralandEasternEuropeangasmarketsconstituteanabuseofitsdominantmarketpositioninbreachofEUantitrustrules[43].GazpromisallegedlyhinderingcompetitioninthegassupplymarketsineightMemberStates(Bulgaria, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland and Slovakia) by implementinganoverallabusivestrategyinthesegasmarkets,inparticularthrough:territorialrestrictions;unfairpricingpolicy;andbymakinggassuppliesconditionalonobtainingunrelatedcommitmentsfromwholesalersconcerninggastransportinfrastructure.Lithuaniaclaimedalmost€1.3billioncompensationfromthecompanyataninternationalarbitrationinStockholmforallegedly“unfair”gasprices[44].

Russia’sstrategicattitudesandmeanswhenusingenergy/gasaseconomicandpoliticalweaponintheongoingpost-Cold-Warconfrontationmaybecharacterisedasfollows.

a. Assigning high priority to the extension of territorial control (e.g. byterritorialclaimsintheArctic;bycontrollingenergysupplyto,andthroughformerSovietrepublicsandformerSovietsatellitestates;theimportanceofCrimeaforcontrollingpresumedBlackSeagas/oilfields);thisincontrasttolowerpriority,orsystemicinability,forinnovation(backlogindeepoceanoil/gasexplorationanddrilling;backloginfrackingtechnology;negligibleinvestmentsinrenewablesolar/windenergy).

b. StrivingtocementGazpromdominanceintheEUgasmarket[45].Onthataccount,tryingtobypass,orevendisciplinebyretortionmeasures,possibletroublemakers (former Soviet republics like Baltics, Belarus, Ukraine,or former Central Europe satellite states like Czech Republic, Poland,Slovakia)4; at the same time relying uponwilling countries likeGreece,Hungary,Serbia;andincaseofseriousresistance,asinUkraine,militaryinterventionnotbeingexcluded.

c. Increasing foothold inGermany, andAustria, bothwith excellent recordfor long-term energy contracts with Russia, by strengthening their rolesas transit countries for other EUmember states [48]. In 2006, PresidentVladimirPutinhadpubliclyofferedtoselectGermanyasadistributionhubforRussiangasinWesternEurope[49].Thisimpliesextensionandvertical“bundling”ofgasinfrastructuresownedbyGazprom,includingownershipofpipelinesfromRussiatoGermanyandAustria,ofcriticalgasstorageonEUterritory,aswellofpipelinesconnectingGermany,andpossiblyAustria,tootherEUmemberstates,ifneededbybreachingEUlaw.

d. MakinguseoftheweaknessesoftheEU,suchas:lackofacommonandcoherentEUexternalenergypolicy;highdependencyofsomeEUmember

4 ASwedishDefenceResearchAgencystudycountedover55incidents1991and2007,mostwith“bothpoliticalandeconomicunderpinnings”[46],[47].

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statesongasimportsfromRussia;poororinconsistentimplementationofrelevantanti-monopolyand“unbundling”EUlegislation,evenwithin theEUmemberstates.WiththebackingoftheKremlin,andsometimeshelpfrominterestedEuropeanparties,state-controlledGazprommaybeintentonrollingbackstipulationsoftheThirdEnergyLegislationPackageonEUterritory [49].

e. BringingifneededlegalconflictswiththeEU(anti-monopoly,unbundling)for litigation to theWorldTradeOrganisation (WTO)orotherarbitrationforums.

Casesillustratingtheabovecontentionsareamongothers:thehistoryandongoingevolutionoftheNordStreamPipeline;thefailedSouthStreamPipeline,anditsalternatives;andtheassociatedpoliticalandlegalcontroversies.Asacommondenominator,MoscowawardslucrativeproductionandservicecontractstomajorEuropeancompaniestoexecuteGazprom’spipelineprojectsinEurope.SuchcontractshelpgeneratepoliticalsupportwithintheEUforGazprom’sprojects,sometimesirrespectiveoftheEU’senergylegislation.

5.3. Nord Stream

Nord Stream gas pipelineisanoffshorenaturalgaspipelinefromVyborg(RussianFederation)toGreifswald(Germany),promotedbyRussia’sgovernmentandagreedbyGermangovernment5.Italsoreceivedsupport,in2008,bytheEuropeanenergycommissioner[51].Initsbroadermeaning,itincludesthefeedingonshorepipelineinRussia,andfurtherconnectionsinWesternEurope(Fig.2).Itconsistsoftwolines,inauguratedin

Fig. 2: Nord Stream with extensions [52]

5 TheagreementtobuildthepipelinewassignedtendaysbeforetheGermanparliamentaryelectionin2005.SoonafterleavingthepostofGermanFederalChancellor,GerhardSchröderagreedtoheadtheshareholders’committeeofNordStreamAG.ThishasbeenwidelydescribedbyGermanandinternationalmediaasaconflictofinterest[50]

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2011and2012,respectively.Itsowner,NordStreamAG,appliedin2012toFinnishandEstoniangovernmentsforroutestudiesintheirexclusiveeconomiczonesforthethirdandfourthlines.NordStreamfeedsintoOPALinGermany,whichinturnfeedsintotheGazellepipelineintheCzechRepublic.OPALandGazelle,bothbeingsourcedfromNordStream,connecttotheexistingpipelinegridinMiddleandWesternEurope,andopenanewrouteforGazpromintoEUterritory6. Nord Stream, 51percentGazprom-owned,isthelargest-capacityoffshorepipelineinEuropeat55billioncubicmeters(bcm)annually.OPALandGazelle,at35bcmand30bcmperyear,respectively,arethelargest-capacityonshorepipelinesinEUterritory[53].GazpromcontrolsOPALinGermanythroughtheGazprom-WintershalljointcompanyGascadeGastransport,holding80-percentownershipandoperatingrights.

TheNordStreamprojectwasseenashighlycontroversialforvariousreasons,includingincreasingEuropeandependenceonRussia,bypassingofPoland,andpotentialenvironmentaldamage.WhereasRussia’spositionisthatthepipelineincreasesEurope’senergysecurity,asitwouldreduceRussia’sdependenceonthetransitcountries,sometransitcountrieswereconcernedthattheKremlinmayattempttoexertpoliticalinfluenceonthembythreateningtheirgassupplywithoutaffectingsuppliestoWesternEurope[54].Byaddingathirdandpossiblyafourthlinetotheexistingtwo,GazpromviaNordStreamwouldbecometheexclusiveproviderofRussiangastoOPALandNEL[48].Theselarge-capacitylinesaremainlyintendedtoprovidetransitserviceforRussiangasacrossGermany,enroutetothirdcountries,mainlytargetinggasmarketsintheEUbeyondGermany.TargetedacquisitionsofGermanstoragecapacitiesbyGazpromcorroboratethatintention7.TheemergingtransitsystemissoconfiguredthatOPALandNELcanonlybesourcedwithgasfromNordStream.Thiswouldprecludeanindependentthird-party’saccesstoOPALandNEL,exceptontermsamenabletotheRussianside.

InGermany,aswellasinBrussels,theRussiangovernmentwaspressingfortheOPALgaspipelinetobereleasedfromthestipulationsoftheThirdLegislativePackage.UndertheThirdLegislativePackage,agasproducercompanysupplyingagivenmarketmayneitherownandoperate,norexclusivelyuse,pipelinesandstorageinthatsamemarket.Acompanyinthatposition,suchastheverticallyintegratedGazprom,

6 NordStreamalsofeedsintotwootherpipelinesinGermany,NEL(towardsHamburg)andNORDAL(towardsBerlin,stillunderplanning).

7 WithNordStream,OPALandNELcontrolledbyGazpromasthemainshareholder,Germanygainsanewsignificanceastransitcountry,aswellasaprimecustomercountryforRussiangas.ButGazpromisalsoaccumulatinggasstoragecapacities,indispensabletosupportingitsexportandtransitoperationsinGermany.DevelopmentofstoragecapacitieshadlaggedbehindpipelineconstructioninGazprom’sexportstrategyinrecentyears.NordStreamwasbuiltunaccompaniedbygasstoragesites,whetheronRussianoronGermanterritory.However,GazpromandaffiliatedRussianfirmshavemovedtodevelopundergroundgasstoragecapacitiesonGermanterritory.StoragesitescontrolledbyGazprominGermanyareplannedtooperateincorrelationwithGazprom-controlledtransmissionpipelines.Thisongoingprocessofverticalbundlingaddsalong-missingdimensiontoGazprom’sexportstrategyinEurope[55].

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isrequiredtoseparate(“unbundle”)itssupplybusinessfromeffectivecontroloftheinfrastructureituses.Itisalsorequiredtoallowcompetitorsupplierstouseupwardsof50percentofthosepipelines’capacities(“third-partyaccess”).TheThirdPackageappliesirrespectiveofwhethertheverticallyintegratedcompanyinquestionhasalreadymadeinvestmentsintotheconstructionofthosepipelines,orproposestostartdoingso.ButtheEuropeanCommissionhasallowedGazpromtotakeoverWINGASandtomaintainpre-existingGazprom–WintershalljointcontrolofGermanpipelines.

InFebruary2009,theGermany’senergyregulatorexemptedtheOPALpipelinefromnetworkaccessandtransitfeesregulationfor22yearsafteritslaunch[56].However,theexemptionfromcompetitionregulationsmaybreachEUregulations,anditwasreportedthattheEUareinvestigating[57].GazpromappliedforanincreasedaccesstotheOPALpipeline.ShortlybeforemilitaryinterventionintheUkraine,RussianPresidentVladimirPutin,concludingtheEU-RussiasummitinBrusselsonJanuary28,2014,hintedthatEuropeanauthoritieswouldallowGazpromtouseasmuchas100percentoftheOPALpipeline’scapacity.However,inJuly2014,theEuropeanCommissionandtheGermangridregulatorBundesnetzagenturagreedtopostponethedeadlineforadecisiononOPAL[58].

AnewchapterinthegameconcerningtheexpansionoftheNordStreampipelinewasopenedinearlySeptember2015whenGazpromanditsEuropeanpartners(E.ON,ASF/Wintershall,OMV,ENGIEandRoyalDutchShell)signedashareholders’agreementontheNordStream-2gaspipelineproject(doublingthepresenttransportcapacity)thatwouldbypassUkraineandbringEuropecloserintoMoscow’senergyorbit.SlovakPrimeMinisterRobertFicosaidon10September2015thatthedealwasa“betrayal”thatwouldcostUkraineandSlovakiaacombinedbillionsofEuros[59].Slovakia’sandPoland’spresidents,AndrejKiskaandAndrzejDuda,announcedon2October2015thattheyareagainsttheconstructionofNordStream2[60].

5.4. Southern approaches

ThemeeknessandinconsistenceinhandlingtherulesoftheThirdLegislativePackagewithrespecttoNordStreammaybeexplainedbythefaitsaccomplis,economicallyandpoliticallyinlinewithGermany’senergypolicyandtheGerman-Russianrelations.ButinthecaseofagreementssignedwithMoscowbysmallermembercountriestobuildSouthStream,theEuropeanCommissionchosetoassumeamoreastuteposition.

SouthStreamwasplannedasapipelinetotransportRussiannaturalgasthroughtheBlackSeatoBulgariaandthroughSerbia,HungaryandSloveniafurthertoAustria,withlinkstoCroatiaandMacedonia.TheRussiangovernmentandGazpromhavesignedbetween2008and2013inter-governmentalandcorporateagreementstobuildsectionsoftheSouthStreampipelinesysteminsixwillingEUmembercountries(Bulgaria,Hungary,Austria,Slovenia,Croatia,Greece),aswellasinSerbia,MacedoniaandthroughTurkishterritorialwaters.ThejointventureSouthStreamAG,equally

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ownedbyGazpromandENI,wasregisteredin2008inSwitzerland,andashareholders’agreement,signedbetweenGazprom,ENI,EdFandWintershallestablishedanewcompanySouthStreamTransportAG.ConstructionoftheRussianonshorefacilitiesforthepipelinestartedinDecember2012[61].

Theprojecthascreatedcontroversies,includingduetonon-compliancewiththeEUcompetitionandenergylegislation.SouthStreamhasbeenseenasdivertingsomegastransportedthroughUkraine,insteadofprovidinganewsourceofgasforEurope[62].ItwasseenasrivaltothenowabandonedNabuccopipelineproject.TheEUhasfrequentlyadvisedRussiaanditsEuropeanpartnersthatagreementsontheconstructionoftheSouthStreampipelineshouldcomplywiththeEU’sThirdEnergyPackageregulations.Asexpected,threemainissueshaveraisedparticularconcerninBrussels[63].First,networkownership“unbundling”requirestheseparationofenergysupplyandenergynetworkprovision.Gazpromhad50–51percentownershipofthejointcompaniesthatweresupposedtoconstructandownthepipeline.Second,Gazpromwasnotwillingtoallownon-discriminatoryaccessofthirdpartiestothepipeline.Third,anindependentoperator,insteadofthepipelineowner(s),shouldhavedeterminedthetransittariffs.EnergyCommissionerGüntherOettingersaidinDecember2013thatthebilateralagreementssignedbysevencountrieswithMoscowmustrespectEUlaw[64].

WhileWashingtonandBrusselswereimposingmoresanctionsagainstRussiafordestabilizingeasternUkraine,theKremlinwasretaliatingbydeepeningdivisionswithintheEuropeanUnionthroughtheprospectiveSouthStreamnaturalgaspipeline[65].OnApril17,2014theEuropeanParliamentadoptedaresolutionstatingthattheSouthStreampipelineshouldnotbebuiltandtheEUshouldlookforothersourcesofsupplytoreducedependenceonRussiangas[66].However,severalEuropeancountriesincludingHungary,ItalyandAustriawerestilltryingtosalvagetheproject,claimingthatitisstrategicallyimportantforEurope.Remarkably,Austria’sEconomyMinisterReinholdMitterlehnerexpressedsupportfortheeffortsofthepartiesontheimplementationoftheSouthStreamprojectonAustrianterritory[67].AnothersupporterofSouthStreamappearedtobeBulgaria,whichisheavilydependentonRussianenergyandseemstohaveextensivenon-transparenttieswithRussianenergycorporations.ThedisagreementontheSouth-StreamProjectledtoasplitwithinthegovernmentcoalition[68].Eventually,BulgariasuspendedSouthStreaminJune2014aftertheCommissionstartedaninfringementprocedureagainstSofia[69].Serbia,theotherstaunchbackerofSouthStream,hasfailedtorespondtorepeatedrequestsfromBrusselstoinspecttheoperationsofSrbijagasandYugorosgas,thetransmissionsystemoperatorsintheSouthStreamsectionthroughSerbia.Asaresult,theEUEnergyCommunityhasaskedtheEUCounciltoexaminethelegalityofbilateralagreementsontheconstructionoftheSouthStreamgaspipelineconcludedbetweenSerbiaandGazprom.TheEuropeanEnergyCommunityconsideredtheagreementsbetweenSerbiaandGazpromasnotincompliancewithEUrulesoncompetition[70].ThenewSerbianfirstdeputyprimeministerandministerforforeignaffairsIvicaDačićhasstatedinApril2014thathiscountry“wouldneverjoinanysanctionsagainstRussia,because

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forusRussiaisnotjustafriendlycountry,aneconomicandpoliticalpartner,butalsoacountrythathasneverimposedsanctionsagainstSerbia”[71].However,inOctober2014,SerbiaannounceditmayhavetosuspendconstructionoftheSouthStreamgaspipelinethroughitsterritory,afterBulgariasaiditwashaltingworkonitssegmentofthepipeline[72].

RussiahasinitiallydecidedtotakethedisputetotheWorldTradeOrganization(WTO),claimingthattheSouthStreamprojectisinternationalandthatEUrulesshouldnotbeapplicabletoit.“TheThirdEnergyPackage,intheopinionofRussia,contradictstheobligationsoftheEUin[the]WTOonbasicprinciplesofnon-discriminationandmarketaccess,”saidaspokesmanofRussia’seconomicdevelopmentministry[65].ButonDecember1,2014,PresidentPutinannouncedthattheproposedSouthStreampipelinewillnotgoahead[73].

ThedemiseoftheSouthStreamledtoanumberofdevelopmentsandspeculationsconcerningthesupplyofgastoSouthernandSouth-EasternEurope.ItalyisincreasinglylookingtothedevelopmentoftheSouthernGasCorridor(SGC),whichwouldlinkgasfieldsinAzerbaijantotheItalian/AdriaticregionviaGeorgia,Turkey,GreeceandAlbania.TheSGCisexpectedtoconnectthreeseparateconduits:theexistingSouthCaucasusPipeline(SCP8)andtheplannedTrans-AnatoliaNaturalGasPipeline(TANAP9)andTrans-AdriaticPipeline(TAP10).TheconsortiumofnationsinvolvedintheSGCprojectisalsokeentoextendtheenergycorridoreastwardtonaturalgasproducerTurkmenistanthroughaproposedTrans-Caspiangaspipeline[74].However,RussiaandTurkeyagreedthatTurkey’senergyimportsfromRussiaviatheBlueStreamgaspipelinewouldincreasefrom16to19billioncubicmetersperyear.TheagreementhasthepotentialofincreasingTurkey’sroleasanenergyhubinEurope,andignitedadebateamongenergyexpertsastowhethertheproposedTurkishStream11pipelinewouldunderminehopesofonedayconstructingaTrans-CaspianpipelinebetweenTurkmenistanandAzerbaijan[75].AlekseiMiller,theCEOofGazprom,wroteinJanuary2015thatRussiaintendstostopallshipmentsofgastoEuropeviaUkraineassoonasitcompletesanewpipelinecorridorviaTurkey.Inageopoliticalanalysis[76],severalgoalsoftheKremlinwereseenasmotivationbehindMiller’swarning:(a)easingEUsanctions;(b)blackmailingtheEUtogiveGazpromfreehand;(c)destroyanyhopeofUkraine’sselfrule;(d)preventotherformerSovietrepublicsfrompursuingEuropeanintegration;(e)establishTurkishdependenceonRussiaasthemajorproviderofgas;(f)placepressureonTurkeytodowngradetheTANAP-TAPlineandpreventCaspian-areaproducerstoconnectdirectlytoEuropeanmarkets.

8 SCPgaspipelineconnectstheShahDenizgasfieldintheAzerbaijansectoroftheCaspianSeatoTurkey.ItrunsparalleltotheBaku-Tbilisi-Ceyhanoilpipeline.

9 TANAPwillrunacrossTurkeyfromtheborderwithAzerbaijantotheborderwithGreece.10 TAPwillstartfromGreeceviaAlbaniaandtheAdriaticSeatoItalyandfurthertoWesternEurope.11 TurkishStreampipelinetorunacrosstheBlackSeafromRusskayaCSnearAnapainRussiato

KiyikoyvillageintheEuropeanpartofTurkey,partlyalongtheoldcorridorofSouthStream.

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Fig. 3: Southern Gas Corridor [77] Russia’sgeopoliticalgamehasbeenhittinguponseveralobstacles.Aparticularly

importantonewastheStatementofObjectionsbytheEuropeanCommissionofApril222015,mentionedearlier.Butthereareseveralothers,reflectingthegrowingimpatiencewithRussia’swayofusinggasexportasapoliticalweapon.

(a)Ukraine’snegotiatingpositionimproving.LatelyUkrainehasbeensuccessfullyreducingitsdependenceongasimportsfromRussia.Far-reachingchangesontheenergymarketsinEuropeandUkraineareincreasinglyneutralizingRussia’sabilitytopressureUkraineandEuropethroughmanipulationofgassuppliesandtransit.ThankstoEUmarketliberalizationandCentralEuropeinterconnections,EuropeanenergycompaniesarethemselvesgainingmarketsharebyresellinggasofRussianandotheroriginsingrowingvolumestoUkraine.Ongoingexpansionofreverse-flowpipelinecapacities,particularlythroughSlovakia,makesthispossible,particularlythroughtheconstructionoftheSlovakian-Ukrainianpipelineinterconnector,Vojany-Uzhhorod,andtheexpansionofitscapacity.Gazprom’ssalestoUkrainehavedeclinedbothinmarketshareandinquantitativeterms.Gazprom’sdiscountedpriceatUSD248seemsdesignedtooutbidEuropancompetitors.[78]

(b) China business seems more uncertain that thought before [79].MoscowhasstruggledfornineyearstofinalizeplansforgasexportstoChina.Despitehandshakesandhigh-profileevents,signspointtocontinuedtensionsinRussia-Chinaenergyties.In2006,PresidentPutinagreedtobuildtwogaspipelinestoChina,onefromtheeastandonefromthewest,butthetwocountrieshavebeenatoddseversinceoverwhichshouldbegivenpriority.RussiahasalwayspreferredthewesternroutefromitsexistingSiberiangasfieldsthroughitsAltairegiontoXinjiang,whichwouldbeshorterandcheaperforGazpromthantheeasternlinetoChina’snortheastindustrialregionandcoastalcitiesfromyetundevelopedresourcesinEastSiberia.Moscow’spressureonBeijingtoprioritizethewesterngaspipelinetoChinaovertheeasternrouteonlyraiseddoubtsaboutRussia’scommitmenttothefirstgaspipelinethatithadpromisedtocompletebyend-2018.However,thecontractfortheeasternroutehadneverbeenfinalized,sincethetermswerecontingentonanintergovernmentalagreementthatRussiahadyettoratify.Butconditionshavechangeddramaticallysincelastyearwhenthecontractfortheeasternroutewassignedwithanestimatedvalueof$400billionand

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apresumedstartingpriceof$350perthousandcubicmeters(mcm).Russia’sstrategyofinsistingonequalnetbacksappearstohavebackfired,dueinparttoitsattemptstoisolateUkraine.InSeptember2014,RussialimitedgassuppliestoEuropeancustomersbyrestrictingthemtocontractminimumsinordertodiscourage“reverseflow”salestoUkraine.ThedevelopmentsleftChinawonderingwhyitshouldbestuckwithastartingpriceof$350/mcm,whenGazpromisnowsellinggastoUkraineat$247/mcm.Thereisstillnoagreementonthecommercialpriceforthewesternroute.GazpromCEOAlexeiMillerhascontinuedtowarnEuropethat“gascouldgotoothermarkets.”Inmid-April,MillertoldaBerlinconferencethat“theAsianmarketwillbeafactorinpricingfortheEuropeanmarket”overthenextdecade.ThisseemstobeanemptybluffsinceGazprom’scomplexnegotiationswithChina,togetherwithexpensivepipelineconstructionandcomplexnew-fielddevelopment,willdelaysignificantgasflowsbeyond2020.

(c)FutureroleofTurkey.TurkeyissignedontotheSouthernGasCorridor,butitisalsobeingstronglycourtedbyMoscowtohostTurkishStream.Turkey’scentralrolewithintheSouthGasCorridoranditspotentialrelationswithoreveninclusioninanEUEnergyUnionstructureisthreateningtoRussia’scontinueddominantpositionintheregionMoscowconsidersits“nearabroad.”[80]NotonlyisRussiantryingtosplitGreecefromtherestofitsEUpartners,butTurkishStreamisalsodesignedtoskirtEUsupervisionsincetheplannedpipelinewillbeopentoEuropeonlyattheborderwithTurkey,whereEurope’senergylegislationdoesnotextend.AccordingtoanUSanalyst[81],TurkishStreamprobablywillnotbebuiltbecauseitmakeslittleeconomicsense and its costs are almost certainly underestimated. TANAP and Turkish Stream willcompeteinthefuturetopipegastowardEurope,accordingtoKenanYavuz,theTurkeyCEOoftheStateOilCompanyofAzerbaijan(SOCAR).Europedoesnotneedadditionalflowsofnaturalgasatthemoment:itscurrentconsumptionisestimatedatsome357bcm—thesamelevelasin1995,andwellbelowitspeakof2007–2010.Therefore,thefateofTurkishStreamandTANAPwillultimatelybedeterminedbygeopoliticalfactors.AccordingtoYavuz,“TANAPistheonlyprojectthatbringsnotonlyroutebutalsosupplydiversityforEuropeanend-users”.[82].

6. Challenges to EU energy-gas security: disruption scenarios and responses

6.1. Disruption risks of Russian gas natural gas supply to Europe

CivilunrestinUkraine,disputeswithGazpromovernaturalgaspricesandtransitfeeshaveledtothefearofaninterruptednaturalgassupplytoUkraineandviaUkrainiantransitpipelinestotheEU.Inthespringof2014thesituationseemedmoreseverecomparableto2006and2009,butsince2009boththeglobalandtheEuropeannaturalgassectorshavesignificantlychangedinvariousways[83].(a)SincetheinaugurationoftheNordStreampipelineinthelate2011,Russianexportsviathe

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Ukrainehavediminishedfrom65%to50%ofallRussianexportstoEurope.(b)EU28countrieshavereducedtheshareofRussiangasimportsfromintotal50%in2001to37%in2012.(c)TheEUregulation994/2010harmonisednationalemergencyplansandledtoexpansionofEUinterconnectorsallowingforreverseflows.(d)TheimportcapacityofLNGintheEUhasbeenexpandedby15%between2009and2014.LNGimportscouldstillbeincreasedsinceutilizationratesarelowwithonly30%onaverageintheEUin2012.(e)WhileUSnaturalgasimportshavebeenmorethan50%lowerin2013thanin2009,productionhasincreasedbyalmost20%duetoaboominshalegasextraction.SomeprojectionsexpecttheUSAtobecomeanetexporterofnaturalgasasof2020.(f)In2012,naturalgasconsumptionintheEUhasbeenlowerby4%thanin2009.ThiswasduetotheeconomiccrisisandlowCO2prices.

TheEUseemstobebetterpreparedforanydisruptionofRussiansupply,withRussiabeingdependentonitsmaincustomer.Asianmarketisanalternative,butintheshortrunactualtradeflowsarelimitedduetoalackofproductionandtransportationinfrastructure.

Despiteallprogress,thedisruptionofRussiannaturalgasexportstoEuropemayhavesevereconsequences,inparticularforseveralEasternEuropeancountries.RichterandHolz[83]investigatedinMay2014theEuropeannaturalgasmarketposition,focusingonalternativegassuppliers,andanalysingtheexpansionofexistinginfrastructure.TheirresultsindicatethattheEULNGimportcapacityisinsufficientlyconnectedtothebroadermarket.Particularly,cross-borderpipelinecapacityrestrictionspreventhigherSpanishLNGimportsusedforanefficientdistributionacrossEurope.Similarly,ItalyispoorlyconnectedtocentralEuropeandcannotserveastransitcountryforAfricanpipelinegasandLNGimports.HencethelargetotalEUregasificationcapacityof195bcmcannotbecompletelyusedtobalanceimportneedsinallmemberstates.

TheRussian-Ukrainiancrisisof2014hasrevitalizedtheEuropeanconcernsofsupplydisruptionsofnaturalgasasexperiencedin2006and2009.Despitebeingbetterpreparedtoday,severalEastEuropeancountriesarehighlydependentonRussiannaturalgas.LNGimportsplayavitalroleinreplacingRussiangas,althoughalargepartoftheEuropeanLNGimportcapacityisnotwellconnectedtothebroadmarket.IncaseofalonglastinginterruptionofRussiansupply,moreinvestmentsintheintra-EuropeantransportationinfrastructurearenecessarytodiversifytheEUimportsandbalance the internal market12.TheseincludetheconnectionoftheIberianpeninsulaand

12 Twoexamplesmayillustratethispoint.Immediatelyaftercomingintopowerin2010,theOrbángovernmentadvocatedagaspipelineconnectingHungaryandSlovakia,whichwasaccomplishedon27March2013thankstoasubsidybytheEU[84].RepublicofMoldova,havinganassociationagreementwiththeEUsince2July2014,isfullydependentonRussiangas,whichcomesthroughUkraineandseparatistterritoryofTransnistria.Inatour de forceact,MoldovaisnowbeingconnectedwiththeRomaniangaspipelinesystem.TheconnectionbetweenthebordercityofUngheniwiththeRomanianIasiistobeofficiallyopenedendofAugust2014.Itsannualcapacityof1bcmcorrespondsroughlytoMoldova’sannualconsumptionofgas[85].

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ItalytoCentralEuropetodistributethelargeimportpotentialsofbothcountriesfromNorthAfricaandtheglobalLNGmarket.PipelineexpansionstoreachtheBalticsandFinlandfromPolandareadvisable,aswellasinvestmentsintheSouthernCorridortobringgasfromtheCaspianregionandtheMiddleEastviaTurkeytothosecountries,whicharemostaffectedbyaRussiansupplydisruption.

6.2. EU´s possible responses to energy security challenges

EventhoughconventionalconcernsaboutEuropeanenergysecurityfocusprimarilyontheexternaldimensionoftheissue,namelyondiversificationofsources,routesandsuppliers,thesupplysecurityoftheEUencompassesaninternaldimensiontoo,whichreferstothenecessarydomesticinfrastructurethateachmemberstatehasinplaceforproduction,transportandconsumptionofenergy.Thisinternaldimensioncanbefurtherbrokendownintotwoaspects:themanagementofenergydemandandthepromotionofenergyindependence[86].Thefirstissuereferstoincreasedenergyefficiencyandenergysavings–topicsaddressedearlierinthepresentpaper.ThesecondaspectoftheinternaldimensionofEUenergysecuritypolicyreferstoself-sufficiency,whichincludesdomesticproductionofenergy,modernizationofenergynetworksandgrids,andemergencyresponsepolicies.Themaintenanceandmodernizationoftheenergynetworkiscarriedoutthroughinfrastructureinvestments,suchastheBalticEnergyMarketInterconnectionPlan(BEMIP).Itwasestablishedin2009withtheobjectiveofconnectingtheremainingisolatedenergymarketsinEuropethroughtheidentificationofthemissingnecessaryinfrastructureandthefinancingrequiredtoitsrealization.BEMIPincludestwoelectricityinterconnectionsbetweentheregionandtheScandinavianPeninsula,thepromotionofaLithuaniannuclearpowerplantproject,andthedevelopmentofregionalgaspipelinesfromPoland,Germany,DenmarkandSweden.ThepresentauthorcanpartlyagreewiththeconclusionofPiccolo[86]that“theinternaldimensionoftheEuropeanenergysecuritypolicylooksasaverypromisingtooltoreducetheimportdependencyofmembercountries.”ButmuchhastobedonestilltostopriskygasdependencyonRussiangas.

TheEuropeanCommissionproposedanenergysecuritystrategyinMay2014[33].TheStrategybuildsonanumberofpresentstrengths(e.g.50%oftheEUelectricityisproducedwithoutGHGemissions),andlessonslearntinthewintersof2006and2009whentemporarydisruptionsofgassuppliesstronglyhitcitizensinsomeoftheeasternMemberStates),andsetsoutareaswheredecisionsneedtobetakenorconcreteactionsimplementedintheshort,mediumandlongertermtorespondtoenergysecurityconcerns.

Toensureuninterruptedsuppliesduringthewinter2014/2015,theCommissionproposedtointensifycooperationwithintheGasCoordinationGroup,continuemonitoringgasflowsandgasstorage,andcoordinateatregionalorEUlevelriskassessmentsandcontingencyplans.Theaimistocheckhowtheenergysystemcan

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copewithsecurityofsupplyrisks,andsubsequentlydevelopemergencyplansandcreateback-upmechanisms.Suchmechanismscouldincludeincreasinggasstocks,decreasinggasdemandviafuel-switching(inparticularforheating),developingemergencyinfrastructuree.g.throughreverseflowpossibilitiesandpoolingpartsoftheexistingenergysecuritystocks.Toaddressthemedium-andlong-termsecurityofsupplychallenges,theCommissionproposedactionsinseveralkeyareas:

• Completing the internal energy market and building missinginfrastructure links is essential to quickly respond to possible supplydisruptions by directing energy flows across the EU as and whereneeded. The development of competitive and well integrated markets intheBalticStatesand in theSouthEastEuropestill lagsbehind.Targetedapproachesthatspeedupthedevelopmentofcriticalinfrastructureaswellas the establishmentof regionalgashubs in these regions areneeded. Inaddition,antitrustandmergercontrolrulesmustcontinuetobevigorouslyenforced since they ensure that EU security of supply is not weakenedthroughanticompetitivebehaviourorbyanticompetitiveconsolidationonvertical integration of energy companies.The Commission has identified33 infrastructureprojectswhicharecritical for theEU’senergysecurity.Apartfromthat,theCommissionproposestoextendthecurrent10%targetasregardsinterconnectionofinstalledelectricitycapacityto15%by2030whiletakingintoaccountthecostaspectsandthepotentialofcommercialexchangesintherelevantregions.

• Diversifyingsuppliercountriesandroutes.In2013,39%ofEUgasimportsbyvolumecamefromRussia,33%fromNorwayand22%fromNorthAfrica(Algeria,Libya).WhiletheEUwillmaintainitsrelationshipwithreliablepartners,itwillseektiestonewpartnercountriesandsupplyroutes,e.g.intheCaspianBasinregionbyfurtherexpandingtheSouthernGasCorridor;bydevelopingtheMediterraneanGasHubandbyincreasingLNGsupplies.Russiaisakeycompetitorinnuclearfuelproduction,andoffersintegratedpackages for investments in thewhole nuclear chain. Particular attentionshouldbepaidtoinvestmentsinnewnuclearpowerplantstobebuiltintheEUusingnon-EUtechnology,toensurethattheseplantsarenotdependentonlyonRussiaforthesupplyofnuclearfuel.

• Strengthening emergency and solidarity mechanisms and protecting critical infrastructure. In this respect theCommissionwill for examplereview the provisions and implementation of the Security ofGas SupplyRegulation.RespectofexistingEUlegislationhastobeguaranteedforanyacquisitionbynon-EUbuyersofstrategicinfrastructure,suchasgasstorage.Theexistingprovisionsonunbundlingofgastransmissionactivitiesalreadyforeseeamechanismtoensurethattransmissionsystemoperatorscontrolledbynon-EUentitiescomplywiththesameobligationsasthosecontrolledbyEUentities.Therecentexperienceofcertainnon-EUoperatorsseekingto

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avoidcompliancewithEUlegislationonEUterritorymighrequireastricterapplicationandapossiblereinforcementoftheapplicablerulesatEUandMemberStatelevel.

• Increasing indigenous energy production includes further deploymentof renewables in conformitywith climate policy targets; initiation of theEuropeanization of renewable energy support systems through improvedcoordination of national support schemes; accelerating fuel switch in theheatingsectortorenewableheatingtechnologies;andsustainableproductionoffossilfuels.

• Improvingcoordinationofnationalenergypoliciesandspeakingwithone voice in external energy policy. The Commission aims to be involved at an early stage in envisaged intergovernmental agreements with thirdcountriesthatcouldhaveapossibleimpactonsecurityofsupply.Moreover,theCommissionwillensurethatallsuchagreementsandallinfrastructureprojectsonEUterritoryfullycomplywiththerelevantEUlegislation.TheCommissionwelcomesthecallsmadebycertainMemberStatesinfavourofanEnergyUnion.

• Furtherdevelopingenergy technologies.• Increasingenergy efficiency.Asbuildingsareresponsiblefor40%ofour

energyconsumptionandathirdofnaturalgasuse,thissectorplaysacrucialrole, not only for energy security but possibly evenmore so for climatechangemitigation.

Itisremarkable,however,thatincontrasttotheclimate2030package,theCommissiondoesnotformulatequantitativegoalswithregardtothereductionofenergyimportdependence.

TheproposalbytheCommissionwasdiscussed,inOctober2014,bytheEuropeanCouncil,whichadoptedthe2030ClimateandEnergyPolicyFramework,howeverwithonlyashortchapteronEnergySecurity.TheCommitteeonIndustry,ResearchandEnergyoftheEuropeanParliamentpreparedinDecember2014adraftreport(Rapporteur:AlgirdasSaudargas)consistentwiththeCommissionproposal[87].However,thereportfailedtosecureparliament’ssupport[88].

ThecreationofanEUEnergyUnioninanalogytoEuratom,wasproposedbyDonaldTuskwhenhewasstillPoland’sPrimeMinister,inordertoendRussia’senergystranglehold[89].Whereasthebloc’s28membersjointlybuyuraniumfortheirnuclearpowerplantsthroughtheEU’satomicenergyagency,Euratom,theyshouldtakethesameapproachwithRussia’sgas.Whetherincoal,steel,uranium,creditorgas,theprincipalideaoftheEUhasalwaysbeentobringEuropetogether,deepeningsecurityandestablishingfairruleswherethefreemarketislacking.Asafollow-up,on25February2015,theEuropeanCommissionsetoutitsstrategytoachievearesilientEnergyUnion,implying:asolidarityclause;energyflows,asifitwereaFifthfreedom;energyefficiencyfirst;transitiontoalow-carbonsocietythatisbuilttolast[90].

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7. Conclusions and outlook

Climatechangeandenergysecuritypoliciesareintimatelyrelated.Therespectiveapproachesareverydifferentamongthemajorworldplayers.TheUSA,stilltheeconomicandmilitaryworldleader,andoriginallyacradleoftheenvironmentalmovement,isbettingonabottom-upapproach.Withfreemarketforcesencouraginginnovationanddeploymentofnewtechnologies,notonlyinshaleoil/gas,butalsoinsolarandwindpower[91],theUSAhavebecomeindependentofenergyimports;theirclimatepolicyisstilllessimpressive.Thedecision-makingwithintheEU,dependingonconsensusamongmemberstates,hasdefinedquantitativedecarbonisationgoals(butnothingsimilaronreducingdangerousenergyimportdependence),wherebyimplementationdependslargelyonnationalpolicies.Taughtbythelessonsoftwoworldwars,theEUseesitselfasavalue-based“softpower”,relyingonthepan-EuropeansecurityandpeacearchitecturethatcameintoexistenceaftertheColdWar.Itsmemberstates,allunitedbyadherencetodemocraticprinciples,aremilitarilyinmajorityundertheNATOumbrella,someareneutral,wherebybothclimateandenergypoliciesarecharacterisedbyimportantdividinglines,whichweakenthepossibilitiesoflong-termplanning.Russia´seconomy,stillstronglystate-controlled,andbasednearlyexclusivelyon(exportof)fossilenergyresources,paysonlylipservicetoclimatechangeissues,anddoesnotdeveloprenewables.SeeingitselfasaloseroftheColdWar,authoritarianRussiacontinuestorelyonthetraditionofterritorialexpansionandcontrol,neglectinginnovation-basedenergyandenvironmentrelatedpolicies.Thethreepowersareofcoursechallengedbytherisingsuper-powerChina.China´sinsistenceoncommon but differentiated responsibilitieswithregardtoclimatechangereflectsitswishtobeseenasresponsibleglobalplayer,butatthesametimeitsdeterminationtodevelop,aspriority,itstechnological,economic,politicalandmilitarypotentialuntilitbecomesequaltoanyothersuper-power.ArecentChinesesourceclaimsalreadyChina´ssolarworlddominance[92].Thisdevelopment,aswellasrisingpopulardiscontentaboutenvironmentaldeterioration,contributedtoChina’srecentconstructivemoveswithregardtomitigationefforts.

Soft-powerEUwillbeconfrontedwithtough,geopoliticallyconsciousnegotiatorsduringtheupcoming2015Parisclimatesummit.Atthesametime,itisfacingseriousenergysecuritychallenges.TheEU,initsinitialtriumphalismaftertheendoftheColdWar,lostitsprudentapproachbyallowingtobecomeincreasinglydependentonenergyimportsfrom(potentially)unstableand/orunreliableregions.AnunpredictableRussia,weakenedbysanctionsandlowoil/gasprice,hasincreasingproblemsinusingitsgasandoilaseconomicandpoliticalweapons.ThesimultaneouslyincreasingpoliticalinstabilityofsomeotherimportersEUdependsupon(MiddleEast)contributestothefutureenergysecurityrisks.TheEUinstitutionshavebeenslow,andsometimesinconsistentanddividedontheuseofexistingpowerfulinstruments–anti-monopolyand“unbundling”legislation–vis-á-visRussianattemptstodominatetheEUgasmarket.

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Theideaofapeaceful,sustainablefutureofEuropeasawholehasbeendeeplyshatteredbyUkrainianexperience.ThisisparticularlytrueofthepostWorldWar2securityarchitectureestablishedbytheFinalActoftheConferenceonSecurityandCooperationinEurope,1975;theParisCharter,1990;theBudapestMemorandum,1994;andtheFundamentalNATO-RussiaAct,1997.AlltheseagreementsguaranteeunequivocallytheinviolabilityofbordersinEurope.ByinvadingCrimea(andeffectivelyotherpartsofUkraine)Putinhasnotonlyinfringedonthesovereigntyofthatcountry,butsimultaneouslyviolatedallfourtreaties[93].IfPutin´sRussiacontinuestoconsidertheUSAandNATOasthemainenemies,thenneutralisingtheEUbymakingitenergy-dependentonRussiaisaprioritythatmakessense.Inthepresentsituation,withmutualsanctionsinforcebothbytheEUandRussia,astrongerandmorecredibleEUenergysecurityplanningwillbeneeded.ThecriticalbottleneckwithintheEUwillbenottheelectricitybuttheheatingsector,whichmeansthathardesthit,incaseofgassupplydisruptionwillbetheciviliansintherelevantEUcountries.EU’spolicyframeworksneedtoputmuchmoreemphasisonenergyefficiencyandsavings.

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62 Pomorski zbornik Posebno izdanje, 29-62

Europe Between Climate And Energy Insecurity...Branko Bošnjaković

BrankoBošnjaković

Europa između klimatskih promjena i energetske nesigurnosti: geopolitički aspekti

Sažetak

EUvidisebekaosvjetskogpredvodnikapriodgovorunaizazoveklimatskihpromjena.NedavnojeukrajinskakrizaukazalanaranjivostopskrbeenergijomkaoposljedicuovisnostiEUouvozunafteiplina.RadrazmatrapovezanostiizgledeklimatskeienergetskepolitikeEUsobziromnaetičkeisigurnosnedimenzije.Etičkadimenzijaraspravljaseuodnosunapravednuglobalnualokacijuodgovornosti–izmeđupojedinihregijailidržava-zasmanjivanjeemisijastakleničkihplinova,štoćebitiiglavnatemanadolazećegUNsastankanavrhuuParizu.NoistovremenobiitemeljnevrijednostiEUmogledoćiupitanjeukolikosenebijamčilaisigurnosnadimenzijasvihzemaljačlanica.EtičkiisigurnosniizazoviskojimajeEUsuočena,jasnoukazujunapoželjnostubrzanoguvođenjanisko-ugljičnoggospodarstvaiodgovarajućeinfrastrukture,pričemuobnovljiviizvorienergijetrebajuigratiključnuulogu,itosrednje-idugoročno.Većpovršanpoglednapostojećuliteraturupokazujedatrajnaovisnostouvozunafteiplina,posebiceizRusije,predstavljaekonomski,političkiiokolišnirizik.Autordajepregledikritičkovrednovanjenekihpredloženihodgovoranateizazove,kaoštojestvaranjeEnergetskeunijeEU.

Ključne riječi:Klima,Energija,EU,Geopolitika.