NS4960
Spring Term 2017
Western Europe Energy Security
Overview I
• Western European countries largely energy dependent
and have
• Employed a number of measures to reduce the risks both
internal and external to their energy systems, and
• Attempted to maintain a level of resilience in order to cope with
new threats as they arise
• Commonly used approaches towards this end have
involved:
• Improving energy markets' response to shifts in supply and
demand
• Investing and maintaining sufficient infrastructure to support
energy production to support energy production and transport
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Overview II
• (strategies contd.)
• Developing ever more sophisticated contingency options
• Emergency plans
• Reserves, and
• Alternative supply routes
• Sustaining a variety of energy suppliers and
• Developing systems to improve energy efficiency
• Each of these measures entails costs, leaving fewer
funds for other security enhancing measures
• The time dimension also important and raise questions:
• Will short-term measures to improve energy security today
create more vulnerabilities in the future?
• Will policies designed to assure long-term energy security leave
countries overly vulnerable in the short term?
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Overview III
• In addition WE energy security considerations are
increasingly coming into conflict with other national and
regional objectives, especially
• Competitiveness and
• The environment -- climate change.
• These conflicts are captured in the energy trilemma
• Increased energy security together with significant reductions in
greenhouse emissions are likely to result in higher energy costs
• Increased energy security and affordable supplies (coal) are
likely to increase greenhouse emissions
• Affordable energy and reduced greenhouse emissions likely to
reduce energy security -- increased reliance on Russian gas
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Overview IV
• Varying country priorities and trade-offs between these
objectives complicate task of formulating national energy
security strategies
• Much more complicated at the European Union (EU)
level)
• Another complication -- EU and national priorities are
currently shifting
• 1970s-80s reducing OPEC risks – energy security concerns
• 2008-09 when energy costs rising a shift towards lower cost
fuels such as coal at expense of greenhouse emissions
• More recently annexation of Ukraine's Crimean peninsula by
Russia and unrest in Eastern Ukraine -- shift to energy security
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Overview V
• The differing national attitudes towards energy security
due in part to divergent views on
• What constitutes energy security and
• How energy security once defined should be prioritized in their
national energy trilemma.
• In turn these differences limit efforts by EU and
international organizations to forge a common approach
towards emerging challenges in
• Energy security
• Environmental quality and
• Fuel affordability.
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EU's Approach I
• EU's focus on energy security remained at the national
level until Treaty of Lisbon in 2009
• Created framework for a common energy policy based on the
three dimensions of the energy trilemma
• A single comprehensive EU-wide energy strategy would have
been optimal for the region as a whole
• However the Lisbon Treaty preserved principle that
choices over energy mixes and supply strategies remain
at the country level
• Made it very hard to devise a comprehensive energy security
strategy at EU level
• Another complicating factor -- energy dependency varies greatly
across countries and by energy type.
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EU's Approach II
• In 2014 the EU imported roughly one-half the energy it
consumed -- with import dependency varying greatly
across countries and by fuel
• Oil: 90% imported -- however many suppliers
• Natural gas 66%
• Solid fuels 42%
• Nuclear Fuel 40%
• Currently,
• Nuclear, coal and renewables do not pose a threat to energy
security
• Main threat to energy security is natural gas delivered by
pipeline
• This threat should lesson over time as LNG terminals are
constructed and number of suppliers increase.
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EU's Approach III
• EU has pursued a two pronged approach to enhance
region's energy security
• Within EU proper this involves
• Building a resilient, interconnected and open internal market
• Internationally EU promotes a rules-based multilateral approach
• 1994 multilateral Energy Charter Treaty (ECT) define rules
concerning
• Investment protection
• Energy transit
• Cooperation on environmental issues and
• Dispute settlement
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EU's Approach IV
• ECT never ratified by Russia
• Russian officials have repeatedly pledged to remain a cooperative energy supplier.
• Still many doubts over Ukraine supply interruptions
• Russia has pressed the EU for policies that would favor energyexporting countries -- guarantees for suppliers
• EU's internal response to gas crisis focused on creating
a region-wide open and competitive gas market involving
• Opposing anti-competitive stipulations in long-term supply
contracts with foreign energy companies
• Initiating anti-trust cases against domestic energy utilities and
Russia's Gazprom
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EU's Approach V
• EU has also developed plans to
• Link the EU member states' gas pipelines
• Have member states maintaining certain levels of national
reserves
• Promote greater interconnectivity between Central and Eastern
European member states
• The EU has also expanded energy ties to Balkan and
Eastern Partnership states (Georgia, Moldova and
Ukraine) -- through its Energy Community program which
• Enabled Ukraine to import gas from several EU member
countries -- reducing dependence on Russia
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EU's Approach VI
• May 28, 2014 European Commission released new energy
security strategy -- response to Ukraine crisis
• Strategy comprises both short-term and medium to longterm policies.
• For short term
• Stress tests taken to assess the impact on EU economies under
assumptions concerning interruptions of Russian gas
• Strategy emphasizes increased energy co-ordination through
removal of restrictions to cross border energy trade.
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EU's Approach VII
• Long term measures include
• Variety of actions to increase energy efficiency
• Alternative supplies -- renewables
• Need for integrated EU approach apparent December
2014 when Putin announced cancellation of the South
Stream pipeline project
• Project would have delivered gas under Black Sea to Bulgaria
• Cancellation suggests lack of certainty by Russian energy
producers regarding the EU as a likely market and refocus on
Asian market
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EU's Approach VIII
• Latest attempt toward more integrated approach to
energy policy in EU is plans for an Energy Union
• Came about as a result of deteriorating relations with Russia
• Energy Union calls for the EU to act collectively to
• Increase its indigenous energy resources and
• Negotiate collectively with energy exporters.
• Energy Union
• could help to enhance EU energy policy and diplomacy,
• but stops short of centralizing energy policy decisions
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EU's Approach IX
• Unclear how far member states will be willing to delegate
responsibilities in areas such as
• Market regulation and
• Energy diplomacy
• Also uncertain how far Commission will be prepared to use
enforcement powers where member states fail to meet existing
commitments
• In sum the EU's policies represent sound responses to many of
the challenges facing European energy security
• However even if most of the EU plans are implemented it will be
years before a satisfactory levels of energy security can be
achieved
• However without bold action the region as a whole may find it
is becoming increasing vulnerable to
• External events and
• Capricious actions of key suppliers.
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UK: Energy Security I
• UK scores consistently high on the standard measures of
energy security
• However clear that the country's dependence on
imported energy is currently increasing.
• UK was a net importer in the 1970s
• With development of North Sea oil and gas, became a net
energy exporter in 1981
• North Sea production peaked in 1999 and by 2004 country was
a net importer again.
• In 2013 net imports amounted to nearly 48% of total
requirements, with shares greatest for
• Coal 77% of total requirements and
• Natural gas 50% of total requirements
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UK: Energy Security II
• Also increasing problems associated with energy supply
• In 2013 country's spare grid capacity available at peak demand
in cold weather around 5%
• In 2011 this was 11%
• Anticipated that problem will be worsening given planned
decommissioning of a number of fossil fuel power plants.
• The nuclear fleet is contracting – Hinkley ?? and
• Number of country's coal plants must close in compliance with
EU climate goals -- Brexit reversal?
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UK: Energy Security III
• British Government's response outlined in its Energy
Security Strategy (November 2012)
• Identified number of challenges:
• Expected closure (various reasons) of one-fifth of the country's
power stations within current decade
• Country's ambitious legally-binding carbon emission reduction
targets and
• Increasing import dependence.
• Government's energy strategy is focused on reducing oil
and gas imports by
• Expanding production from the UK Continental Shelf
• Through the development of low carbon energy sources and
• Incentives to improve energy efficiency
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UK: Energy Security IV
• In terms of energy trilemma, UK strategy suggests
• Energy security and environmental concerns have top priority
• Government will leave price of energy to increase
• Policy has created a temporal imbalance with the two long term
objectives -- energy security and the environment shifting many
of the transitional costs to the current price of energy
• Ordinarily situation could be managed
• In short term by using cheapest sources of energy such as coal
• Over time as generating capacity built up with new nuclear
plants UK could gradually phase out higher carbon-emitting
plants
• Thus keeping energy prices in check
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UK: Energy Security V
• Problem -- constraints imposed by the EU
• EU treaties leave the energy mix up to national governments
thus allowing the increased use of cheaper carbon sources
• However its binding targets for renewable power -- wind and
solar have undermined that principle
• EU 2009 directive for the UK is that by 2020 15% of the
country's energy needs must come from renewables
• However renewable power generation in UK is expensive
and subsidies have been needed for UK wind farms
• Cost of subsidies have been transferred to consumers
• One in four British households now in fuel poverty (10%
or more of disposable income spent on energy)
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UK: Energy Security VI
• Situation in UK not sustainable
• Conservative government has proposed new legislation
directed at reducing price to consumers
• Looks like a shift towards energy efficiency (affordability)
and energy security
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German Energy Security I
• Germany scores relatively high on the standard energy
security measures
• International Index of Energy Security Risk for 2015
ranked the country 9th in the large energy group
• Germany’s energy security has fluctuated over time
• Between 1980 and 2000 Germany’s energy security improved
progressively at rages greater than the average for the OECD
countries
• During this period the country’s ranking improved from 12 to 4.
• After 2000,Germany’s scores have closely followed the OECD
Average
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German Energy Security II
• The World Energy Council’s Trilemma Index for 2014
suggests that Germany’s performance does not stand out
in any one area.
• Germany was ranked 27th in energy security, down from 24th in
2012
• 42nd in energy affordability down from 13th in 2012 and
• 27th in environmental sustainability up form 31st in 2012
• Steep decline in energy affordability stands out
• Reflects the recent shift in priorities to emphasizing
• energy security and
• environmental sustainability
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German Energy Security III
• Germany’s relatively low energy security scores are also
reflectively of the country’s high dependence on
imported
• Oil
• Natural gas and
• Coal needs.
• The country’s low score also reflective of the fact that
contrary to other European countries
• Energy security has not until recently received a high priority
• Assumption in Germany has been there were sufficient sources
of energy to meet demand
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German Energy Security IV
• Subsequent to oil shocks of 1970s
• Germany able to lower its oil consumption significantly
• However Germany use of natural gas has grown steadily since
the 1970s
• German gas supplies limited to around 12% of country
needs
• Country imports more than 80% of its needs, 37% of which
comes from Russia through pipelines
• Forecasts made in mid-2000s suggested Russian gas might
account for as much as 70% of total usage by 2020.
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German Energy Security V
• For other fuels energy dependence on imports 2010
• 70.2% primary energy consumption
• 100% nuclear
• 97.8% oil
• Hard coal increased from less than 10% in 1990 to 77% in
2010
• Despite trends German leaders seemed to take little
notice.
• Early in 2000s the Government decided to phase out nuclear
power within two decades
• Phase-out undertaken with clear knowledge that country would
become increasingly reliant on increased imports of natural gas
• Nuclear power generates 30% of electricity.
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German Energy Security VI
• German concerns changed abruptly in 2006
• Gas dispute between Russia and Ukraine revealed the risk of
dependency on Russian Gas
• Developed a long-term transition away from imports through
creasing a sustainable energy supply domestically
• Goal articulated in government’s Integrated Energy and
Climate Program (IECP) of 2007)
• Aimed to increase share of renewable energy to 25-30% by
2020 – aimed primarily at environment
• Gains in energy security were to be achieved
• Indirectly through gains in efficiency, and
• The increased substitution of import by renewable energy
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German Energy Security VII
• Energy security concerns raised again in 2009 by another
Russia-Ukraine gas crisis
• In 2010 fear of future interruption in Russian gas together
with growing concerns over climate change led to new
framework or Energiewende (energy transformation)
• Set even more ambitious targets for renewables
• 35% for electricity
• 20% reduction of primary energy consumption by 2020
• Unfortunately Energiewende not turned out as planned
• Came at cost of affordability
•
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German Energy Security VIII
• Early 2014 6.9m German households living in energy
poverty with heavy burden on industry
• Energy subsidies for renewables had been passed on to the
public
• Between 2000 and 2013 electricity prices for households
increased 80% in real terms
• In early 2014 German household energy prices 48% above
European average
• Power costs for German Industry 19% higher than EU average
• Rose by 60% since 2007
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German Energy Security IX
• By early 2015 country finding many of its goals were
inconsistent
• Renewable energy subsidies and difficulties in integrating
renewable energy into the grid were leading to higher electricity
prices
• Decision in 2001 to phase out nuclear power by 2022 while
politically popular narrowed down country’s energy options
• Little choice tut to expand the use of coal - Shift to coal
reinforced by
• High gas prices and
• Low prices for emission certificates
• Natural gas not an economical option to replace nuclear power.
• Many gas turbines had been shut down as a result
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German Energy Security XI
• By 2015 clear there would be no significant reduction of
coal usage in Germany even in medium term
• While natural gas and renewables will continue to growth it will
not be enough to offset decrease in nuclear
• Will be little or no decrease of CO2 emissions in Germany in
coming years.
• Trilemma simply too binding to allow German energy and
energy-related goas to be met.
• In fact none met
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German Energy Security XII
• In the longer term likely country’s energy policies with
continued growth in renewables should strengthen
energy security
• However for perhaps next 15 – 20 years country will
remain quite vulnerable to possible Russian coercion or
gas stoppages
• In early April 2015 Government indicated it would allow
shale gas fracking at depths of over 3,000m – reversing a
de factor moratorium
• With this policy shift country the country appears to be
moving towards goals of energy security and affordability
and away from environmental sustainability.
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French Energy Security I
• Because of its sparse endowment of fossil fuel
resources, energy security has been a prime concern of
the French government
• Oil shocks of 1970s brought home the dangers of overdependence on foreign sources of energy especially oil.
• At times of shocks French government began plans to expand
domestic production
• Decision at early stage to shift to nuclear power for a large share
of energy supply
• Strategy extremely successful
• By early 2000s energy from nuclear and hydro accounted for
45% of France’s primary energy consumption
• In recent years 80% of French electricity generated from nuclear.
• In 2012 France world’s third largest exporter of electricity
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French Energy Security II
• Move towards nuclear has helped France improve its
energy security situation
• Since 1980 France’s energy security ranking for high energy
users has improved from 15th to 8th
• As might be expected most of the country’s current
energy issues center on its nuclear program
• Country’s current plants were built in the late 1970s and early
1980s
• Assuming a 40-year lifetime, replacements will be required
between 2015 and 2020
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French Energy Security III
• Recently the nuclear industry has come under political
attack
• Francois Hollande first presidential candidate to break away from
the nuclear consensus
• Vowed to reduce the share of nuclear supply of electricity by
50% by 2025
• With demise of Hollande and the greens, future of French
nuclear program again seems assured
• Regardless of one’s views on nuclear energy, France’s
energy security policies have to be considered a major
success.
• Key has been a clear feasible plan focused on realistic long-term
targets
• Not compromised by short-un political expediency as was case
in Germany
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