The importance of secure energy supplies is unquestionable and as such not a new observation nor a new priority. Modern societies need a reliable supply of energy being delivered under reasonably predictable prices and conditions and in an environmental sustainable way.
It is of course the objective to achieve the most favourable conditions for our energy supplies. This should basically be understood as ensuring the lowest financial, economic and environmental cost and being subject to least conditionality and unpredictability caused by external factors.
Prior to the Ukrainian crisis the European focus was mainly, but not only, on the price and the climate impact of energy consumption.
The price of energy is in focus due to other regions and countries having access to cheaper energy and thus creating a competitive disadvantage to Europe, and the climate impact of CO2 emissions due to the scope for meeting the 2 degree Celsius target quickly narrowing.
In the past couple of decades the conditionality and unpredictability linked to the origin and routing of energy supplies have to some extent been considered a low risk factor in the European energy policy. In parallel, Europe’s dependence of energy imports has steadily increased.
The interruption of gas supplies from Russia to Ukraine in 2009 did result in the launching of important initiatives targeting Europe’s vulnerability to short term interruptions in gas supplies. This was done by establishing interconnectors, reserve gas stocks and the solidarity clause. However, Europe’s mid and long term vulnerability remains.
The Ukrainian crisis has significantly changed the understanding of the risk and consequences linked to the origin of energy supplies and routings.
Whereas closer cooperation and increasing mutual dependence is generally seen as a positive contribution to the relations between Europe and Russia, the current crisis has highlighted that this approach also limits Europe’s foreign and security policy room for manoeuvre and does entail risk of supply interruption.
Even fully realising the severity of the Ukrainian crisis and its consequences, this development has not eliminated the need for continued attention to prices and climate change.
Fortunately, our priorities are neither mutually limiting nor incompatible. In our EU energy policy we have the possibility to develop our approach making our priorities mutually supportive and reinforcing.
Energy efficiency is an obvious example of this opportunity. Using less energy will lower EUs dependence on energy imports; reduce vulnerability to future price fluctuations; reduce emissions and reduce investment needs for energy transmission and distribution infrastructure as well as power generation capacity. And the potential is significant.
Imagine if Poland could improve industrial sectors to “best in class” energy efficiency standards. This test tube example would result in 40% reduction in energy consumption in the Polish industry sector.
By implementing consistent policy measures it is also possible to decouple economic growth from energy consumption. Denmark is a good example as along the growth in GDP over the last couple of decades the energy consumption has remained the same.
Another example is the the potential of national and cross-border efficient energy management. I.e. making sure that we limited the need for back-up capacities, we distribute energy surplus to deficit areas efficiently and we prioritise the use of cheapest energy source available. The Nord Pool cooperation of Nordic and Baltic region is a tangible example of benefits to be achieved through close cross-border cooperation and deregulated markets. In 2013 a total of 493 TWh were traded in Nord Pool ensuring access to available and lowest cost electricity on a daily basis.
Renewable energy, based on locally available sources, is yet another source supporting energy independence and the climate objective. As a back bone reflex many would argue that renewable energy per definition is more expensive than conventional energy. This is simply not correct. As clearly seen from the Danish experience, our high content of renewables in the energy mix does not imply a higher electricity cost compared to e.g. Polish electricity prices. In a Danish context, a recent study by the Danish Energy Authority has identified land based wind mills as the cheapest options compared to alternative power producing units, including gas and coal fired units.
The EU energy policy is a complex matter and energy efficiency, efficient energy management and renewable energy do of course not deliver all the answers. However, these areas do provide important elements to our future long term development while mutually addressing our priorities.
The author of the policy paper is member of the WSF Program Council, H.E. Steen Hommel, Ambassador of the Kingdom of Denmark to the Republic of Poland.
Road to WSF2014 is a project accompanying the international conference Warsaw Security Forum 2014. It is a collection of analyses from the Forum’s Program Council as well as from globally renown security experts focusing on international security challenges and opportunities. Issued in the printed form, Road to WSF2014 will be distributed to the public administration, participants of the WSF2014, as well as to the general public.
PDF version of the policy paper can be downloaded HERE