The EU’s dependency on Russian energy and the Energy Union

Nord Stream 2 project has raised the question of EU’s energy dependency on Russia. The EU is currently too dependent on Russian energy imports in its energy consumption and there are very few viable options for Russian energy, with the EU’s own Energy Union as the best viable solution to tackle the problem of energy dependency.

During a NATO summit in July 2018, President of the United States Donald Trump accused Germany of being a captive of Russia due to its large dependence on Russian energy imports. Critique was made in the light of Nord Stream 2 gas pipeline that will increase the amount of Russian natural gas coming to Germany, a country that is currently the largest consumer of Russian natural gas inside the European Union with over one fifth of all Russian gas ending up there. Nord Stream 2 does not however affect only Germany, but instead it speaks of a wider European issue that spreads through the sphere of energy into the realms of economy, security and foreign affairs throughout Europe.
Almost all of the EU member states import Russian gas and it’s currently mainly transported through Ukraine. This makes Ukraine the biggest loser in this equation, since it stands to lose billions of dollars if Russia is able to completely bypass the current major pipeline running through Ukraine exporting natural gas from Russia to the European Union. However, Ukraine’s fears are not just related to economy, but also to energy and security concerns. Ukraine sees its current status as a major transit country for Russian energy exports as a security guarantee against further Russian aggression. By trying to invade Ukraine or further escalate the conflict in eastern Ukraine, Russia would risk interrupting its own gas transports to Europe that would end up being economically very costly, a risk that Russia is currently unlikely to take with its already struggling economy. At the same time Ukraine itself is extremely dependent on Russian energy exports. Gas is already an issue which Ukraine and Russia have clashed over before, and being able to bypass Ukraine would give Russia the tools to cut out Ukraine out of its main source of energy and increase its leverage and influence over Ukraine even further.
[bctt tweet=”Being able to bypass Ukraine in the exporting process would give Russia the tools to cut out Ukraine out of its main source of energy and increase its leverage and influence over Ukraine even further.”]
When addressing the concerns that Nord Stream 2 project has instilled in European countries, Russia has made statements claiming that they would be willing to keep the pipeline open as long as Ukraine is able to solve its differences with Russia in fee and cost related issues regarding the pipeline. Due to tensions between Ukraine and Russia that escalated with the Russian annexation of Crimea, Ukraine has been very vocal in their reservations about Russia’s motives and their actual willingness to keep the pipeline running. This is a very valid concern when taking in to account the implications Nord Stream 2 could potentially have for Ukraine.
Germany’s Chancellor Angela Merkel has defended the Nord Stream 2 project as purely economical with no political implications, but many European countries heavily questioned Merkel’s claim. The President of Ukraine, Petro Poroshenko, has argued that the new gas pipeline will not be economically viable to neither Germany or Russia, making it a completely geopolitical project. Vocal opposition for the project has also emerged inside the European Union. In March 2018, eight EU member states from eastern Europe sent a letter to the President of the European Commission Jean-Claude Juncker stating that the project could have destabilizing geopolitical consequences for Europe.

Too dependent on Russian energy?

The case of Nord Stream 2 has raised once again a bigger issue on the table: is the European Union too dependent on Russian energy? According to the EU’s Energy Security Strategy the Union imports over half of all the energy it needs. The dependency on imports is high especially regarding crude oil (90% of it imported) and natural gas (69% imported). In these two areas Russia is the largest provider with 31% of crude oil imports coming from Russia as well as 40% of natural gas imports. Some EU countries are even entirely dependent on Russia for their natural gas. Overall, Russia covers over 30% of all primary energy imports of the European Union. Taking into account that over half of all energy is imported, the EU relies on Russia to provide over 15% of all of European Union’s energy needs. The significance of this is unquestionable and the EU has taken measures to tackle the issue.
The Energy Security Strategy of the European Union identified several long-term solutions to address the issue of energy dependency. The EU should increase energy efficiency inside the Union, focusing on buildings and industry contributing to over half of the energy consumed. Energy production in the EU should be boosted through increase in renewable energy production, safe nuclear energy and sustainable production of fossil fuels. In addition, energy supplier countries and routes should be diversified.
During 2018 a few alternatives for Russian gas in the future has been presented. Azerbaijan is planning to build a gas pipeline to Europe that could bring natural gas from Azerbaijan to the European Union. The project could also be expanded in the future to allow gas to be imported from Turkmenistan, Iran and Iraq. The project is still in the early stages and there is a possibility of it never becoming a reality. For example, Russia has voiced their opposition to the project claiming environmental reasons. If realized, the project could provide an alternative to the Russian gas for European countries. President Trump has also recently made statements about willingness to export U.S. liquified natural gas into Europe. Locational disadvantage of the U.S. however makes it unlikely that natural gas coming from the U.S. would end up being a major source of European imported gas. Neither of these options seem very convincing options to Russian gas at the moment. Is there a viable solution for ending dependency on Russian energy?

Energy Union

The EU is placing its hopes in the European Commission’s plan for a European Energy Union. It is based on existing EU energy policy, like the 2030 Energy and Climate Framework as well as the Energy Security Strategy. One of the major objectives of the Union is to guarantee securing energy supplies. Much like the Energy Security Strategy suggested, the Energy Union aims to limit the dependency on Russian energy by increasing the energy efficiency of the Union, leading to lesser need for imported energy. Use of renewable energy will be promoted by creating a “single market for energy” and increasing the EU member states’ renewable energy production. Europe’s sources of energy imports will also be diversified. All of these measures of will take the EU towards a path of lesser dependency on Russian energy, meaning that the EU would not be just more energy secure but also freer on the geopolitical implications that energy dependency on Russia necessarily creates.
[bctt tweet=”All of these measures of will take the EU towards a path of lesser dependency on Russian energy, meaning that the EU would be more energy secure.”]
The last progress report on the Energy Union was made in February 2017 and assesses that the EU is advancing towards its targets on Energy Union and secure energy, but that there is still more work to be done to meet these objectives. The Energy Union is not a solution aimed only to tackle energy security issues, but is also tied to the climate goals of the Union. Even if there would not be willingness to counter the energy dependency on Russia among certain member states (with the current trend of populist parties and their pro-Russia sentiment), the drive towards meeting the EU’s climate goals would also result in less dependent Europe.
The Energy Union is currently the best way for the EU to tackle the issue of energy dependency on Russia, while the same time not only making the EU more energy independent but also more climate friendly. This duality of the Energy Union is a factor that can help the EU to actually achieve the Energy Union, with two driving forces behind it, security and climate action, increasing the likelihood that it will actually be realized in the future.
TEXT Anttoni Saarinen
PHOTO European Commission
The author studies international relations at Tallinn University. Interests include the Eastern Partnership -initiative as well as environmental issues.