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10th May 2021

EU leaders to grapple with divergent energy proposals

  • Turkmenistan mosque: high-level meetings with gas-rich dictators paint EU energy politics in a bad light (Photo: d_proffer)

A stronger EU mandate for dealing with gas-rich autocracies in the Caspian region, more public funding for renewable energy sources and a north-south energy corridor will be on the agenda of an EU summit on Friday (4 February). But France, Germany and eastern EU members are at odds over what to prioritise.

Money and Russia are ultimately the two big issues looming in the discussions of EU leaders on energy security, pipelines and market liberalisation. The EU commission, for instance, would like to have public funding committed for cross-border and green energy projects in the next multi-annual EU budget from 2013 on.

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Modernising the bloc's power grids, so that wind energy from the North Sea for instance is transported to Spain or Italy, is one of the crucial investments the EU commission is pushing for. The cost is estimated at around €200 billion and Brussels fears that the private sector will not be able to foot more than half of the bill.

Germany, the main contributor to the EU budget, sees things differently. According to German government sources, the issue is not so much about money, but about "intelligent regulation" which would allow the private sector to invest more in this field.

A proposal put forward by EU energy commissioner Guenther Oettinger, himself a German politician, will be discussed on Friday. But Berlin is keeping its cards close to its chest and prefers to defer the money issue to the broader talks about the next multi-annual EU budget.

Germany's confidence in the power of companies to make the necessary investments in the area does not stand the test of experience in Spain and Netherlands, where companies have struggled after the scaling down of subsidies for wind and solar parks in austerity budgets.

EU leaders from the eastern member states, many of whom where badly hit by the Russia-Ukraine gas crisis in 2009, are eager to get EU funding for cross-border connecting pipelines, which would allow their countries to help each other out in case of another supply crunch.

On Thursday night, the Prime Ministers of Bulgaria, Hungary, the Czech Republic, Poland and Slovakia and the President of Romania will meet with EU commission chief Jose Manuel Barosso to agree on a "North-South gas corridor." This project would link the eastern flank of the EU, which is still heavily dependnt on Russian gas, to the more mixed energy sources of northern and western Europe.

The money issue and EU caution over Russia relations could put the brakes on the scheme, however.

The EU's flagship project aimed at reducing reliance on Moscow's gas politics - Nabucco - is currently in its ninth year of existing mostly on paper. Not one km of pipeline has been laid down yet, out of the projected 1,200 km to cross the South Caucasus and Turkey, Bulgaria, Romania, Hungary and Austria.

Mr Oettinger, in an interview with the Austrian newspaper Die Presse, expressed annoyance that multi-national consortium behind the project has still not taken key business decisions.

"There's a chance now to get to the largest gas fields in the world. The same way our forefathers went to Baku 150 years ago to make oil, there is this window of opportunity now, to seal a gas partnership between the Caspian area and Europe," he said.

A stronger negotiation mandate with Caspian countries for the EU is one of the issues to be discussed on Friday.

None of the Caspian autocracies are easy business partners for Europe, however. High-level meetings result in fierce criticism by human-rights-oriented NGOs, while the unpredictability and non-transparency of the regimes make it difficult to secure commitments and contracts based on normal European models.

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