Europe at TTIP talks: Open the US energy spigot

European officials are using transatlantic trade talks to push for access to the US shale oil and gas boom, largely off-limits due to decades-old trade restrictions on US energy exports. Environmental groups and consumer advocates oppose lifting the ban on concerns it will raise domestic energy prices and contribute to climate change.  

By , Staff writer

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    Transfer pipes carry liquified natural gas to and from a holding tank, seen in background, at Dominion Energy's Cove Point LNG Terminal in Lusby, Md. Europeans are more eager than ever to trade energy with the US – a stable, reliable ally undergoing a boom in oil and gas production.
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European officials have a message for their American counterparts as they head into transatlantic trade negotiations this week: Open the spigot.

The US energy renaissance looks particularly appealing from the other side of the Atlantic Ocean where Europeans pay a premium for energy and rely on Russia for a large portion of their fuels. The US shale boom has remained largely out of reach due to decades-old trade restrictions on US crude oil and permitting limits on natural gas, but the industry and some in Congress are pushing to expand exports. Doing so, they say, would boost profits at home while bolstering security abroad. Critics contend it would raise US energy prices and increase carbon emissions from burning fossil fuels. 

It's clear where European leaders stand on the issue. Gaining access to some of the oil and gas gushing from North Dakota, Texas, and other states will be high on their priority list for this week's talks on the Transatlantic Trade and Investment Partnership (TTIP), a proposed US-EU trade agreement currently under negotiation.

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"US companies have been enjoying the benefits of resurgent domestic oil and gas production at a time when European refineries are in the doldrums and the Ukraine crisis has lifted questions about security of gas supplies to the top of the agenda for policy makers," Richard Mallinson, geopolitical analyst at London-based research consultancy Energy Aspects, writes via e-mail

Russia supplies more than a quarter of the gas Europe consumes, and a little less than half of that gas travels through Ukraine. Last month, Russia shut off Ukraine's gas supply after the Eastern European country failed to pay back billions it owes in gas debt to Russia's state-owned gas giant Gazprom.

Russia, Ukraine, and Europe have said that gas continues to flow through Ukraine to the rest of Europe, but the concern is that supply intended for Europe might be interrupted or siphoned off as cold weather approaches. That's what happened in 2009, when Moscow cut off the supply midwinter.

It's why Europeans are more eager than ever to trade energy with the US – a stable, reliable ally that became the world's top natural gas producer in 2010 and which currently rivals Saudi Arabia for biggest oil producer. The Obama administration has already begun issuing permits to export liquefied natural gas (LNG), but that won't come online until next year at the earliest and is already under contract to go to Asia, says Mihaela Carstei, acting director for energy and environment at the Atlantic Council, a global think tank based in Washington.

"However, it doesn’t mean [US LNG] doesn’t have an impact on gas markets," Ms. Carstei adds via telephone from Bucharest, Romania. "Putting more LNG out there will help the Europeans, especially when you look at it in the larger picture." By 2020, global LNG capacity could nearly double with added US and Australian supplies, she says. 

US crude oil exports are more controversial, but they could come online more quickly. The Obama administration recently issued a private ruling that seemed to ease restrictions on the export of an ultralight form of US crude.  

EU officials are pressing for the TTIP agreement to "[include] provisions on unrestricted access to U.S. natural resources," according to a May 27 EU document leaked to the Washington Post last week.

"The current crisis in Ukraine confirms the delicate situation faced by the EU with regard to energy dependence," the document reads. "Of course the EU will continue working on its own energy security and broaden its strategy of diversification. But such an effort begins with its closest allies. Building a strong and comprehensive chapter in TTIP, which would combine our support for procompetitive regulation while also lifting bilateral restrictions on gas and crude oil, will show our common resolve to increase security and stability through open markets."     

Of course, more fossil fuels are not the only way to boost energy security. Environmental groups oppose such a liberalization of EU-US energy trade on the grounds that it will not just replace Russian supplies, but expand demand for and production of oil and gas. Building out the long-term infrastructure necessary for such trade would delay a transition to a renewable-energy economy, critics say, and would increase the emissions of heat-trapping gases that warm Earth's atmosphere.     

"To protect themselves from Russia and to save the planet [Europe] needs to move to renewables and conservation," says Bill Waren, senior trade policy analyst at the Washington-based environmental group Friends of the Earth. "We need political leaders to take steps that will encourage investment in renewables and conservation rather than take legal steps that will encourage more drilling, more pipelines, and more port facilities to expand current capacity to ship fossil fuels."

TTIP discussions have included cooperation on renewables and efficiency as well, but some say the role of clean-energy technology sharing has not played a large enough role in transatlantic collaboration.

"Energy security issues focus too much on energy supply, less on energy demand," Claudia Kemfert, professor of energy economics and sustainability at the Berlin-based Hertie School of Governance, writes in an e-mail. "Energy efficiency potential, especially in the USA, is huge. It would be desirable to combine such negotiations with European environmental standards."

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