On energy, Europe looks to Ukraine and beyond

G7 energy ministers meet next week in Hamburg amid calmer European geopolitics. Douglas Hengel of The German Marshall Fund explores what the G7 can accomplish in the energy space beyond assisting Ukraine. 

When the energy ministers of the G7 countries met in Rome last May, the Russian assault on Eastern Ukraine was in full swing. Europe and its allies were focused on energy security, an obvious preoccupation given the importance of Ukraine as a transit country for natural gas supplies to Europe. With that background, the ministers made an ambitious pledge to embark on a “step change to improve energy security at national, regional, and global levels.” They agreed on a fairly comprehensive set of principles and a plan of action to guide their work on a strategy that acknowledges energy security as “a collective responsibility” and “core component of our economic and national security.” The top energy officials of these countries, plus the European Commission, committed to collaborate closely to assist Ukraine in its reform efforts and to develop energy emergency plans for the 2014-15 winter.

On May 11-12 in Hamburg, the G7 energy ministers will meet again under the German G7 Presidency to take stock of their efforts over the past year and plot a course ahead. What can we expect? A certain amount of self-congratulation is in order. Ukraine and Europe survived the past winter with no disruption to natural gas supplies, the G7 partners are cooperating closely with Ukraine as President Petro Poroshenko undertakes the kind of deep energy and economic reforms that are essential to both turning around his country’s economy and to the energy security of Europe, and the launch of the EU’s Energy Union places a priority on a secure energy future for Europe.

With Russian aggression ongoing and still a long way still to go on Ukraine’s reforms, the G7 energy ministers will undoubtedly focus on ways to continue to strengthen Ukraine and their own near-term energy security. A broader look at natural gas security and the role of liquefied natural gas as new supplies come online from the United States and Australia would be welcome. Beyond assisting Ukraine, however, what can the G7 really accomplish in the energy space? These countries (including the EU as a whole, represented by the European Commission), account for a declining share of global energy consumption (about 37 percent now and headed lower). Without China and India at the table and buying in, how does energy security become truly “a collective responsibility?”

In addition to the absence of key countries driving future energy demand, the G7 members themselves are less than fully united on the best path forward to enhance energy security while also addressing climate change. Germany remains committed to closing its nuclear power plants, hence the statements issued at G7 and other international fora in which Germany participates always caveat the language about the contribution of nuclear energy to energy security and lowering carbon emissions by adding: “in the countries that opt to use it” or a similar formulation. At Rome last year, ministers listed “encouragement of indigenous sources of energy supply” as a core principle for energy security, yet exploration for shale gas in several G7 countries (and others in the EU) is effectively blocked. If Germany does proceed to close its remaining nuclear plants by 2022, this is likely to have a major negative impact on European energy security and the climate agenda. Either additional fossil fuels will be needed to take up some of the slack, or if Germany is successful in deploying enough renewables to replace nuclear there will be no net gain on emissions as one low carbon source is replaced by others. And by taking a potentially significant source of indigenous energy — shale gas — off the table, Europe’s commitment to a “step change” to enhance energy security rings a bit hollow.

Notwithstanding these differences, the G7 is unified on the importance of promoting energy efficiency and an increased uptake of renewables in the energy mix as key contributions to both energy security over the medium term and combatting climate change. The G7 can show global leadership on creating the conditions for incorporating more renewables into the electricity grid, in particular strengthening the resiliency of the network and managing demand. With its Energiewende, Germany is a leader on this set of challenges, and the Quadrennial Energy Review recently released by the U.S. Department of Energy focuses on modernization of U.S. energy infrastructure, including transmission, storage, and distribution, to promote energy security and environmental sustainability. Cybersecurity as it affects the reliability of the energy system is a related area where the G7 could show leadership that reinforces the energy security of all. Building on the International Energy Agency’s (IEA) Electricity Security Action Plan, the G7 members could launch a platform open to all countries to collaborate on the transformation of electricity networks. Such a platform would be analogous to an initiative launched by the G8 (when Russia still belonged to the group) in 2009 to accelerate the adoption of energy efficiency practices globally. The International Partnership for Energy Efficiency Cooperation, housed at the IEA, counts China, India, Brazil, and other major energy consumers among its members in addition to the G7 as it works to facilitate implementation of policies and programs to use energy more efficiently. A similar framework for cooperation to attain a more robust and resilient energy infrastructure would be attractive to much of the world and potentially an important contribution to a global climate agreement as COP 21 approaches in December.

 

G7 energy ministers should also reinforce the encouraging launch of the EU’s Energy Union program and strengthen the hand of the European Commission to harmonize the sometimes conflicting national energy policies and priorities of its members. Nothing will advance the EU’s energy security faster than further integration of European energy markets and more coordinated and cohesive national strategies. Despite the pledges of allegiance by all to the goals of the Energy Union, Europe is still far from mutually reinforcing approaches to its energy challenges. The statement coming out of the Hamburg meeting should clearly endorse the Energy Union as vital to our collective energy security.

Douglas Hengel is a Senior Resident Fellow with The German Marshall Fund of the United States (GMF). The views expressed are the authors’ own and do not reflect those of GMF or the U.S. Department of State.