The dependency of the EU on foreign energy

Article published on March 14, 2005
community published
Article published on March 14, 2005

This article has not been vetted by an editor at Paris HQ

With insufficient energy production, the European Union is seeing its dependency grow continually in comparison with other countries. Meanwhile, the Green Paper aims to respond to growing Community consumption

The European Commission’s Green Paper, presented in November 2000, takes stock of the EU’s energy resource situation under the title “Towards a European strategy for the security of energy supply”. To be more precise, in this paper the Commission stresses that if nothing is done over the next twenty or thirty years, 70% of the EU’s energy requirements will be provided by imported products, as opposed to the current 50%. The consequences of such dependence are significant in economic terms: they already amounted to 240 billion euros in 1999; that is, 1.29% of the EU’s GNP. In geopolitical terms, 45% of imported oil comes from the Middle East and 40% of natural gas from Russia. Furthermore, this dependence is reflected in all sectors of the economy with transport, the domestic sector and electricity remaining largely reliant on hydrocarbons and, therefore, at the mercy of erratic differences in international prices.

Economics or geopolitics?

Faced with this report, a crucial question arises: can the European Union accept an increase in its dependence on foreign energy sources without compromising the security of supplies and European competitiveness? And, in the event of failure, for which energy sources would it be advisable to contemplate a framework policy on imports? In this context, should an economic approach be favoured (the cost of energy), or a geopolitical one (the risk of supply interruption)? It must be noted that over the past twenty years there has been no real debate on the options available and even less so on energy policy in the context of security of supply. Today, however, the double pressure of environmental concerns and the new working of the European energy market require a response. Current energy consumption consists of 41% oil, 22% natural gas, 16% solid fuels (coal, lignite, peat), 15% nuclear and 6% renewable sources. According to the Green Paper, if this trend does not change, by the year 2030 the balance of energy use would still rely on fossil fuels: 38% oil, 29% natural gas, 19% solid fuels, and barely 6 % nuclear and 8% renewable.

Long-term strategy

As a consequence, the Green Paper has outlined a long-term energy strategy which recommends focusing on reducing demand rather than increasing supply. This is because “there is not a great deal of room to manoeuvre with an increase in Community supply as regards need, whereas there is more promising leeway with new demand.” And with regard to demand, the European Commission has called for a real change in the attitude of consumers, and has particularly insisted on implementing an active policy on saving energy. The Commission also brought to the fore the importance of taxation with a view to steering demand towards better controlled and more environmentally friendly consumption (for example, the European Union is committed to reduce greenhouse gas emissions by 8% by the year 2012 in relation to 1990's emission levels); but such use of taxation has so far been blocked by the Council. Moreover, the Green Paper has drawn up an analysis according to which efforts to reduce the European Union’s energy dependency will, above all, involve an increase in the production of non fossil fuel energy sources in Europe. Since 1957, the Euratom Treaty has been promoting nuclear energy, even though countries still regard this a controversial option. The use of diverse energy sources also concerns the use of natural gas and, to a lesser extent, renewable energy; but still with the objective that these are to represent 15% of world consumption by the year 2010. Despite this, significant efforts to favour other sources of energy, especially new and renewable, will remain limited in the face of the growth in demand. As a result, conventional forms of energy will remain indispensable for some time to come. The Green Paper has also suggested drawing up a framework policy on imports, despite a large number opposing this, arguing that a framework on imports would, by its very nature, completely upset the balance of the energy markets which are scarcely liberalised as it is.

New Community aspect

Although the Green Paper has introduced an EU angle into energy policy, ultimately, responsibility still lies with the member states, be it for production, consumption, or diversification. Thus decisions vary widely from one country to another and each is free to choose methods to respect their commitment and the realisation of objectives set by the Commission (for example, greater emphasis on nuclear energy in France; on lignite in Germany; on coal in Poland; or on gas in the United Kingdom). Until now, Europe has mainly been engaged in coordinating networks, considering global strategies and financing important research programmes. There are many more avenues left to explore. There also remains the urgent matter of continuing to try and grasp the European energy policy other than just by means of the home market, harmonisation, the environment or taxation.