- By Chris Kremidas Courtney
To ensure their energy security, the EU’s member states need to be able to help each other in times of need. That means that adequate interconnection and reverse flow options are crucial, and a solid infrastructure is indispensable if Europe’s internal energy market is to be achieved. In turn, an efficiently functioning European internal market for gas will enhance our security of supply. And when gas becomes a freely traded commodity, its use as a tool in political power games is reduced.
The EU Commission’s analysis shows that roughly €30bn could be saved every year till 2030 providing we can achieve the full integration of our national gas markets. These benefits would mostly come from more competitive gas wholesale prices. But that requires sufficient infrastructure to ensure that these markets are fully connected so that gas can be traded freely.
What do we need to do to enhance our infrastructure and achieve these objectives? The EU’s gas infrastructure policy is driven by the regulation on trans-European networks for energy (TEN-E Regulation), and the new one that entered into force last year will help to improve Europe’s gas infrastructure in a number of ways.
First, it consists of a flexible approach that is tailored to the specific needs and challenges of the EU’s different regions. This helps us identify the investments that are most urgently needed, not least in terms of the security of supply challenges we face. It therefore focuses on ending the energy isolation of the Baltic member states and overcoming single source dependency in central and eastern Europe. At the same time, it aims to promote further market integration in the West and also looks at supply diversification options through the Southern Gas Corridor.
To support these goals, we identified “Projects of Common Interest” a year ago, in October 2013, which benefit from efficient permit-granting procedures and improved regulatory conditions. Among the 248 key energy infrastructure projects listed, 107 relate to gas; half of these are in central and south eastern Europe, 27 in western Europe, 15 in the Baltic Sea region and 12 in the Southern Gas Corridor, which will link the European markets to the Caspian region. There are also several LNG terminals and storage projects, as well as reverse flow projects. Under normal circumstances, it is expected that all the gas projects will be completed by 2020, and that will considerably strengthen Europe’s energy security.
Second, the TEN-E Regulation tackles the greatest barriers to infrastructure development by streamlining permit-granting procedures and ensuring the fairer distribution of investment costs based on the benefits to be brought by each project.
Third, it addresses some of the financing questions related to infrastructure projects. The Connecting Europe Facility, which earmarks €5.85bn for energy infrastructure until the end of 2020, may support the implementation of some of the Projects of Common Interest, but this applies only to projects with positive European benefits that cannot be developed on purely commercial terms. In the European Energy Security Strategy the Commission presented earlier this year we gave a further indication of where our strategic priorities lie; 33 critical energy infrastructure projects were identified, 27 of which concern gas. If we want to speed up these projects, early support under the Connecting Europe Facility would certainly help, but in many cases it is political support that would be even more important.
We shouldn’t forget that much has already been achieved in improving gas infrastructure around the EU. Reverse flow capabilities and new interconnectors, as well as new LNG terminals have been built during the past few years, especially in the aftermath of the 2009 gas crisis. Most of the projects have been co-financed by the EU, although the work is still not yet completed.
To be absolutely clear, I must emphasise that words are not enough to improve the EU’s infrastructure. What we need is action, and this demands a greater effort on all sides.
To be absolutely clear, I must emphasise that words are not enough to improve the EU’s infrastructure. What we need is action, and this demands a greater effort on all sides. It means a stronger commitment by project promoters when examining technical ways accelerating implementation; by regulatory authorities who must agree on cost allocation and funding; and by national ministries that need to ensure the necessary political support while also tapping into all possible financing sources, including the EU’s structural funds, cohesion funding and the European Investment Bank.
Developing Europe’s energy infrastructure will demand close co-operation and co-ordination between EU member states. The energy challenges that now confront us underline the way in which we have to “think European” if we are to improve our energy security. The EU can only win if it plays as a team.
- By Jamie Shea
- By Hannah Scheuermann & Birte Brecht-Drouart
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