By: Kanan Agazade
The International Asia Today presents the material about Europe’s new energy crisis policy that interpolates politics and economy with one another. Here we will introduce you to the EU attitude towards the current energy crisis policy in order to avert potential risk and protect its interests from the main monopolist exporter.
Background
The recommendation announced by the European Union to implement the same energy policy will affect the continent and the future of the global energy map. This is a game-changer in order to solve the energetic crisis in Europe. The EU recommends all member states follow the same energy legislation in accordance with the collective action rules. They hope that this new policy across the European Union will help them to avoid the consequences of the current energetic crisis and decrease dependence mainly on Russia.
Measures and reactions:
The collective policy surely came because of Europe’s dependence on Russian gas, as well as to prevent the Kremlin from using energy as political blackmail. According to this expected policy:
- EU countries will pursue the policy of a united price;
- All energy related contracts and agreements will have to be within the union’s rules;
- All agreements in compliance with the European Energy Charter will come into force after the approval of the Energy Union;
- The one-sided pricing policy of energy resources of the countries wanting to sell in the European market will be terminated;
- Although the main factor in creating this union is Russia, the EU is fully aware that in the course of the next thirty years, new players will enter market, so the goal is apply its rules even to the new comers.
Members of the EU spend approximately €1.1 trillion annually on energy (gas, oil, coal and other energy projects). This is a very large market. If up until now Europe’s main goal was to provide Europeans with energy, now the main goal is to straighten up the market, and more importantly ensure that the spent resources remain in Europe while transitioning to a renewable energy strategy.
With the new recommendations, Europe will try to save and economy money, and most importantly, enable the EU to spend this money outside of its borders. The model for this decision comes from Sweden, where more than 47% of the country’s energy needs come from clean, renewable sources. Finnish model is also good – the country encourages the use of electric cars by installing free charging stations across the country and applies no tax for such cars. Therefore, there are a number of incentives introduced for these purposes.
The Institute of Energy Economics at the University of Cologne released a new report measuring Europe’s dependence on Russian gas. According to this report, Europe is better equipped to deal with Russian energy blackmail in 2015 than it was in 2009.
Having said this, there are a number of countries – primarily in Southern and Eastern Europe and the Baltic states – still strictly dependent on Russia’s gas supply, and the main goal is to reduce these countries’ dependence.
The future perspective:
The formation of the new energy policy further undermines Russia influence and it will no longer dictate prices, and in the course of the next ten years, new players will enter the market. Aside from the players like the USA, Israel, Azerbaijan, Nigeria, Cyprus, Iran and Iraq are also aiming to enter the European market. This happens because the most stable, richest customers are within this market. Europe is also fully aware of this – it understands and tries to determine the rules of the game.
Iran and Iraq can export together with more than Russia. In the United State, liquefied gas will be ready by 2022, and by 2023, will be able to extract up to 80bcm of gas. Both Israel and Cyprus intend to reach 30-40bcm of gas by 2025. With these alternatives, by 2025 Europe will have somewhere between 200-210bcm of gas, which is more than the 150bcm of gas currently supplied by Russia.
Russia will understand that the time of finding friends through oil and gas has ended. Continuing to depend on hydrocarbons as a means of achieving all economic and political goals is not sustainable. The country has to move on to a new development model. The sooner the government realizes it, the better it will be for the state and the nation. If they refuse to accept this new reality, they can only cause serious damage to themselves and the country.