The EU’s climate policy has not vanished but the approach today is probably more balanced towards other aims like energy supply security and competitiveness, Friedbert Pflüger said.
The green energy revolution seems to have stalled in recent years in Europe and across the world. Meanwhile, natural gas and even coal are re-gaining momentum. Is this an unintended trend in energy sector?
There is indeed a sort of paradigm shift. While a few years ago, climate policy was the issue which characterised EU energy policy to 90%, today other priorities have made their way to the forefront. This is because people have understood that there is no peak oil, that we have enough oil and gas for a long-term period. There have been new shale gas findings, new oil reservoirs with tight oil.
Secondly, we have the economic and financial crisis, and people had suddenly other priorities than climate change – like having jobs, economic competitiveness, and affordable energy prices. These two trends together stepped in. They did not make the climate policy vanish away; it will continue to play a role in the future. But the approach today is probably more balanced, towards other aims like supply security and competitiveness.
International projections speak of rising energy demand. The EU is trying to promote energy and resource efficiency but these are mostly in the form of non-binding measures. Is it enough to help enhance energy security in Europe?
Energy efficiency has already been promoted and there is still a lot of potential, especially in the transport and housing sector, as well as in power plant production. In the EU we should put a priority in the next years to enhance energy efficiency.
Next to the development of renewables, I believe that energy efficiency and measures to save energy are of extreme importance. Diversification of energy supplies is another big issue on the agenda.
What is important is not to have a one-sided view but to find a right balance between the various aims that European energy policy is looking to. Sometimes we neglected the necessity of economic competitiveness, which is the pre-condition also for developing new technologies, energy efficiency and renewables.
Oil and gas supplies have often been used by producing countries like Russia as a foreign policy tool. How do you see future developments with regard to these markets?
Today, many parts of Europe are still largely dependent on Russian natural gas. For us in Germany, it has been a reliable energy supplier. But we know that in other markets the gas prices that the Russians set are very high. These long-term contracts with high prices will come into very tough competition with more LNG and new gas suppliers entering the market.
Until recently we had global oil and coal markets with global prices but regional gas markets. With more LNG and the US becoming a pretty solid exporter of gas, the times of regional gas markets and prices are over. That will put enormous pressure on long-term contracts as we have seen so far and will change gas markets worldwide over time.
Within the EU strategy for diversification of energy supply sources, there has been much talk about the Nabucco pipeline project and competition for Caspian gas. But due to the delays, some observers are getting more sceptical about implementation of alternative gas supply routes to Europe. What is your opinion?
First of all, it is pretty clear that gas via the Gazprom project South Stream will start to be shipped to Europe by 2018 at the latest. In June the Shah Deniz consortium will make a decision, whether it will be for the Nabucco West or the TAP project.
For a long time Nabucco was a synonym for diversification but the TAP pipeline, although smaller, caught up and today nobody can say who will be the winner at the very end. But that is not decisive from the political point of view. What’s important is that we will have a diversification of our gas supplies with new gas suppliers and new pipelines and that is good news for consumers.
Why did it take so long? First, Western free market countries do not take purely geopolitical decisions, it has to be a business case, it has to be commercial. You have to find for a certain amount of gas and buy it. And only that will make it a commercial success and not the other way around, not that we make a political decision for a geopolitical purpose. Therefore the process is enormously complicated. But from what I hear it is very clear that we will have Caspian gas coming to Europe and that´s good news.
In a recent article, you said that the Chinese will emerge as the winners in the ongoing “subsidy war” with Europe over solar panels. Can you elaborate?
China is looking aggressively all over the world for energy sources. And that is understandable from their point of view because they have a fast growing economy with a population of over a billion people. So they are doing the same thing that others have done in the past – securing the necessary energy resources.
China and also India will make up for 20-25% of the additional global energy consumption in the next 20 years. And that means that in all fields – oil, coal, gas, but also renewables – there will be an enormous growth in the Eastern Asian countries.
To find affordable energy is an enormous challenge for the Chinese. The first visit of the new Chinese leadership after the party congress was to Russia. Now they are looking for a closer relationship with the Russian leadership. And we will perhaps also have a lot of global repercussions, a process which we will have to watch very closely.
After a short hesitation caused by the Fukushima accident, most nuclear power projects are now back on track. How do you perceive the future role of nuclear power in the EU when you consider the various national approaches, ranging from the German phase-out to the new drive in the UK and central European region? What are the main issues that need to be addressed?
Relatively high construction costs for new-build reactors, tighter safety regulations, delayed investments, higher risk premiums, as well as increased public resistance is likely to dampen nuclear expansion in Europe despite a drive in the UK and a few CEE countries. This particularly holds true for countries currently experiencing difficult economic times and tough austerity measures.
Moreover, cost and safety issues regarding decommissioning and waste management remain important challenges. The Asse German nuclear waste disposal site in Lower Saxony clearly underscores this. Due to radioactive leaks, the government has determined that the site will have to be emptied of all of its 126,000 barrels of nuclear waste, costing several billion euros and taking 30 to 40 years to retrieve all the waste.
The costs and risks associated with nuclear decommissioning and waste management are issues that are obviously not only restricted to Germany, but which will eventually have to be addressed by all states which are considering building new nuclear power plants.
Friedbert Pflüger is director of the European Centre for Energy and Resource Security at King's College, London. Throughout his political career he served as Parliamentary Secretary of State in the first Merkel government (2005-2006) and was a member of the German Bundestag from 1990-2006. He also worked as press secretary for the former German President Richard von Weizsäcker.