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The European Union Energy Policy:
An Initiative in Progress

Anna Rulska
April 2006

I. Introduction

In January 2006, Russia cut off supply of gas to Ukraine. The European Union (EU), dependent on gas from Russia, delivered through Ukraine, realized the full extent of its vulnerability in the realm of energy security and a need, more pressing now than ever, for a common energy policy. Shortages of energy carry implications not only for domestic producers and consumers, but also for external security of the EU, for energy becomes a strong bargaining chip for Russia who can easily exert pressure on the EU members—especially those who do not possess their own supplies and whose energy sources are not diversified.

What is the current energy policy of the EU? Can the EU member-states agree on an effective common energy policy? What is an effective energy policy for the EU? Why has the subject of a common energy policy climbed the EU agenda now? Can disparity in national interests and levels of dependency be breached to create a common energy policy? What are the challenges the EU is facing in creating an effective common energy policy? What dangers lay ahead the EU if the members do not agree on common policy? These are but a few questions associated with issues of European energy.

The need for a common EU energy policy is a fact—and the mechanics and provisions of such a policy should be left to specialists on energy security. Instead, this essay asserts that the EU energy policy is really a matter of two intertwined policies: energy policy and security policy. In terms of energy policy, the issues of security of supply and managing demand are vital. In terms of foreign policy, assuring diversity in supply in order to reduce the dependence of Europe on one source of energy—and creating political security through a proper management of energy sources through foreign policy cannot be overlooked. Since the scope of the issues involved in the field of energy security presents a broad and complicated puzzle, this paper will focus on the EU’s relationship with Russia and use this particular relationship as an example.

This essay sets out to discuss the issues of European energy at play. First, general principles governing energy security will be discussed, leading the way to European dependence on energy. The second part of the essay will present the current energy situation in Europe, followed by issues associated with divergent energy needs of member-states. Next, energy policy at present and its proposed changes will be explained, followed by a stipulation on possible obstacles to implementation of such a policy.[1]

II. Energy in the European Union

‘Energy dependency’ and ‘diversification of energy sources’ seem to be the buzzwords in Europe these days when discussing energy issues. While energy dependency “shows the extent to which a country relies upon imports in order to meet its energy needs,”[2] diversification of energy sources indicates diversification of imports with respect to imported energy sources. These, in turn, are assured through long-term political stability in regions of origin and the resource base in regions of origin, including the home region/country itself.[3] Energy security can be enhanced through: drawing on foreign energy resources and products—increasingly aide by energy treaties and charters and by investment and trade agreements; adequate national/regional strategic reserves to address any interruptions, shortages, or unpredictably high demand; technological and financial resources and know-how to develop indigenous renewable energy resources and domestic power generating facilities; attention to environmental challenges; diversification in import sources and types of fuels; energy conservation and efficiency measures.[4]

Energy-producing companies, research institutions, and governmental advisors all predict that while world energy consumption...
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