Energy Union or national sovereignty: will EU leaders manage to untie the knot?

The latest in a line of ‘cornerstone’ EU energy and climate policies, the Energy Union proposal attempts to transform Europe into a low-carbon economy vying for greener energy, tackling climate change, reducing energy dependence and gaining competitive energy prices. But at what cost, and are Member States willing to go along?

Has the era of the real Energy Union arrived? Following its unveiling a month ago by the European Commission, the skeleton of the Energy Union proposals hardly offers new ideas, but rather puts forward repackaged solutions wrapped in a political banner with bits and pieces of economic sensibility. But also a lot of wishful thinking.

Perhaps more importantly, it has restarted a much needed debate on the future of EU energy policy, creating a new impetus to get the ball rolling. A cascade of questions and criticisms emerge as industry, national governments, investors and customers alike try to make sense of what the Energy Union really means.

Today, this debate arrives at Justus Lipsius across the street from the Berlaymont, the literal poster child for the Energy Union. As EU heads of state and government arrive to attend the March European Council Summit, they will address several agenda points such as better enforcement of existing energy legislation, transparency for the gas market and building additional energy infrastructure.

The Energy Union’s strong push to build additional energy infrastructure is a critical aspect to connecting and creating a real internal energy market. But a critical question needs to be answered… in earnest: how is Europe paying for all this?

The proposal suggests funding should come from the European Investment Bank, the Connecting Europe Facility and most frequently quoted, President Juncker’s €300bn investment package. A recent report by the European Court of Auditors (ECA) may also make its way into the conversation, because it notes that EU taxpayers might take losses on public projects funded by the investment plan, and it highlights other potential liabilities. Are taxpayers ready to take a hit?

Leaked Council conclusions suggest however that the thorny financing question may well be put on the back burner. The draft communiqué reveals that an old argument may erupt over Member States’ national sovereignty. The majority of Member States points out that the type of energy they decide to use is their prerogative, and Brussels should mind their own business. But the national sovereignty debate will resonate further and also touch the Commission’s desire to increase transparency with intergovernmental agreements (IGAs) and commercial contracts.

MEPs and NGOs have come out strong on this with Claude Turmes recently stating, “Come on! How can you build an Energy Union over the borders, if you won’t give up a millimetre on your national energy mix?” From his perspective, shale gas developments and the use of nuclear energy are preventing a true transition to renewables and a low carbon society.

Even earlier this month during a meeting of EU Energy Ministers, Germany identified developing nuclear energy with taxpayer money to be a “big conflict.” Meanwhile a small coalition of countries including France, Czech Republic, Lithuania, Poland, Romania, Slovakia, Slovenia and UK call for their preference for their energy mix to be respected.

Will the Energy Union get bogged down by national interests? Or will “the greater good” of developing an internal market prevail? The next few paragraphs will be written today, but we all know that the saga will continue for much longer…

*This article was written by Paula Iwaniuk. You can connect with her on Twitter via @iwaniukpaula.