European Strategic Autonomy – Climate & Energy Policy

Preliminary Terms of Reference (TOR)

Project Title: Europe’s Quest for Strategic Autonomy: Prospects and Scenarios

 

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Client Organization: Eurasia Group

 

Client Website: https://www.eurasiagroup.net/     (https://www.eurasiagroup.net/)

 

 

Background:

Eurasia Group is a political risk consulting and advisory firm, with a network of experts and resources in 90 countries. They specialize in helping clients understand how politics and markets interact around the world.

Project Background:

 

At a time when the coronavirus and geopolitical tensions have exposed the risks and vulnerabilities of interdependence, the European Union has placed                                                                                               (https://eeas.europa.eu/headquarters

/headquarters-homepage/89865/node/89865_en) “strategic autonomy” at the heart of its foreign policy.

 

The official definition of this concept, agreed to by all EU member states in the November 2016 Council conclusions, is “the capacity to act autonomously when and where necessary and with partners wherever possible.” For the purposes of this project, Eurasia Group has defined European strategic autonomy (ESA) as:

The EU’s ability to decide for itself and to have the necessary instruments, means, capacities and capabilities to act upon its decisions, in such a manner that it is able to safeguard its long-term interests, with others when possible but on its own when needed, without depending on the will and capabilities of third parties.

It is important to note that strategic autonomy is not an either/or variable; rather, there are gradations of autonomy. Moreover, autonomy is not unidimensional, and can characterize different stages of the policymaking process to varying degrees. For example, a high degree of political (i.e., decision- making) autonomy could co-exist with low institutional or operational autonomy.

The drive to pursue ESA is motivated in part by a recognition of the need to reduce the EU’s vulnerability to exogenous shocks and reliance on external actors in an interdependent world, but also by a desire to enhance the EU’s ability to act geopolitically and project influence in accordance with its interests and values amidst a more multipolar global order featuring a mix of competition, cooperation, and confrontation with other powers.

There is broad consensus among member states that the EU should indeed be able to decide and act more autonomously. As EU High Representative Josep Borrell recently stated, the EU considers that it must “keep a certain degree of autonomy in order to defend [its] interests.” But strategic perceptions and therefore assessments of how much autonomy is required, from whom, and how to increase it differ across member states and policy areas.

 

Objective:

The team will characterize the current level of European strategic autonomy (as defined above) and assess its medium-term (5-year) prospects, in at least two of the following domains:

  1. Security and defense policy
& Energy policy
  • Climate
  1. Economic policy (including trade, investment and finance [banking, monetary])
  2. Technology and/or industrial policy

 

Tasks:

Based on the descriptive modeling of the relevant actors, the historical analysis of the laws of motion
of EU common policy, the assessment of ESA ambitions, and the constraints analysis, you will then  
generate prospective scenarios for the medium-term (5-year) direction of ESA in the policy domains
of their choice .

 

*This list is intended to help the team break down the larger research question into discrete research tasks. However, they are non-binding suggestions. The team is free to chart its own research path in consultation with Eurasia Group.

 

 

Deliverables and timetable:

 

The key deliverable is a final paper of unspecified length (perhaps 50-80 pages)—the most succinct possible document that can do justice to the findings.

 

Sample Answer

 

Part 4: Climate and Energy

In this part, we focus on ESA in relation to climate and energy. The primary objective of ESA in energy is the reduction of Europe’s dependence on energy imports in a political and economic environment that has become highly volatile.[1] The constraints from the growing political volatility across Eurasia and the prevailing security threats have exposed the demerits of Europe’s energy dependence. Subsequently, ESA has gained increased significance in light of the need for the EU to reform the energy sector to achieve greater autonomy, bolster resilience and minimize dependence on foreign energy. Strategic autonomy in energy is a vital element in the EU’s pursuit of climate change goals. Furthermore, energy sufficiency is viewed as integral to European security in the long term.

  1. The current situation: actors, trends and policies

The discussion about the current situation in regard to ESA in climate and energy identifies the relevant actors along with their interests, capabilities, and actions, Europe’s energy dependence, trends in the climate-energy sector, and the interaction between sectors.

  1. Relevant actors and interests

Three main actors appear as drivers for energy and climate changes in the EU.

First, the European Commission has been central to the push for strategic autonomy in energy. The European Commission, as the executive organ of the EU, is instrumental in the development of policies and the implementation of actions to enable ESA. The current interest of the European Commission in energy is to promote strategic autonomy by seeking greater European self-reliance. The Commission intends for the EU to reduce the dependence on energy imports and ensure that energy is more secure, affordable, and sustainable. In 2021, the EU imported 155 billion cubic meters of gas from Russia.[2] The quantity is around 45% of the gas imports into the EU. The European Commission is coming to terms with the deteriorating relationship with Russia, a key supplier of energy to the EU, in light of the invasion of Ukraine.

The EU has imposed a raft of sanctions on Russia which has further strained the relationship and threatened energy security in Europe. European Commission President Ursula von der Leyen has stated that energy sufficiency in the EU means that Russia can no longer blackmail Europe.[3] The commission aims to boost the internal energy market to wean Europe off Russian energy supplies. On March 8, 2022, the European Commission released an outline of a plan to achieve independence from Russian fossil fuel supplies by 2030 and speed up the transition to clean energy.  The European Commission has also indicated a commitment to the European Green Deal that was approved in 2020 by the European Parliament. The European Green Deal is a set of long-term policy initiatives by the European Commission for the attainment of the goal of achieving carbon-neutrality in Europe by 2050. In March 2022, the European Commission proposed an increase to the 2030 renewable energy target from 32% to 45%. The proposal has received widespread support among members of the European Parliament.

Second, the European Council which governs the political and policy direction of the EU has influenced Europe’s approach to energy independence. In February 2015, the European Council launched the Energy Union project. This energy policy was a direct response to the annexation of Crimea by Russia and the recognition that Europe needed to reduce the importation of energy. The project was the brainchild of Donald Tusk, who had proposed it while he served on the European Council. The primary goal of the Energy Union is to minimize Europe’s reliance on energy imports.[4] The project seeks to facilitate the transition to a clean, secure, safe, and affordable energy system across Europe. The next priority of the Energy Union is overseeing the full integration of the European energy market.[5] Integration of the market will offer a cost-effective way to meet the demand for energy and achieve greater energy sufficiency in the EU as a crucial step toward strategic autonomy in energy. On 25 January 2018, EU member states allocated €873m for the development of energy infrastructure projects across Europe.

Third, the Council of the European Union, commonly referred to as the Council, deliberates on various laws and policies on climate and energy. Energy ministers of the Council met on February 28, 2022 to discuss the energy situation of Europe following Russia’s invasion of Ukraine.[6] The Council agreed to a range of contingency measures in the event of supply disruption from Russia. The Council agreed to bring forward discussions on how to accelerate Europe’s energy independence.

 

Actor Interests
European Commission

Functions: executive organ of the EU; development and implementation of policy

·     Promotion of ESA in climate and energy

·     Achieving European self-reliance in energy

·     Reduce Europe’s energy dependence

·     Attainment of climate change targets in the EU

European Council

Functions: oversees the political and policy direction of the EU

·     Promotion of ESA in climate and energy

·     Reduce energy importation

·     Integration of the European energy market

·     Energy transition to clean, safe and renewable sources

Council of the European Union

Functions: discussion, amendment and adoption of laws and policies

·     Promotion of ESA in climate and energy

·     Attainment of energy independence in Europe

·     Reduce dependence on energy imports

Table 1: Relevant actors and their interests

  1. Current trends and dependencies

Energy Dependence

Despite efforts at diversification, Europe is still highly dependent on energy exports. According to statistics provided by the EU, the rate of energy dependence in Europe stood at 61% in 2019. The figure indicates that over half of the energy utilized in Europe is from energy imports.[7] Europe’s energy dependency has gone up from the 56% that was reported in 2000. Fig. 1 below demonstrates the level of energy independence among the EU member states.

Fig 1: Energy dependency rate by country. Source: Eurostat

The top five exporters of crude oil to the EU by percentage of the total volume of imports to the EU in 2019 were Russia (26.9), Iraq (9.0), Nigeria (7.9), Saudi Arabia (7.7), and Kazakhstan (7.3).[8] The top 3 exporters of natural gas to the EU by percentage of the total volume of imports to the EU are Russia (41.1), Norway (16.2), and Algeria (7.6). In regards to solid fuels such as coal, the main exporters to the EU by percentage of the total volume of imports are Russia (46.70), USA (17.7), and Australia (13.7).

The statistics paint a grim picture of Europe’s energy dependence. Of considerable concern for the EU, especially in the current political climate, is that Europe imports a significant percentage of energy in all forms from Russia. Europe’s energy dependence has been on the rise due to the changing configuration of the energy landscape in Europe in the last 20 years. Europe’s energy dependence on energy imports has escalated because of the all-year availability of energy imports from countries like Russia. The energy imports ensure the availability of energy throughout the year to meet the growing energy needs of the EU population. Another factor is that energy imports from countries like Russia, Iraq, and Kazakhstan are considerably cheaper than the energy produced in Europe.[9] Intra-national decisions surrounding energy in various EU countries have also led to higher energy dependence in the respective countries. For instance, Germany terminated the production of nuclear energy through the Atomic Energy Act of 2011.[10] The consequence of this action was the country’s increased dependence on energy imports.

 

Trends

Fig 2 below shows that the greenhouse gas emission in the EU has been on a steady decline from 1990 to 2019. Under the 2030 climate and energy framework, the EU set a target of reducing greenhouse gas emissions by 40% with the 1990 levels as the baseline.[11] In 2018, the emissions were 23.2% below the emission levels in 1990 which shows that the EU is still on track to meet the 40% target.

 

Fig 2: Greenhouse gas emission in the EU: 1990 to 2019.[12]

Fig 3: Greenhouse gas emissions by sector in the EU in 2018.[13]

As shown in Fig 3 above, the three sectors that emit the highest volumes of greenhouse gases are energy (28.0%), fuel combustion excluding transport (25.5%), and transport (24.6%).[14] In 2018, the greenhouse gas emissions across the sectors were down by an average of 21% compared with 1990 levels.  This shows that the EU is on course to accomplish the goal of reducing greenhouse gas emissions by 40% by 2030. The biggest decline in the volume of emissions in the sectors of energy and transport was reported between 2010 and 2014.

  1. Current ESA policies

In terms of greenhouse emissions by capita measured in tons, the countries that release the highest volume of greenhouse gases in 2019 were Luxembourg (20.3 tons), Iceland (15.8 tons), and Ireland (12.8 tons).[15] Conversely, the countries with the lowest volume of greenhouse gas emissions per capita are Sweden (5.2 tons), Malta (5.3 tons), and Romania (5.9 tons). The average greenhouse emissions per capita across all EU member states in 2019 was 8.4 tons. The figure indicates a reduction from 8.7 tons in 2018 and 8.9 tons in 2017.[16] In 2013, EU countries released 9.1 tons of greenhouse gases per capita. As such, there has been a marked reduction in the volume of greenhouse gas emissions across EU member states since 2013.

The EU has set a target of 32% renewable energy share by 2030. In 2020, the share of renewable energy used across the bloc was 22.1%. As such, the EU met its target of achieving a 20% renewable energy share by 2020. The EU met and exceeded the target on the back of the COVID-19 pandemic which led to a widespread reduction in total energy across Europe. The countries with the highest renewable energy shares in 2020 were Iceland (83.7%), Norway (77.4%), and Sweden (60.1%). Countries with the lowest share are Malta (10.7%), Luxemburg (11.7%), and Belgium (13.0%). All EU member states met or exceeded their renewable energy share targets except France.

The climate emergency has been forcing the global economy to shift the fundamentals of its energy matrix away from fossil energies, such as oil and coal. Historically the main challenge of the clean energy transition agenda in Europe has been the move away from coal. For no other reason over the past years, the European Union has been focusing on energy substitution, betting on natural gas as an important substitute in their decarbonization strategies.

Investments, as well as research and development efforts have been primarily directed to the development of renewable energy sources, such as wind (on and off shore), solar, nuclear, geothermal, as well as less impactful fossil fuels, such as natural gas. To that extent, therefore, the rise of clean energy is one of the structural and long-term trends facing European energy policy is the decrease in fossil fuel production and consumption. The latest State of the Energy Union report, published in 2021, states that in 2020 renewable energy overtook fossil fuels as the EU’s main energy source[17].

While, in the long run, the rise of renewable energy in substitution of fossil fuels is the predominant trend, that very trend is likely to trigger opposite effects in the short and medium run. Experts have been warning that, due to the structural divestment trend away from fossil fuels, short and medium term supply for oil will drop faster than the corresponding demand for that source of energy[18]: divestment pressure will decrease supply, while demand is likely to decrease much slower. As a result, the supply of oil is likely to become more concentrated in fewer countries, such as Saudi Arabia.

In the face of the recent War initiated by the Russian Federation, the European agenda has shifted dramatically. And one of the most impacted policy areas in which Europe has now to rethink its goals is the one of energy policy. The International Energy Agency and the European Commission estimate that about 10 bcm the Russian supply of pipeline gas might be substituted by a combination of increased domestic supply and additional inputs from Norway, the Netherlands, Azerbaijan and Algeria[19]. Within that trend, the demand for Liquified Natural Gas is likely to keep increasing, given the need to substitute the Russian supply of pipeline natural gas.

The Covid-19 pandemic has brought to light a new dimension in the quest of nations for sovereignty and security: the flexibility of their supply chain for crucial goods, such as food, pharmaceutical products and relevant industrial inputs. This contemporary concern also has implications for Europe’s strategic autonomy in the energy field, on top of the already mentioned trends, putting stress on the block’s current position as a net importer of energy.

The latest State of the Energy Union report, published in 2021, states that in 2019 the European Union dependency on energy imports reached its highest levels in the last 30 years. At the heart of such a trend, the persistent demand for natural gas from Russia and African countries, given the EU’s bet on natural gas as a tool for their decarbonization strategy away from coal.

 

  1. Analysis of Background
  2. Regulatory processes and past milestones

Over the years, the EU has adopted and implemented a range of policies and frameworks influencing the pursuit of strategic autonomy in the climate-energy sector. The first is the European Green Deal which was adopted in 2020. The European Green Deal encompasses policy initiates instituted to achieve climate neutrality in Europe by 2030.[20] The EU developed the policy as a response to scientific projections that predicted a rise in air temperature in Europe by 3% by 2030 that posed a direct threat to human, animal, and plant life. The European Green Deal outlines that Europe should decarbonize the energy sector by increasing the share of renewable energy sources. The policy prioritizes affordable energy, an integrated EU energy market, and energy efficiency. The next key component of the policy is the farm to fork strategy that promotes sustainability in the agricultural sector with targets such as reducing the use of pesticides by half and increasing the percentage of organic food production by 25% by 2030. Additionally, the European Green Deal adopted a Circular Economy Industrial policy to boost modernity in industries and encourage the decarburization of energy-intensive sectors.

The European Climate Law was adopted by the EU in June 2021. The law went into effect on July 9, 2021. The law established the goal of attaining net-zero greenhouse gas emissions in Europe by 2050. In the interim, the European Climate Law spells out that the EU should attain a 55% reduction in greenhouse gas emissions by 2030.[21] The law outlines that the EU should meet these targets in a manner that is cost-efficient and socially fair. The law prescribes the creation of a system to monitor the progress of the policy initiatives and propose mitigation actions as deemed necessary. Another objective of the law is to inject some level of predictability to suit investors and other economic actors. The European Climate Law emphasizes the need to bolster the EU’s carbon sink through more ambitious land use, land-use change, and forestry regulations. Under the law, the Union commits to engage with the various sectors to facilitate the development of sector-specific roadmaps outlining the path to the attainment of carbon neutrality across the various economic components. The Climate Law describes the process of setting the 2014 climate targets and stronger provisions regarding how the EU adapts to climate change. The law has been instrumental in guiding the EU on how to achieve a gradual and irreversible reduction in greenhouse gas emissions. Furthermore, the Climate Law enshrines the climate neutrality laws in EU regulations.

The ‘Fit for 55’ package is a set of proposals that streamline EU policies with climate goals established by the European Parliament and the European Council.

Fig 5: Components of the Fit for 55 package Source: EPHA[22]

The Fit for 55 package proposes far-reaching changes to the emissions trading system (ETS) that would result in a 61% reduction in emissions by 2030 in identified sectors.[23] The proposals set binding greenhouse gas emission reduction targets for EU member states. The package proposes a target of a 29 to 40% reduction in emissions compared with 2005. Consequently, the national targets are revised in line with the set targets. Fit for 55 proposes a revision of the renewable energy directive and sets a target of 40% renewable energy share by 2030.[24] The package proposes an energy efficiency of between 36 to 39% by 2030 in primary energy consumption for the member states. Fit for 55 proposes that the Council should change the directive of taxation of energy products to align the taxation with the Union’s climate, environmental, and energy policies. Fit for 55 proposes a new target of a 100% reduction in CO2 emissions from cars and vans by 2035. Additionally, the package establishes a social climate fund to tackle issues around the uneven social and distributional effect of the ETS on buildings and transportation.

Since 1996, the EU has adopted several measures intended to integrate the internal energy market. The integration of the European Energy market has a legal basis in Article 194 of the Treaty of the Functioning of the European Union which outlines the EU’s energy policy. The article states that energy is a shared responsibility between the EU and the member states. Therefore, the main goal of the EU’s energy policy is to facilitate the integration of the energy market to increase the security of the energy supply.[25] EU policy seeks to improve the functioning of the energy market to improve access to energy across Europe. Another goal of integrating the energy market is to encourage energy savings and energy efficiency. The EU’s energy policy aims for greater interconnectedness of energy systems to improve energy market access and ensure adequate energy supply among member states.[26] Consequently, the policy proposes the construction of trans-European networks to transport oil, gas, and electricity. The integration of the energy market aligns with the goal of strategic autonomy in energy.

 

Strategy Policies Projection Political drivers Constraints
Energy security and integration European Green Deal Climate neutrality in Europe by 2050

Reduce net greenhouse gas emissions by 55% by 2030

Increase share of renewable energy to 40% by 2030

Fully integrated EU energy system.

25% organic food production share.

European Commission

European Council

European Parliament

Uneven ambitions among member states

Financing constraints surrounding green investments

High energy dependence

Lack of cross-sectional links in current European energy system

Energy security European Climate Law Net zero greenhouse gas emissions by 2050

Achieve negative emissions after 2050

Reduce net greenhouse gas emissions by 55% by 2030

Ambitious land use, land-use change, and forestry regulations

Setting a 2040 climate target

Creation of a system for monitoring progress towards goals

European Commission

European Parliament

High energy dependence

Slow uptake of renewable energy

Varied national policies among member states

Slow pace of adoption of sustainability measure in the transportation and construction sectors

 

 

Energy security Fit for 55 61% reduction in emissions by 2030 in specific sectors

29 to 40% reduction in emissions compared with 2005

40% renewable energy share by 2030

Energy efficiency of between 36 to 39% by 2030

100% reduction in CO2 emissions from cars and vans by 2035

European Commission

European Council

High usage of fossil energy sources

Political instability in Europe

 

Table 2: Summary of ESA policies

 

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  1. External Factors
  2. External actors

The first relevant external actor is the United States of America. The US is a key ally of Europe in climate and energy. The US and EU have enjoyed a cordial partnership on matters of energy and climate. A deviation from this relationship emerged during the term of President Trump.[27] Firstly, the US withdrew from the Paris Climate Accord in November 2020, indicating its lack of commitment to the climate change objectives.[28] Secondly, there was a dispute between Trump’s administration and NATO over member contributions. Since many European members of NATO are members of the EU, the trans-Atlantic ties became strained. Furthermore, Trump’s policy of energy dominance which sought to promote greater energy independence in Europe was viewed as unwelcome interference in the European energy market.[29]

However, US-EU relations have considerably improved under President Biden’s administration. The ninth US-EU Energy Council was held on February 7, 2022, in Washington D.C. The council resolved to promote energy diversification and energy security. The council resolved to accelerate the transition to carbon-neutrality by 2050 to ensure energy sustainability and mitigate the impacts of energy market fluctuations. Additionally, the council agreed to increase collaboration of energy and increase investment in research and innovation in energy.

The US has also shown interest in supplying Europe with energy as an alternative to Russia. On March 25, 2022, President Joe Biden and President Ursula von der Leyen formed a joint task force to bolster energy security for the EU. The task force will seek to diversify liquid natural gas supplies in line with climate change objectives. The US also pledged to provide an additional 15 billion cubic meters of liquid natural gas to the EU in 2022.[30]

The second relevant external actor is the Russian Federation. For decades, Russia has fulfilled the role of the primary supplier of energy to Europe and the EU’s key trading partner. Consequently, Europe has grown highly dependent on oil and gas supplies from Russia. In 2021, Europe imported energy worth €99bn from Russia in what was the biggest importation from Russia. In 2021, around 40% of the gas and around 25% of the oil used in the EU came from Russia. Since 2011, the volume of energy and the total value of energy imported from Russia has fallen, as shown in Fig 1 below.

 

Fig 4: EU-Russia trade: 2011 and 2021.[31]

Fig. 4 shows that in 2011, the EU imported €148.0 worth of energy from Russia but that fell to €99 in 2021. The decline in the volume of energy imports to the EU has fallen due to the deteriorating relationship between Europe and Russia. In 2014, Russia annexed the Crimea region in a move that attracted condemnation and opposition from the EU. Following this event, the EU initiated policies intended to promote energy sufficiency and security in Europe such as the Energy Union policy of 2015. The growingly antagonistic relationship between Europe and Russia has been exacerbated by the latter’s invasion of Ukraine in February 2022. Following the invasion, the EU initiated a plan to cut Europe’s reliance on Russian energy. The EU plans to gain independence from Russian energy by 2030.[32]

Under the Fit for 55 plan, the EU aims to cut fossil gas consumption by 30%.[33] The reduction is intended to reduce the need for fossil gas supplies from Russia. Therefore, the adversarial nature of the EU-Russia relationship has fueled Europe’s need to pursue strategic autonomy in energy. On its part, Russia has been on the search for new trading partners for its oil and gas as a countermeasure to reducing energy exports to Europe. On February 4, 2022, Russia entered an energy alliance with China in a 30-year agreement. The agreement states that Russia will supply gas to China by 10 billion cubic meters annually. Russia and China have initiated plans to build a new gas pipeline within three years. Russia is also banking on India to increase its oil, gas, and coal imports. In sum, while Europe and Russia were key trade partners in energy, the two entities now follow divergent strategies.

  1. External factors at play in the EU

The ability of the EU to pursue strategic autonomy in the climate-energy sector is influenced by the European Union Association Agreement (AA). AA is a treaty binding the EU, EU member states, and non-EU members in a framework of cooperation. The agreement forms the foundation for bilateral ties between the EU and non-EU member states. For instance, the EU has an agreement with Ukraine to provide the non-EU member state with financial support and access to EU markets. In regards to energy, AA forms the basis for cooperation between the EU and other countries. The EU has set in motion plans to reduce energy dependence on Russia. To plug the gap created by the dissociation with Russia, the EU has to enter AAs with non-EU member states to supply energy. The development of such agreements takes time and the terms are not always favorable to the EU. The breakdown of the agreements due to changing political circumstances is a considerable obstacle to the EU’s goal of strategic autonomy in energy.

The EU has Memorandums of Understanding on Strategic Energy Partnership with Ukraine, Kazakhstan, Azerbaijan, and Algeria. The memorandums outline the basis for cooperation between the EU and the four non-EU member states. The memorandum establishes that the four countries will have access to EU markets to facilitate the integration of the energy markets. For instance, the memorandums have seen the enhanced integration of the EU and Ukraine energy markets to improve energy supply.[34] The memorandums also aim to improve the security of the energy supply. The memorandums also influence cooperation between the EU and the non-EU members on energy efficiency and renewable energy production. In his way, such memorandums can be integral in the attainment of strategic autonomy in energy by influencing energy supply and energy market integration.

The Kyoto Protocol is a 1997 treaty on climate change that obliges industrialized countries to reduce greenhouse gas emissions. The treaty prolonged the 1992 United Nations Framework Convention on Climate Change. The treaty became international law in 2005. 84 states are signatories to the treaty. The Kyoto Protocol bound the signatories to a commitment to reduce greenhouse gas emissions to 5.5% below the established 1990 levels by 2012.[35] The targets are country-specific which means that each country has a target that it is required to meet by a specific date. The Kyoto Protocol has a bearing on the climate and energy policies of the EU since the union is a signatory to the treaty. The treaty requires that the EU and EU-member countries develop and implement actions to reduce greenhouse gas emissions and meet its established reduction targets. The provisions of the treaty can be a guiding light or an impediment to the development of climate policies in the EU.

The Energy Charter Treaty is an international agreement that was adopted in 1994. The agreement creates a multilateral framework that guides inter-country cooperation in the energy sector. The EU is a member of the Energy Charter Treaty. The primary objective of the agreement is to promote energy security by encouraging the liberalization of the energy markets.[36] The Energy Charter Treaty operates within the principles of sustainable development. The provisions of the treaty cover the protection of foreign investments, non-discrimination in energy-related matters, dispute resolution, and promotion of energy efficiency. The agreement influences the objective of ESA through the provisions that touch on cooperation between countries. Under the agreement, cooperation between the EU and non-members should allow for open energy markets. The agreement protects non-EU members from discrimination in the EU energy markets and also cushions them from political risks. Finally, the Energy Charter Treaty lays down regulations that control the trade and transportation of energy across national borders. As such, the regulations contained in the agreement allow for more open cooperation between the EU and its energy partners who are allowed access to the European energy markets.[37] The agreement is beneficial to the EU because it addresses the issue of transportation of energy into the EU and integration into the EU energy market.[38]

 

  1. Projections

European Green Deal

The main policies established by the EU including the European Green Deal, the Climate Law, and Fit for 55 are likely to pass within the next 5 years. For instance, the European Climate Law states that the EU should attain a 55% reduction in greenhouse gas emissions by 2030. In 2021, the European Environment Agency (EEA) announced that the EU had met the target of reducing greenhouse gas emissions in 2020 by 20% compared to the 1990 levels.[39] EEA also announced that the Union had accomplished the target of increasing renewable energy use by 20% by 2020. As such, there is a high probability of attainment of the targets set out in the Green New Deal since the EU has regularly met targets for greenhouse gas emissions. The policies are likely to pass since the EU member countries have displayed a willingness to meet the provisions in the policies. For instance, all EU countries except one have met or exceeded their target on renewable energy share.

Fit for 55

Under the Fit for 55 proposals, the EU aims to cut fossil gas consumption by 30% by 2030 to reduce dependence on Russian gas supplies.[40] The target is the equivalent of reducing the current fossil gas use by 100 billion cubic meters by 2030. This will require that over the next 5 years, the EU should reduce its fossil gas consumption by at least 58 billion cubic meters. Reducing fossil gas supplies will also mitigate the effects of price volatility in the energy market. It is projected that the plan will fail. The projections are unattainable in the next five years due to the EU’s high level of dependence on Russian fossil gas supplies. In 2020, the level of dependence on fossil gas imports stood at 57.5%.[41] The high level of dependence shows that the proposal to cut off fossil gas supplies from Russia will likely fail within the next five years and by the projected date of 2030. Furthermore, without drastic reductions in the volume of fossil fuel gas consumed across Europe, the EU will fail in reducing fossil fuel gas consumption by 58 billion cubic meters by 2017.

REPowerEU

REPowerEU is a strategy to reduce the dependence on fossil fuels with a particular focus on reducing dependence on Russian gas. REPowerEU aims to bolster the resilience of the EU’s energy system. The strategy is also to increase energy imports from non-Russian sources. The plan is to completely phase out Russian energy imports by 2030.[42] In the long-term, REPowerEU aims to significantly increase the uptake of renewable energy across Europe. Under the plan, the European Parliament will pass legislation that will require underground gas facilities across Europe to be at 90% capacity by October of each year in preparation for winter.[43] REPowerEU projects a doubling of production of renewable biomass and hydrogen to 35 billion cubic meters by 2030.[44] Within the next five years, the EU is expected to have considerably reduced the proportion of energy supply from non-Russian suppliers. One of the key non-Russian energy suppliers to Europe is Ukraine with which the EU has a Memorandum of Understanding on Energy Cooperation.[45] However, due to the ongoing invasion of the country and the unpredictability of the current situation, Ukraine is unlikely to increase energy production or supplies to the EU. Other countries with a memorandum with the EU for energy cooperation such as Kazakhstan, Azerbaijan, and Algeria lack the capacity to provide sufficient quantities of energy to fill the gap left by cutting off Russian energy imports. Therefore, in the next five years, the EU will likely fail to meet the objectives or short-term targets set out in REPowerEU.

International Energy Agency 10-point Plan

The International Energy Agency (IEA) has developed a 10-point plan to reduce the EU’s reliance on Russian natural gas. In the short term, the IEA contends that the 10-point plan will half Russian gas imports or a reduction of 80 billion cubic meters.[46] Some of the proposals in the plan include the EU not entering into new energy supply contracts with Russia, replacing fossil gas supplies from Russia with alternative sources, introducing minimum gas storage obligations, increasing energy generation from nuclear and bioenergy sources, and accelerating energy efficiency improvements.[47] The EU can attain some of the proposals in the 10-point plan in the next five years. For instance, the EU can achieve the goal of increasing minimum storage in gas facilities by 2027 to increase the resilience of the gas system. Another goal that the EU can achieve is accelerating the deployment of wind and solar projects by offering incentives and reducing taxation. However, the EU will fail to accomplish a majority of the proposals in IEA’s 10-point plan. Firstly, the EU has over 40 supply contracts with Russia that run until the end of the decade means Europe will still be reliant on Russian energy imports in 2017.[48] Secondly, the proposal to replace Russian gas supplies with gas from non-Russian sources will come short. The proposal will fail since Russia is a global leader in gas production and the non-Russian gas suppliers such as Norway and Azerbaijan lack the production capacity to replace gas imports from Russia.

Paris Agreement

As a signatory to the Paris Agreement, the EU has a duty to pursue the objectives of the treaty. The agreement states that global greenhouse emissions need to be reduced by around 50% by 2030 to meet the goal of staying below 2.0 °C of global warming with a limit of 1.5 °C. The EU member states have made commitments to reduce emissions by 55% by 2030 compared to the 1990 levels under the Fit for 55 package.[49] The national determined contribution of the EU under the Paris Agreement was to meet the target of reducing emissions by 40% as a minimum by 2030 compared to 1990 levels. Therefore, the EU has set an ambitious target of exceeding the target set by the nationally determined contribution by 15%. However, based on current estimates, the EU is expected to miss the 2030 target for emissions. Europe is projected to miss the target due to the slow pace of energy transition.[50] Energy transition measures have been hampered by a lack of coordination among the EU member states. Meeting the targets will also require the EU to make significant revisions to the renewable energy targets. Therefore, the EU will fail to meet the 2030 targets and the shorter-term targets set within 5 years.

Embargo on Russian Energy

As a response to Russia’s invasion of Ukraine, there have been suggestions for an embargo on Russian energy. A resolution passed by the European Parliament on April 7, 2022 outlined punitive measures against Russia and a call for a full embargo on Russian oil, gas and coal.[51] A full embargo on Russian energy will require the EU to procure other sources of energy to meet the supply deficit left by the termination of Russian energy imports. The options for the EU in the case of a full energy embargo are to increase the supply from current partners and enter agreements with new partners. As such, the EU will focus on increasing the volume of energy imports from countries like the US, Norway, Algeria and Kazakhstan.[52] However, the EU is unlikely to meet the demand for energy in the case of a full embargo on Russia energy imports since energy production in partner states, and the top energy producing states, is maxed out.[53] Therefore, an energy embargo is unlikely to work out for the EU in the next 5 years.

 

Strategy Policies Projection Political drivers Constraints
Energy security European Green Deal 55% reduction in greenhouse gas emissions by 2030

 

European Commission

Member states

Energy dependence
Energy independence Fit for 55 Slash fossil gas consumption by 30% by 2030 European Commission

European Council

Member states

Dependence on Russian gas imports

Needs for drastic, unattainable reductions in fossil gas consumption in Europe

Energy security REPowerEU Completely phase out Russian energy imports by 2030

Double production of renewable biomass and hydrogen to 35 billion cubic meters by 2030

European Commission

European Parliament

Political instability (Russia invasion of Ukraine)

Low energy production capacity

Energy security IEA 10-point plan Half Russian gas imports

 

Member states Existing energy supply contracts with Russia

Lack of sufficient energy among import partners

Energy security Paris Agreement Reduce greenhouse gas emissions by 50% by 2030

Reductions of emissions by 40% as a minimum by 2030 in EU

European Commission

European Parliament

Member states

Slow energy transition

 

Energy security Embargo on Russian energy Embargo on oil, gas and coal from Russia European Commission

European Parliament

Dependence on Russian energy imports

Inadequate energy production in partner states

Table 3: Summary of projections

ESA seeks to achieve greater self-reliance in Europe. In the climate-energy sector, a wide range of actors including the European Commission, the Council, the US, and Russia, have an important role in shaping Europe’s approach to strategic autonomy. Russia’s invasion of Ukraine has underscored the need for the EU to pursue greater energy independence and security. Current trends show that there is a reduction in greenhouse gas emissions across the EU in line with pre-established reduction targets. The sectors of energy, fuel combustion, and transport emit the highest quantity of greenhouse gases. The key policies shaping the EU’s approach to climate and energy are the European Green Deal, the European Climate Law, Fit for 55, and the policy of integration of the energy market. The EU is unlikely to meet the 5-year projections on climate and energy due to constraints such as Europe’s high reliance on energy imports.

[1] Eloïse Ryon. “European strategic autonomy: Energy at the heart of European security?.” European View 19, no. 2 (2020): 238-244.

[2] EC. “REPowerEU: Joint European action for more affordable, secure and sustainable energy.” European Commission, (2022): https://ec.europa.eu/commission/presscorner/detail/en/ip_22_1511

[3] Reuters. “Russia can’t blackmail EU with its energy resources -Von der Leyen.” Reuters Thompson, 2022. https://www.reuters.com/world/europe/russia-cant-blackmail-eu-with-its-energy-resources-von-der-leyen-2022-03-24

[4] European-Council. “Energy union.” European Council, Council of the European Union, 2022. https://www.consilium.europa.eu/en/policies/energy-union

[5] Ibid., 2022.

[6] European-Council. “Transport, Telecommunications and Energy Council (Energy), 28 February 2022.” European Council, Council of the European Union, 2022.  https://www.consilium.europa.eu/en/meetings/tte/2022/02/28/

[7] EC. “From where do we import energy?” European Commission, 2020. https://ec.europa.eu/eurostat/cache/infographs/energy/bloc-2c.html#carouselControls?lang=en

[8] Ibid., 2020.

[9] Quint. “How Europe became so dependent on Putin for its gas.” Bloomberg News, 2022. https://www.bloombergquint.com/quicktakes/how-europe-has-become-so-dependent-on-putin-for-gas-quicktake

[10] Catherine Clifford. “Why Europe is so dependent on Russia for natural gas.” CNBC News, 2022. https://www.cnbc.com/2022/02/24/why-europe-depends-on-russia-for-natural-gas.html

[11] EEA. “Total greenhouse gas emission trends and projections in Europe.” European Environment Agency, 2021. https://www.eea.europa.eu/ims/total-greenhouse-gas-emission-trends

[12] Statista. “Total greenhouse gas emissions in the European Union from 1990 to 2019.” Statista, 2022. https://www.statista.com/statistics/780410/total-greenhouse-gas-emissions-european-union-eu/

[13] EC. “How are emissions of greenhouse gases by the EU evolving?.” European Commission, 2019. https://ec.europa.eu/eurostat/cache/infographs/energy/bloc-4a.html

[14] Ibid., 2019.

 

[15] Eurostat. “Statistics – Greenhouse gas emissions per capita.”  European Commission, 2022. https://ec.europa.eu/eurostat/databrowser/view/t2020_rd300/default/table

[16] Ibid., 2022.

[17] European Commission, “State of the Energy Union 2021 – Contributing to the European Green Deal and the Union’s Recovery,” 2021, https://ec.europa.eu/energy/sites/default/files/state_of_the_energy_union_report_2021.pdf.

[18] Jason Bordoff and Meghan L O’Sullivan, “The New Geopolitics of Energy,” Foreign Affairs, 2022, 20.

[19] https://www.energypolicy.columbia.edu/research/qa/qa-replacing-russian-gas-supplies-europe-how-can-alternative-suppliers-help-2022

[20] EC. “European Green Deal: Commission proposes transformation of EU economy and society to meet climate ambitions.” European Commission, 2022. https://ec.europa.eu/commission/presscorner/detail/en/IP_21_3541

[21] EC. “European Climate Law.” European Commission, 2022. https://ec.europa.eu/clima/eu-action/european-green-deal/european-climate-law_en

[22] EPHA. ” Fit for 55 – will new climate legislation deliver for public health?” European Public Health Alliance, 2021. https://epha.org/fit-for-55-will-new-climate-legislation-deliver-for-public-health/

[23] European-Council. “Fit for 55.” European Council, Council of the European Union, 2022. https://www.consilium.europa.eu/en/policies/green-deal/fit-for-55-the-eu-plan-for-a-green-transition/

[24] San van Hoof. “European Commission launches proposals to reach 55% emissions reduction by 2030.” Sustainable Development Solutions Network, 2021. https://www.unsdsn.org/european-commission-launches-proposals-to-reach-55-emissions-reduction-by-2030

[25] EUR-Lex. “EU energy policy.” European Union, 2022. https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=LEGISSUM:energy#:~:text=Display-,EU%20energy%20policy,Member%20States%20and%20the%20EU.

[26] EC. “Electricity market design.”  European Commission, 2022. https://energy.ec.europa.eu/topics/markets-and-consumers/market-legislation/electricity-market-design_en

[27] Nathalie Tocci. “European Strategic Autonomy: What it is, why we need and how to achieve it” IAI, 2021.

[28] Matt McGrath. “Climate change: US formally withdraws from Paris agreement.” BBC, 2020. https://www.bbc.com/news/science-environment-54797743

[29] Timothy Gardner and Alissa de Carbonnel. “Aggressive U.S. energy policy tests ties with European allies.” Reuters, 2019. https://www.reuters.com/article/us-usa-energy-europe-idUSKCN1U512P

[30] Sam Meredith. “EU strikes gas deal with the U.S. as it seeks to cut its reliance on Russia.” CNBC, 2022. https://www.cnbc.com/2022/03/25/eu-strikes-gas-deal-with-the-us-as-it-seeks-to-cut-its-reliance-on-russia.html

[31] Charlotte Edmond. “How much energy does the EU import from Russia?” World Economic Forum, 2022. https://www.eea.europa.eu/ims/total-greenhouse-gas-emission-trends

[32] EC. “REPowerEU: Joint European action for more affordable, secure and sustainable energy.” European Commission, 2022. https://ec.europa.eu/commission/presscorner/detail/en/ip_22_1511

[33] European-Council. “Fit for 55.” European Council, Council of the European Union, 2022. https://www.consilium.europa.eu/en/policies/green-deal/fit-for-55-the-eu-plan-for-a-green-transition/

[34] EC. “Memorandum of Understanding on a Strategic Energy Partnership.” European Commission, 2015. https://ec.europa.eu/energy/sites/ener/files/documents/mou_strategic_energy_partnership_en.pdf

[35] Carla Tardi. “The Kyoto Protocol.”  Investopedia, 2021. https://www.investopedia.com/terms/k/kyoto.asp

[36] IEC. “The Energy Charter Treaty.” International Energy Charter, 2010. https://www.energycharter.org/process/energy-charter-treaty-1994/energy-charter-treaty/

[37] IEC. “The Energy Charter Treaty.” International Energy Charter, 2010. https://www.energycharter.org/process/energy-charter-treaty-1994/energy-charter-treaty/

[38] EC. “Electricity market design.”  European Commission, 2022. https://energy.ec.europa.eu/topics/markets-and-consumers/market-legislation/electricity-market-design_en

[39] EEA. “EU achieves 20-20-20 climate targets, 55 % emissions cut by 2030 reachable with more efforts and policies.” European Environment Agency, 2021. https://www.eea.europa.eu/highlights/eu-achieves-20-20-20

[40] European-Council. “Fit for 55.” European Council, Council of the European Union, 2022. https://www.consilium.europa.eu/en/policies/green-deal/fit-for-55-the-eu-plan-for-a-green-transition/

[41] Eurostat. “Energy statistics – an overview.”  European Commission 2022. https://ec.europa.eu/eurostat/statistics-explained/index.php?title=Energy_statistics_-_an_overview

[42] EC. “REPowerEU: Joint European action for more affordable, secure and sustainable energy.” European Commission, 2022. https://ec.europa.eu/commission/presscorner/detail/en/ip_22_1511

[43] Interreg. “REPowerEU: Joint European Action for more affordable, secure and sustainable energy.” Interreg Europe, 2022. https://www.interregeurope.eu/news-and-events/news/repowereu-joint-european-action-for-more-affordable-secure-and-sustainable-energy

[44] Ibid., 2022.

[45] EC. “Memorandum of Understanding on a Strategic Energy Partnership.” European Commission, 2015. https://ec.europa.eu/energy/sites/ener/files/documents/mou_strategic_energy_partnership_en.pdf

[46] IEA. “A 10-Point Plan to Reduce the European Union’s Reliance on Russian Natural Gas.” International Energy Agency, 2022. https://www.iea.org/reports/a-10-point-plan-to-reduce-the-european-unions-reliance-on-russian-natural-gas

[47] Ibid., 2022.

[48] Kate Abnett. “Russian demand for rouble gas payments would be breach of contract, EU leaders say.”  Reuters, 2022. https://www.reuters.com/business/energy/russian-demand-rouble-gas-payments-would-be-breach-contract-eu-leaders-say-2022-03-24/

[49] EEA. “EU achieves 20-20-20 climate targets, 55 % emissions cut by 2030 reachable with more efforts and policies.” European Environment Agency, 2021. https://www.eea.europa.eu/highlights/eu-achieves-20-20-20

[50] Reuters. “Europe to miss 2030 climate goal by 21 years at current pace – study.” Reuters Thompson, 2021. https://www.reuters.com/business/environment/europe-miss-2030-climate-goal-by-21-years-current-pace-study-2021-09-04/

[51] EP. “MEPs demand full embargo on Russian imports of oil, coal, nuclear fuel and gas.” European Parliament, 2022. https://www.europarl.europa.eu/news/en/press-room/20220401IPR26524/meps-demand-full-embargo-on-russian-imports-of-oil-coal-nuclear-fuel-and-gas

[52] Euronews & AP. “What would sanctions on Russian energy mean and why is Europe reluctant to impose a ban?” Euronews, 2022. https://www.euronews.com/next/2022/04/05/what-would-sanctions-on-russian-energy-mean-and-why-is-europe-reluctant-to-impose-a-ban

[53] Chestney, Nina. “Factbox: Europe’s options in case of Russian gas disruption.”  Reuters, 2022. https://www.reuters.com/business/energy/what-are-europes-options-case-russian-gas-disruption-2022-03-29/

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