The authoritative source for independent research on UK-EU relations

20 Jun 2022

A Changing EU

Policies

Following Russia’s invasion of Ukraine on 24 February 2022, the EU has developed a series of sanctions that are supposed to limit Russiaʼs access to international trade, thus deterring its military activities in Ukraine. Although energy exports to EU countries are a major source of income for Russia – and, as such, are also form of support for the invasion – the EU has so far been more than hesitant to fully sanction Russian energy supplies. What we have seen so far has been a cautious approach towards the issue of energy policy and delayed sanctions with many exceptions.

While sanctioning coal exports in April 2022 was a first step, they present only a minimal fraction of EU energy imports and there is a transitional period until the second half of 2022. Oil sanctions, in place since May 2022, is a much more important tool, but has drawn considerable opposition from member states.

Several of them have negotiated transitional periods and other exceptions that significantly threaten the image of the EU as a united actor. Natural gas plays a special role in the energy relationship between the EU and Russia since its supplies to the Union are less diversified than oil.

This is not only due to technical differences between the two energy sources (oil requires less complicated infrastructure than natural gas and is easier to store) but also the historical legacy of supplies to Europe, and high dependency on Russian gas in many sectors of the EU’s economy.

The EU worked hard during the 1990s and 2000s to turn energy sources (especially electricity and natural gas) into a ‘standard’ product that would be traded within the EU without limitations.

This process of liberalisation meant the dismantling of huge energy companies that were natural monopolies and introducing competition into energy markets, which was also supposed to guarantee energy security.

This market perspective dominated all energy discussions. The Nord Stream II pipeline connecting Russia directly to Germany and circumventing Ukraine and several EU countries was seen as a business project, not a geopolitical one.

Moreover, when an energy security event emerged, as was the case in January 2009 when Russia halted supplies to the EU via the Brotherhood pipeline, the EU’s response was inwardly oriented.

The Union increased its energy security mostly by improving its internal infrastructure, not by looking at the source of the problem (the volatility of the external supplier).

Some countries invested in developing LNG (liquified natural gas) terminals that enable them to import natural gas from around the world. But, as we have seen recently, existing LNG importing capacity is not sufficient to replace Russian gas.

Thus, the EU’s dependency on Russian energy supplies stayed the same despite the major 2009 energy crisis and several smaller ones which impacted individual member states. In the meantime, the domestic production of fossil energy decreased, leading to an increase in the EU’s dependency on imports from third countries.

One way in which the EU wanted to offset this situation was by increasing the deployment of domestic renewable sources of energy. However, energy security was not the main focus of such decarbonisation efforts. Rather, they focused on climate issues.

Initiatives connected to energy policy (such as the 2015 Energy Union) that were originally envisioned as energy security-oriented projects ended up as an umbrella scheme covering all aspects of energy and climate policy.

Even the reaction to the Covid-19 pandemic was along these lines: the EU decided to use the post-pandemic recovery to transform its energy sector, giving priority to climate goals over energy security ones.

The low interest in energy security was not the European Commission’s idea. On the contrary, it has repeatedly sided with members impacted by supply interruption. The main opposition came from those member states that enjoyed very good energy relations with Russia, granting them preferential treatment not only when it comes to supply stability but also energy price.

The ‘divide and conquer’ principle has been at the core of Russian energy policy for a long time and some member states (knowingly or not) played an important part in it.

The member countries that pointed to the EU’s vulnerability in connection to energy dependency on third countries, especially Russia, were often criticised by other members for being too worried and panicked.

The situation changed dramatically on 24 February 2022, when Russia invaded Ukraine. The EU and its member states started to talk almost immediately about the need to replace Russian energy sources and significantly increase its energy security.

However, the concrete steps towards these goals did not reflect the proclaimed urgency. Many member states underlining their dependency on Russian energy sources for the proper functioning of their economies or even societies (in connection to heating, for example) as a reason for dragging their feet.

Moreover, Russia started to apply its ‘divide and conquer’ policy even more vigorously and requested payment for energy supplies in roubles. This is a clear breach of existing contracts that include dollars or euros as the payment currency. After Bulgaria and Poland refused to make their payment in roubles, Gazprom interrupted their supplies at the end of April 2022.

Although the two countries were getting ready to stop importing gas from Russia at the end of 2022, the new situation caused some hardship. We can view this event as a test of the EU’s response to Russian energy policy and a message to other EU importers not to reject Russiaʼs requests, even those that are in breach of existing contracts.

The situation became even more complicated in mid-June 2022 when several other member states’ supplies by Gazprom were fully or partially interrupted. This threatens the ability of member states with biggest underground storages (like Germany) to fill these to levels that would be able to support the hight demand during the winter of 2022/2023.

Until this development, the EU and its member states considered challenges connected to the coming winter to be under control and were getting ready for the following heating seasons. The latest events, however, further intensified energy security questions within the Union.

The common position of the EU towards energy imports from Russia is still being formed, but the fairly slow pace of this process is indicative of the challenges present within the Unionʼs energy policy.

Within these discussions, lowering energy consumption by increasing energy efficiency – a very important tool for decreasing the EU’s energy dependency – is currently an underrated tool.

The focus is on replacing Russian energy sources, but should be on a decrease in energy consumption that would make Russian supplies obsolete.

By Matúš Mišík, Assistant Professor at Comenius University in Bratislava. Read more from Matúš on the EU’s external energy security here.

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