July 14, 2014
This guest blogpost is a contribution by Hans Martens, special adviser to Fipra, the global network of senior, strategic advisers, and former Chief Executive at the European Policy Centre (EPC) in Brussels.
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Energy policy will be in the EU focus for the next five years – at least. However energy policy can take many shapes – from very green to very brown depending on the political choices.
It is actually possible to achieve four very desirable targets at once if it is done right:
- Creating construction jobs here and now and high value jobs in the future
- Reduce CO2 emissions considerably
- Reduce energy dependency on imported energy
- Save money in the longer term.
To achieve all these benefits it will be necessary to integrate Europe’s energy networks and stop promoting national, or sub national, markets. The networks are either for electricity or gas, and both should be integrated, although the focus should primarily be on electricity, which is not only the most flexible form or energy, but electricity is also what the most important renewables are producing.
Without renewables the magic does not work – they will be crucial for reducing CO2 emissions and for reducing the energy dependency – and they can of course best be utilised in an integrated European network which will cover three time zones, very different climate zones and different work/leisure timings as well. Today there is an increasing opposition to renewables despite the green rhetoric used by politicians, but this opposition is most often developed with a view to a fragmented European market. Another reason for the opposition is the subsidies, but that argument does not take into account the value of reduced energy dependency. An externality that should be internalised, to put it in a technical way.
A connected Europe
The idea of “Connecting Europe” was already launched a couple of years ago, and an excellent plan for financing the inter connectors were developed. It was called Euro-Project-Bonds, and it was built on public-private partnerships, where a small guarantee was provided via the EU budget. Most of the budget envelope for the guarantees were emptied by our heads of state and government in December 2012 where their main focus was on small rebates on the EU budget rather than on a visionary plan for connecting Europe and create jobs and growth. Actually the project bond idea would have generated an activity of roughly 20 Euro per one Europe spent from the EU budget!
In addition the operators are willing and able to finance many interconnectors. They just need a long-term regulatory environment – a clear political line for the medium to long term energy future.
So building interconnectors for electricity (and gas) will create much needed jobs in the construction sector, and gradually turning the European grid into a smart grid will create a lot of high skill jobs. We will get a much more efficient use of the energy produces and thus reduce CO2 emissions and energy dependency, will reduce the risk of black-outs and at the time where the investment is paid back (via savings on energy) Europe’s energy bill will be reduced substantially.
European leadership needed
So why is all of this not happening? Firstly we need a European political leadership to drive the process. Secondly we need to create enough trust in each other to create a common energy market, but is it not better to trust other EU member states than Russia or the Middle East? Thirdly we need to overcome the resistance from those who want national energy markets and be compensated for loss of capacity and those that wants to fuel Europe by the brown energy – primarily coal.
So we have two choices for Europe’s future: A smart and green solution or a traditional brown solution. EU-leaders, it is now time to make the right choices and get on with the job.Blogactiv Team