The Guest Blog

Guest post by Stuart Reigeluth, founder of Revolve Media

Energy will flow fluidly across transnational grids, tapping into decentralized hubs everywhere, that are both interconnected all along the way by the digital technology of things.

While the integration of the European energy systems is of paramount importance for the overarching project called ‘Europe’, geopolitically, the Old Continent is too small and too fragmented to be a global powerhouse, so each time the tandem of regionalism and decentralization surface as the means to involving citizens and consolidating the socio-political space of the European Union.

These two phenomena – regionalism and decentralization – were leitmotifs of the 17th Inter-Parliamentary Meeting (IPM) on Renewable Energy and Energy Efficiency in Tallinn on 29 September 2017 that took place propitiously in the wake of the EU energy ministers meetings in the Estonian capital the week before that advanced the redesigning of the electricity and transport markets.

Arguably, these two phenomena are adding to the irrevocable deterioration of national sovereignty: countries within different supra-regions are seeing the added value of coming together to cooperate around the sharing of energy; and at sub-national levels we see cities, neighbourhoods and communities coming together to create self-sufficient decentralized energy systems.

Regional (Baltic) Cooperation

Energy systems will be transnational or they will not be. Historically beneath the Soviet sphere of influence, the more affluent Baltic states of Communism are still connected physically to Russia: Lithuania alone relies on Russia for more than 90% of its energy needs, namely from oil and gas. Confronted with such realities, to speak of an integrated European energy market seems fantastical.

The response is simply to replace the overwhelming dependence on Russia by a more mutually beneficial co-dependence with neighbours. This may shift the geopolitical alignment of the gas pipelines or electricity interconnectors but it does not change the fact that the sovereignty of the state is depleted by a foreign entity.

The adumbration of national sovereignty need not be negative, on the contrary: regional cooperation can be much more cost efficient for the respective states and long-term public-private partnerships can foster more sustainable business models to achieve energy security for Europe. If energy independence from paying half a billion euros of European taxpayer money to Russia per year is the goal, then transnational cooperation – in this case of the Baltic states – is the answer.

Famous for its creative acronyms, the European Commission is helping to encourage the Baltic Energy Marketing Interconnection Plan (BEMIP) under the TEN-E regulation as part of the Projects of Common Interest (PCIs). This cross-border cooperation would connect offshore and onshore windfarms and increase interconnections between Member States. Such regional efforts would help cut GHG emissions by 40% plus increase renewables by 27% which are part of the 2030 energy goals.

CEO of Fortum, Pekka Lundmark, agrees that with current Russian dominance and supra-national European alternatives there is “no such thing as a national energy market” anymore. The old guard utilities are on their way out, gradually ceding terrain to new incumbents, cooperatives and ‘prosumers’.

The Baltic, like other European supra-regions such as the North Sea, can become more relevant, and while converting themselves into regional ‘powerhouses’ as mentioned by Lundmark may be overly ambitious, the same old question emerges: how much should the state be expected to pay for such cooperation? Or more precisely, how much will citizens have to pay for this energy transition?

Power to the People

Citizens will have to pay, a lot. Pricing will vary from east to west and from north to south, as described by EUFORES President, MEP Claude Turmes, because of Europe’s debilitating income disparities. National GDP variations will also make carbon pricing difficult, indeed impossible in the immediate future.

Meanwhile, China advances relentlessly with its grand plans for the One Road, One Belt and more importantly by the end of 2017 with establishing a carbon pricing of $5 per ton of CO2 in seven Chinese cities. Europe’s internal squabbles make it lag far behind on possible mega projects and a more cohesive energy currency such as a basic carbon floor price.

As Europe looks around to position itself as a climate action leader in the global arena, Europeans are coming together to form cooperatives and community-based hubs. Energy systems will now be decentralized, or they will not be. This is part of the democratization process, of people literally taking the power back, of becoming ‘prosumers’, of assuming their legal energy rights as supported by the advocate of endorsing citizen engagement, UK Member of the European Parliament, Theresa Griffin.

According to Josh Roberts, Advocacy Officer at REScoop, the production of energy by citizens will continue to grow: by 2050, 83% of EU households could contribute to RES generation (production, demand response, storage). Numerous examples abound of islands moving in this direction, such as Sifnos in Greece, and of cities like EnerGent that provides energy services to the electricity grid, all run by citizen groups and going towards 100% renewables providing the “value of distributed energy resources (DER)”.

Coupled with digitalization, the attraction of sub-national decentralized energy systems is gaining traction as is the establishment of supra-national regional cooperation, both pulling the nation-state in either direction, questioning the limits of sovereignty, begging the question: do energy systems really need the state? Or does the state need to control energy sources to survive?

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