SER-2 [03] Communication of the Security and Solidarity Action Plan

Continuing the analysis of the Second Strategic Energy Review (SER-2), the focus this time is on the document entitled “Communication from the Commission to the European Parliament, the Council, The European Economic and Social Committee and the Committee of the Regions". This is a formal document that details the Energy Security and Solidarity Action Plan, presented in the Memo reviewed last time.

This post tries to highlight important aspects that aren't referenced in the Memo and presents the implementation steps proposed by the Commission to put the Plan into practice.

Update: Over at the European Tribune an effort is being taken for a common reply to the Public Consultation on the Green Paper Towards a Secure, Sustainable and Competitive European Energy Network. Come and join in.

An audio version of this log entry can be downloaded here

On the introductory section of the document the following paragraph is worth highlighting:

However, complementary measures are necessary to attain all three underlying objectives of the EU's new energy policy: sustainability, competitiveness and, above all, security of supply. For example, the EU is projected to remain dependent on imported energy - oil, coal and especially gas – for many years to come. Europe's indigenous production of fossil fuels is declining. As a result, net imports of fossil fuels are expected to stay at roughly today's levels in 2020 even when the EU's climate and energy policies are fully implemented.

These lines pretty much wrap up the motives and expectations that drive European Energy Policy at the moment: internal fossil fuel depletion is fully acknowledged forcing an end to the growing consumption, but faith still remains on an ever available foreign supply. This expectation of stable imports is a very relevant aspect of SER-2, that will become more clear in the analysis of following documents.

For each of the five strategic lines that compose the Action Plan, the Commission outlines a number of steps that more or less correspond to a chronological approach to implementing these strategies. The following is a summary of these steps.

Promoting infrastructure essential to the EU's energy needs.

First step: the EU should agree that the projects outlined by the Commission are energy security priorities. These are the infrastructure projects described in the Memo, listed below. The Communication goes to some length describing them, a worthy reading that for the sake of brevity isn't fully reproduced here.

  • Baltic Interconnection Plan - to be developed in 2009 with the aim of connecting the remaining isolated energy markets in Europe, covering gas, electricity and storage. A regional Summit will be held in the second half of 2009 to start its implementation.

  • Southern Gas Corridor - connecting to the Caspian and Middle Eastern sources. In its first phase, the objective is to build pipelines to Azerbaijan and Turkmenistan, Iraq and Mashreq countries, later eyeing Uzbekistan and Iran; no objective time frame is given.

  • Liquefied natural gas – later this year the Commission shall propose an LNG Action Plan aiming to foster regasification capacity in Europe as well as liquefaction capacity in gas exporting nations. This plan is seen as vital to states that are today dependent on a single supplier; the Solidarity Plan should facilitate the transport of gas liquefied in coastal states to inner states.

  • Completion of the Mediterranean Energy Ring - linking Europe and North Africa with gas and electricity interconnectors, essential to developing the region's solar and wind resources. By 2010 the Commission shall present a Communication outlining the links that are missing from the plans set by the December 2007 Euromed Energy Ministerial meeting and the Mediterranean Solar Plan adopted in Paris in July 2008.

  • North-South gas and electricity interconnections within Central and South-East Europe - a continuation of the New European Transmission System (NETS) initiative to create a common gas transmission system operator, the Energy Community Gas Ring, the priority interconnections identified by the Energy Community ministerial in December 2007, and the Pan-European Oil Pipeline.

  • Blueprint for a North Sea offshore grid - in order to interconnect national electricity
    grids in North-West Europe and plug-in several planned offshore wind projects. Together with the Mediterranean Ring and the Baltic Interconnection projects, the Commission aims at a future European Supergrid.

Second step: lay out the details for the above actions, including identifying financing needs and potential sources of finance. These needs will be identified by the Commission in collaboration with member states, industry, energy operators and regulators and the Parliament. The work shall take place during 2009 and 2010 resulting in a series of Communications.

Third step: implementation 2010 onwards. This last step will most likely require a budget reformulation; the Commission has today for this area a budget of 22 million euros, provided by the TEN-E instrument, that is clearly insufficient for projects of the dimension outlined above. Accompanying SER-2, a Green Paper was issued which provided an outline of a possible replacement of TEN-E with a new financing instrument, the EU Energy Security and Infrastructure Instrument, which would have broader powers.

A greater focus on energy in the EU's international relations

The document discusses at some length economic relations in the energy field with several countries, and describes several approaches to strengthening such ties. Energy is posed as essential content of the EU's foreign relations, both at the trade and political levels, something that the document alludes to not being exactly the case at the moment. Below is a summary of the recommended approaches.

  • Norway - supplier of 24% of the EU's gas imports and 16% of its oil imports, is already integrated in the European Economic Area. The Commission aims at deepening further energy relations with Norway, collaborating with it for the maximization of the energy output from the Norwegian continental shelf, include its wind resource.

  • Ukraine, Republic of Moldova and Turkey - negotiations are under way for these three countries to join the Energy Community, a programme to create a south-eastern energy market subject to the EU's legislation for the internal market, and security of supply of gas and electricity (with discussions on the way for an extension to oil). The Commission expects this programme to kick-start a reform of these countries' energy sector, especially an upgrade of Ukraine's gas transit infrastructure.

  • Belarus - in a single sentence, the document calls for the development of a specific strategy to secure the transit of energy from Russia through this neighbouring country.

  • Russia - is and will for long be the EU's largest energy partner (read supplier). The Commission shows the intent of renegotiating the 1997 Partnership and Cooperation Agreement, replacing it with a new agreement deepening the EU's relations with Russia. Two goals are proposed: the liberalization of Russia's internal market (which according to the Commission would facilitate its reform) and the establishment of transit rules across the pan-European continent. So far Russia has limited negotiations on a new Agreement to its entrance into the World Trade Organisation

  • Caspian - the Commission calls for the development of a Partnership with the countries of this region along the same lines of that developed with Russia. Empowered by the Council's decision to give high priority to the relations with these countries, the Commission will work to strengthen the Baku process and to build bilateral relationships.

  • Iraq and the Gulf Cooperation Council - already in cooperation with the EU through the EU-OPEC Energy Dialogue. The Commission will develop further relations with these countries in the field of hydrocarbons (e.g. clean technologies) and procure bilateral agreements to secure the energy supplies from the region.

  • Australia, Canada, Japan and the US and emerging consumer countries (China and India) - promote cooperation with these countries for the transparency of international energy markets and to commonly address sustainability issues.

  • Latin America and the Caribbean - home to alternative energy suppliers with whom the EU is already developing multilateral and bilateral partnerships. Brasil is referenced as an important supplier of biofuels.

  • Algeria, Egypt, Libya and Nigeria - already important suppliers of energy, these countries are part of a continent with great potential, not only with respect to hydrocarbons, but also for renewable energies. The major goal put forward by the Commission is the Trans-Sahara Gas Pipeline, that it pretends to secure with bilateral agreements using instruments such as European Neighbourhood and Partnership Instrument, the European Development Fund and the European Investment Bank.

On Nuclear energy, the document offers the following approach:

With the Instrument for Nuclear Safety Cooperation, the EU will cooperate with and assist third countries in improving their nuclear safety culture and the safety of their operating nuclear power plants. For emerging countries intending to build nuclear power plants, the EU will help in the development of competent and independent nuclear regulatory authorities, capable of ensuring that the new plants are built according to international nuclear safety standards and operate in accordance with the highest standards.

Closing this section, a reference is made to the construction of a common foreign energy strategy. The Commission expresses that to make such common policy a reality, a single foreign energy representative is not needed, but a proper planning and effective coordination of State level with Commission level policies. To that goal the Commission proposes to identify concrete mechanisms to ensure transparency between these two executive planes. It goes further with possible legislative measures:

[…] the Commission will consider proposing a revision of Regulation 736/96 which obliges Member States to notify to the Commission investment projects of interest to the Community in the petroleum, natural gas and electricity sectors, in order to increase its relevance to today's energy challenges. The Commission will consider how best to further develop early warning systems with key neighbouring energy partners.

Improved oil and gas stocks and crisis response mechanisms

The Commission starts this section by noting that the mandatory oil stocks requirement, in place since 1968, has been successful in response to short term disruptions. Part of its success has been the relatively loose implementation approach, leaving to each state the choice between ad hoc government stocks, industry stocks or a combination of the two. Still, the Commission will propose new legislation to improve the system, making it more transparent and less permeable to speculation.

At present, the EU publishes data on the level of strategic oil stocks for each Member State. Unlike the US, it does not publish information on the level of additional commercial oil stocks held in the EU. In order to improve oil market transparency and limit the effects of uninformed speculation, the Commission proposes that the EU now takes the step of publishing, on an aggregated basis, the level of commercial oil stocks held by EU oil companies on a weekly basis.

The Commission held off from proposing mandatory strategic gas stocks, mainly because of its costs: five times those of oil stocks. Preference is given to harmonisation of security of supply standards and emergency measures, allowing for a better EU-wide coordination with respect to crisis response. Diversifying supplies, especially with the build up of LNG infrastructure, is also given as a better alternative to strategic storage.

It is quite possible that this view will be rendered to be outdated during the next months, given present stock levels in the UK.

A new impetus on energy efficiency

This section of the Action Plan sets forth a further package towards the goal of 20% improvement in energy efficiency, adding up to the legislation presently under discussion at Parliament. This new package breaks down the following way:

  • Energy Performance of Buildings Directive - to be revised broadening its scope, simplifying its implementation and developing energy performance certificates for buildings.

  • Energy Labeling Directive - also to be revised in order to broaden its scope, from solely home appliances today to a wider range of energy-using products; classifications for a series of products groups will be revised or introduced anew. A new energy label for car tyres will be introduced under a separate legal instrument.

  • Ecodesign Directive - its implementation will be intensified, with minimum requirements to be adopted in coming months for: light bulbs, electrical equipment in standby and off-mode functions of devices, street and office lighting equipment, external power supplies and simple set-top boxes for televisions; shortly after will follow: washing machines, dishwashers and refrigerators, boilers and water heaters, motors, and televisions. This Directive together with the Labeling Directive should allow the EU to save 96 Mtoe by 2020.

  • Cogeneration Directive - still under study, with a Communication and technical details to its implementation to be published shortly.

  • Covenant of Mayors - together with other financial and legal instruments will be used by the Commission to disseminate best practices on energy use, leading to benchmarking and networking mechanisms.

  • Cohesion Policy Funds - to be used promoting energy efficiency improvements in the industry, commerce, transport and public buildings, cogeneration and local energy production, innovation for sustainable energy, and training for monitoring and evaluation of energy performance. Funds from the Cohesion Policy will be used with the same intent.

  • Green Tax Package - this will be presented to align the Energy Tax Directive with the energy and climate change package and propose the employment of VAT and other fiscal instruments in promoting energy efficiency.

Making better use of the EU’s indigenous energy reserves

This section opens up with pretty straightforward numbers:

Energy produced within the EU represents 46% of the total consumed. Before the 20-20-20 initiative, this was set to fall to 36% by 2020. Implementation of the new Energy Policy would keep it at around 44% of EU consumption.

The following energy sources are discussed in the Communication:

  • Renewables - this is one of the “twenties" already agreed upon: growing the renewable share of the market from 9% today to 20% by 2020. This target will be empowered by the Renewable Energy Directive, after which the Commission will focus on monitoring its application. In this line the Commission will produce a Communication entitled “Overcoming Barriers to Renewable Energy in the EU", that will identify difficulties in scaling up renewable energies (e.g. grid constraints) and propose measures to deal with them. In this chapter the Commission will work with the European Investment Bank and the European Bank for Reconstruction and Development to set up a proposed EU Sustainable Energy Financing Initiative, to facilitate obtaining funds needed for the proposed growth of these energies.

  • Oil and Gas - for these traditional energies the Commission proposes to focus on developing the remainder of the conventional reserves and properly assess and produce unconventional reserves as shale and peat. The Commission will also work towards more transparency in the refining market and will try to ensure adequate diesel refining capacity in the future; a Communication on Refining Capacity and EU Oil Demand shall be presented in 2010.

  • Coal - seen by the Commission as a virtually infinite energy source whose usage will grow around the world as inside the EU, among a healthy international market. Carbon Capture and Sequestration (CCS) will be introduced in 12 commercial scale demonstration plants by 2015. Only then will the Commission consider imposing mandatory CO2 emissions standards, and only if the Emission Trading Scheme proves unsuccessful by then.

  • Nuclear - the Commission notes that although Uranium supplies are well diversified and stable, and that Uranium prices do note have a major impact in the final price of electricity, the majority of Nuclear plants operating in the EU will reach the end of designed lifetime in the next 10 to 20 years. No policy tactic is defined in support of Nuclear, with the Commission leaving that decision to each state. Nonetheless, it pretends to guarantee a high standard of safety by developing common legislation for nuclear plant safety and waste management.

The Communication closes with a few guidelines “Towards a Vision for 2050". This is still a rather immature vision composed of an open list of issues to tackle. For the sake of brevity, these issues are simply listed without further discussion:

  • Decarbonising the EU electricity supply by 2050.
  • Ending oil dependence in transport.
  • Low energy and positive power buildings.
  • A smart interconnected electricity network.
  • Promoting a high-efficiency, low-carbon energy system throughout the world.

Final comments

The sheer size of the infrastructure build up plans plainly shows that the Commission has gained the sense of urgency that the moment requires. Unfortunately, there is a clear over reliance on Natural Gas, especially in the ambitious plans for a Southern Corridor and the build up of LNG infrastructure. With respect to the former, if a single transition country can be the source of the trouble seen in recent weeks, a lot is left to be desired from such international project; with respect to the later, the Commission seems to be underestimating the competition for LNG contracts from other international importers.

The document makes no acknowledgement of Norway's and Russia's depletion, the former with respect to Oil and Gas the later at least with respect to Oil. The intent to liberalize Russia's internal energy market is maladjusted and could even be seen as offensive by this partner. There are no moral or economic grounds on which the EU can promote Thatcher Politics abroad.

The weekly publication of commercial stocks is quite welcome. Transparency driven initiatives like this not only benefit the market as can bring citizens closer to the Commission and promote a unified vision of the EU.

It is encouraging to see that the Commission is not actually blindly pushing CCS forward but instead putting it as a sort of last measure; even so, the 12 demonstration projects should be called into question. On the other hand, the Commission doesn't perform any visible assessment of future coal supplies from exporting countries, not even acknowledging recent constraints in the international coal market.

This carefulness with CCS might actually make room for Efficiency measures to have a real impact. The approach taken by the Commission based manly on regulatory market legislation can have a swift and important effect on energy consumption. The labeling approaches also have an extra benefit in the present time of economic difficulties: it creates a product differentiation mechanism from which EU companies can benefit, valuing goods fabricated internally, that although more expensive, are more energy efficient. The Commission can go as far as forbidding altogether low efficiency products from entering the EU's market.

The laissez faire position the Commission takes on Nuclear energy borders on irresponsibility. If this internal energy source is set to decline in coming decades, the EU either needs a strategy to reverse that trend or to fill the gap with other energy sources. On this point it is important to note that there's no renewable energy capable of performing the baseload role Nuclear has today. While hydroelectric and tidal power can effectively produce energy on a predictable basis, the continuous production of a Nuclear power plant isn't replicable. Even if the approaches to promote renewable energies laid down above come to fruition, a parallel programme is needed to develop/implement energy storage mechanisms.

The reflection on the Commission's energy budget is quite welcome. The Community should agree in due time how these projects are executed (in case they are approved) either by reinforcing the European budget, by state execution (in which case leaving the Commission solely on a coordinating role) or by a combination of the two. Ideally, a framework for the execution process of pan-European energy projects should be brought about.

Finally, how can any Energy Policy be successful, at this particular moment in time, without taking Transport as a central target of action is something only this Commission seems to know.

Previous entries in the series:

SER-2 [02] Memo on the Security and Solidarity Action Plan

SER-2 [01] Introduction

Even without trying to tackle nuclear energy or transportation, the Commission has really bitten off a lot. They clearly understand there is a big problem, and are trying to throw everything at it they can--form shale oil to LNG to energy efficiency to improved grid.

With the current financial problems, and the likelihood that they will even get worse, it is hard to see how very much of this will get implemented, though. At the time they were meeting, the Commission had no idea of the problems ahead, and even if they did know, it is hard to see how it would have changed what they recommended by very much.

Hi Luis,
Thanks for bringing this to our attention.

A few questions:
1) In your first post - (which I just now got to – thanks!):
“Securing your energy future: Commission presents energy security, solidarity and efficiency proposals
“Securing your” is an unfortunate way of starting. The implied gap between policy makers or technocrats and commons citizens is in stark contrast to what the EU should aim to be. In any event this is just a detail, but illustrative. “

Could you possibly explain this further? Could you possibly articulate the aim of the EU should be in this respect, as you see it?


Under your point 1:
“To close this point a question must be asked: why aren't the measures to foster alternative energy supplies at the forefront?”

My questions here are: What do you think the reasons are for this lack of prioritization?

Do you think some scientific consensus – (such as an international scientific body or committee, eg., for climate, IPGCC; or, the international collaboration of National Academies) – would be a way to address this? Do you see a way to address it?

And, along these lines, I wonder, do you think there is any way for the Commission to address the following: A) limitations in AE potential to replace FF, (“Finite Planet” concept); B) Timing (“assumption of peak now”)?

3) Re: From this post

“Coal - seen by the Commission as a virtually infinite energy source whose usage will grow around the world as inside the EU, among a healthy international market.”


Re: “On this point it is important to note that there's no renewable energy capable of performing the baseload role Nuclear has today.”

Do either or both of these relate points to your question about why AE is not given more prominence?

4) Re: “Finally, how can any Energy Policy be successful, at this particular moment in time, without taking Transport as a central target of action is something only this Commission seems to know.”

Is there any formal input process WRT the Commission?

linking Europe and North Africa with gas and electricity interconnectors doesn't sit well with the reasons given in

Aren't growing LNG imports just oil imports v.2 ? The day might come when Europe's terms of trade can no longer support high energy imports. It might take more than wine and package tours to pay for LNG and uranium if those commodities get expensive.

Good point Boof. All the FF energy supplies are commodities with finite limits. I don't study the EU but I have some hope that NG might be used as a buffer in the US until more long term solutions can be constructed. This, of course, assumes the govt's use such a "grace period" to our advantage. Unfortunately, I have limited hope of such forward thinking action by our political leaders.

My understanding is that the "Mediterranean Energy Ring", as such, concerns electricity only.

However, gas interconnects between North Africa and Europe are not about LNG, they are pipelines (three operational, three more in construction). They make a lot of sense for Europe, both in diversifying supplies and in "locking in" suppliers, whose alternative is to export LNG to the highest bidder.

Europe is also facilitating the construction of a gas pipeline linking Nigeria to Europe, which will provide a valuable outlet for Nigerian gas (which they still flare off, I believe?)

As for Europe's terms of trade, there are other countries that have bigger problems in that respect (check out the trade balance of the USA and compare...)
North African economies have a lot to gain by intensifying their links with Euro economies. Investment, technology, markets, etc. If there is a big build-out of thermal solar in North Africa, in order to export electricity to Europe, I don't see why that shouldn't be win-win.

In fact, Australia, with its vast solar resources, should look at doing the same thing with respect to the energy-starved economies of Southeast Asia. What do you reckon Boof?

In fact, Australia, with its vast solar resources, should look at doing the same thing with respect to the energy-starved economies of Southeast Asia

Never happen. Makes too much sense. And in any case (I originally typed 'cash' there. Freudian slip? ;) ), the Federal Australian Labor Party is Committed to Coal.

Don't know what that started out as a link to, but here's a small street protest in Newie against coal (talk about swimming against the stream).

Given the size of the island and the population, Australia also has substantial wind power capacity per capita, and since it has built the energy storage capacity to allow it to overbuild constant-output coal power plants, the combination of opportunities to harvest from widely separated wind and solar resources and substantial capacity to firm the residual volatility with dammed pumped hydro ...

... obviously, one of the biggest hurdles would be political ... absent a 2,000km+ undersea line from Papua New Guinea to the Philippines, the only way to route the power to Thailand, Malaysia, Singapore is via Indonesia, which would threaten to put Indonesia in the position for direct electricity exports that Ukraine is in now for Russian natural gas.

Perhaps use of the electricity to produce something more fungible, like NH3, would be a better idea?

Australia is already exporting very large amounts of electrical energy as aluminium. It would make more sense to continue doing this if there is a "surplus" of renewable energy, rather than building transmission lines to China so that Australian minerals can be processed in China. It would make more sense for a HVDC line between China and Indian sub-continent so that mid-day solar could be used for China's afternoon peak using the 4 h time zone difference, storing some in SE Asian hydro.

Australia's priority should be to 1)expand the Bass-Link( so it doesn't become overloaded), 2)add a HVDC link to all that NG fired peak capacity and potential wind capacity in WA, and as a bonus take advantage of the 3 h summer time zone difference between WA and SE Australia to iron out peak summer demand.
and 3) start replacing coal fired electricity with solar, wind and geothermal to reduce that 27tonnes CO2e per person.

I'm not sure why you bring China into the conversation - its been about SEA.

Your three point program also needs a sustainable energy export component, or the coal lobby can always hit you over the head with the impact on the trade balance. NH3 is an area where there is active ongoing development of less capital-intensive electrical production techniques, which would make it eligible for a supply-following industrial load.

(Is the energy intensity of the aluminum processing high enough that it makes sense to overbuild peak capacity and use it as a supply-following load? Or will it, under higher international energy prices?)

The Lower Hunter has long needed (and been promised several times) a transport interchange at Glendale in northern Lake Macquarie, with a train station for Glendale Center, a road overpass over the rail line to connect Main Road Glendale to the Cardiff West Industrial estates, and a bus/rail interchange ...

... which would convert two bus cul-de-sac traffic drivers into a single through route and turn the Glendale / Town rail route into a route with peak hour traffic drivers at both ends.

And when the stimulus package was brought down, the transport infrastructure the Lower Hunter got was investment in the coal lines, to allow more coal to come from up the Hunter Valley to the coal loaders.

Because making public transport more viable and reducing dependence on driving is optional, while increasing coal exports is a national priority.

I think that once transmission crosses between ethnic and language groups it becomes vulnerable. One person with a stick of dynamite can take out an HVDC cable and that could lead to cascading failures at the other end. We saw this last week in southern Australia. It wasn't dynamite but an overheating inverter that removed 700 MW from the system and suburban substations 1000km away failed. Old folks died in the 46C/115F heat because their electric fans stopped.

I guess you could build cross border transmission then wait and see how often it gets blown up. At the same time it might be best to have sufficient local generation to get by. This is the efficiency vs resilience tradeoff.

Its the sole path that leads to a lot of the vulnerability ... multiple paths substantially reduce the risk.

Which is, of course, why Oz exporting electricity directly to SEA via Indonesia is problematic unless it is feasible to also run a line to the Philippines via PNG, and that is longer than the current longest landline HVDC in the DRC.

That's why exporting energy indirectly to SEA via production of an energy intensive agricultural like NH3 seems far likelier ... there are multiple paths, with the possibility of using east coast and west coast ports if there is a problem getting product out via Darwin.

The aim is to make possible the developing of the North-African huge solar resources. The terrorist treath to this infraestructure is not so big as it is the top priority of the security forces of Maghreb countries and the South-Europe armies to protect them. The proof is that gas pipes have never been attacked in Algeria or Morocco.

Moreover a Mediterranean energy ring would enhance economic integration between the not so friend North-African countries, thus stabilizing and improving their relations in the long term.

As a European, I find it exhilarating that the Commission has finally "got it".

Their learning curve has been exceptionally steep, from an embarrassingly low starting level only a couple of years ago. They have come up with something that looks like a plan to me!

The timing is good too : the need to kick-start the economy by deficit spending is well-accepted, and these infrastructure projects are, in the aggregate, exactly the sort which will add value and sustainability to the European economy, medium term.

I'm a little bit alarmed about bringing the Ukraine into the euro energy community -- clearly it's a basket case, and destined to be clawed back into the Russian sphere of influence pretty quickly.

Luis, I don't share your disapproval of the nuclear cop-out : the Commission has no standing or credibility to deal with this issue, which is intensely political, in different ways in each member nation. It is best to let the member nations and their national champions (EDF, Areva, Suez...) deal with it : the nuclear build-out has started, and will accelerate. The nations that don't want to deal with it will huff and puff, and eventually import nuclear electricity.