EU’s energy security is about self-help, not seek-out

Amid escalating tension with Russia over Ukraine, Brussels centres on shale gas and non-Russian gas imports in its new energy security strategy unveiled in May this year. However, I cast great doubt that either the crisis is being used as a pretext to re-carbonise Europe’s energy sector, or the strategy document deplorably reflects how Brussels still pits emissions target and energy security goals against each other but favouring the latter. In the green and digital age, the key to accomplishing both missions, which should not be mutually exclusive, is empowering the people to empower themselves – proliferating “community-owned renewable energy schemes” in the EU, rather than revisiting the outmoded, high-carbon formula to secure energy supplies.

Ludicrous is “sustainable production of fossil fuels” proposed as a means to increase indigenous energy production in the strategy document. Production of fossil fuels itself is not only environmentally but also recently proven to be economically unsustainable, no matter it is from Russia or not.

Although global reserve of natural gas at end 2013 has just over 55 years to last, the Energy Return on Energy Invested (EROEI) of gas has been falling sharply since the early 1990s. Shale gas is nothing but sugar-coated poison. Take the word of a former senior executive in Australia’s oil, gas and coal industry, Ian Dunlop, for it: “Fracking can rise production rapidly to a peak, but it then declines rapidly, too, often by 80 to 95% over the first three years.” These mean commercial extractors need to devote more and more energy (and costs) to produce the same amount of gas for a “return on investment”. Thus, Brussels may appear overly optimistic towards the dependability of gas imports for the next few decades.

You can only achieve true energy security when you produce energy by yourself. Today, nearly 40% of EU gas and one-third of oil imports are from Russia. The lopsided dependence can be effectively alleviated with “community-owned energy”. Union-wide, the current renewable energy share is 12.7%. It already saves us €30 billion a year in EU’s external energy bill (around €400 billion in 2013). Germany is taking the lead with 46% of its renewable energy generated from community-owned power. In the new era, policy makers should recognise its potential to fill the gap and strategically empower millions more people to become “prosumers” – a portmanteau of producer and consumer. It means people, often as a community, produce their own green energy from their homes, offices and factories, consume and share it with each other by means of a super smart grid, or as Jeremy Rifkin puts it, an “energy internet,” just like we now create and share information online.

That said, there are numerous barriers which can prevent this energy revolution from blossoming. Financing is one of them. For example, in an article two years ago, I examined how EU regulations like the “state aid de minimis rule” and bankers’ calculators have suffocated the development of community-owned energy in many cases. Today, such stranglehold is still there to grip. Solutions are by and large absent in the UK’s community energy strategy published in January this year. Thanks to the Internet, crowdfunding is rekindling us new hope. Just last September, a world record of crowdfunding was set by WindCentrale, which raised a total of €1.3 million in just 13 hours through selling shares in a wind turbine to 1,700 Dutch households online. Instead of looking to fossil fuels again, Brussels should be turning its back to adopt successful models in some member states and create a “Community Energy Directive” that forms an integral part of a revised energy security strategy.

With more community-owned energy schemes up and running, it will be more economically viable to set up a super smart grid bringing all the renewable energy generators together, thus establishing a well-functioning single energy market and delivering long-term energy security. Back in December 2010, the European Commission tabled a proposal for a Super Smart Grid, linking up the electricity networks of EU and North Africa by 2050, whereas in March 2011 nine countries around the North Sea already signed the North Sea Countries’ Offshore Grid Initiative, perceived as a debut of the pan-European super grid. Nonetheless, the progress of developing the offshore grid has stalled. This is not because we are short of HVDC technologies to make it happen with at least Germany and China already in hold of them, but because there is “no regulatory arrangement [that] exist to incentivise investment in and facilitate trading across hybrid offshore structures”, according to the progress report released by Benelux in August. Unless there is a complete institutional and regulatory framework catered to provide economic solutions for traditional transmission system operators (TSOs) and the “prosumers”, we will never be close to realising the European Super Smart Grid. These are the very issues Brussels should work on for now.

At the EU-US Summit in March, state leaders agree on more transatlantic energy cooperation in a joint statement. The EU is on track to achieving the first and second “20s” in its 20-20-20 climate and energy package adopted in 2009, but not the third “20” – energy efficiency, which can cut our energy use by 40% in the next 15 years and should not be addressed “separately” from the energy security strategy like how Brussels is doing. The EU and US actually share common energy security goals. It is in their mutual interest to enhance such cooperation on the research and development of versatile energy efficiency technologies.

Policy makers in Brussels please don’t even try to deal with an energy crisis of the future with the mentality of the past! Anyway, the enthusiasm that the European Union has always shown at climate conferences must be harmonised with the right mentality at policy level to keep our lights on. 

This is my commentary published on Comment Visions for September 2014.

Email me at alastair.t.marke@gmail.com