Business 5 October 2022, 4:14pm

European Council President urges genuine energy union

Portfolio

"By launching a war on Ukraine, Vladimir Putin has also fired an “energy missile” at Europe. He wants to obliterate our economies, weaken our societies and destroy our morale. We must be clear-eyed in assessing the scale of the damage. This crisis vindicates our common growth strategy and makes it a matter of urgency to establish a genuine energy union. It will be an essential pillar of EU sovereignty," writes Charles Michel, President of the European Council, in an op-ed in The Financial Times.

charles michel europai tanacs brexit201015

Highlights of the article that you can read in full in the FT here:

The EU’s energy imports in the first half of 2022 amounted to almost €380bn, which is close to what we usually pay for an entire year. Our energy trade deficit is likely to double in 2022, reaching about 5% of gross domestic product.

This situation forces us to reassess how we achieve our longer-term transition to climate neutrality, which is not only central to our environmental fight but key to our growth strategy. Our path to net zero was partly predicated on ample availability of affordable gas. This is now a thing of the past.

EU leaders have recognised the "need for a new energy strategy in tackling this crisis and in laying the ground for a resilient economy. That is why Michel is calling for a

genuine energy union

that will go hand in hand with "revisiting many of our longstanding beliefs and acting more collectively, as Europeans."

A resilient energy union will require (i) the compatibility of 27 national energy mixes, (ii) strong and sincere co-ordination between states, and (iii) the creation of the necessary regulatory framework and market conditions.

The EU's common energy strategy should have four goals, said Michel:

Reducing our consumption - this will require "a great deal of innovation and creativity", and honestly facing the challenges ahead;
Ensuring security of supply - diversifying away from Russian energy, not becoming overdependent on a single source, buying smarter (putting the collective buying power of the bloc to better use), rather than competing and driving up prices. "A varied energy mix will reduce the risk of energy dependency. This includes renewables, such as solar, wind and geothermal energy, as well as hydrogen."
Reducing prices - If the EU wants to cut consumption, diversify and achieving net zero, member states collectively need to invest more in research, innovation and technology.
Reinforce the cohesion of the single market - Even legitimate actions to protect households and businesses can cause imbalances.