Michael LaBelle: Expanding the ring of European energy security

“What lies in ruins are not only Ukrainian cities but also many of our basic security assumptions.”
The President of the European Commission, Ursula von der Leyen, (von der Leyen, 2024)

Integration of energy markets is logical for both efficient allocation of resources and for security. Since the 1950s and the formation of the European Coal and Steel Community interdependent energy and industrial relations have guided European integration efforts. Another milestone was reached in the 1970s and early 1980s when Austria and West Germany received Soviet gas through a new network of transcontinental pipes. After the 2004 enlargement taking in former Communist countries and further market reforms, the energy market of the European Union continued its decades-long integration. This process, particularly in Germany would go largely unquestioned until Russia’s February 2022 invasion of Ukraine. Soon, integration flipped to the disintegration of trade.

Despite previous disputes between Germany and Poland over solidarity in the gas market, a common front emerged. Within one year, a significant change was realized in the delivery of fossil fuels. Europe cut its Russian gas imports from over 40% to less than 10% in 2023. With a full phase-out envisioned by 2030. How does Europe rebuild a new energy security to meet its high energy demand?

First through institutions. Since the 2000s, the EU has consistently built new institutions and established new goals to be carbon neutral by 2050. This includes the EU Emissions Trading System (ETS), Agency for the Cooperation of Energy Regulators (ACER) and clear targets of 55% in the reduction of Greenhouse Gas emissions by 2030 – which were sped up in the REPower EU package after Russia’s invasion. Now, there is the joint purchase of gas through the EU’s AggregateEU platform. Institutions are at the heart of the EU’s energy market.

Second, Europe rebuilds its energy security through technology. Coal and pipeline gas is replaced by shipborne liquefied natural gas (LNG), prices drop for solar PV, wind generators, and batteries. Investments in new factories producing these in Europe or imported into the EU shift security away from raw natural resources of fossil fuels and to production chains. The knock-on effect is the definition of a secure energy system widens. Technological developments contribute to and reframe energy security. Today, we now speak of gas security of supply, whereas in the 1970s energy security was defined by oil. Western and Eastern European countries pivoted to Soviet gas and oil after the Middle Eastern oil crisis in the 1970s. Energy transitions are fueled by insecurity and in turn redefine energy security. The technologies of electrification are now included in energy security assessments.

And third, energy security is assured through rules and regulations. In the past, European fossil geopolitics were characterized by attracting foreign companies and governments to “come and play” (Goldthau and Sitter, 2015, p. 2). These actors accepted rules and regulations that enabled the EU to meet its geopolitical strategic goals. In the past, this largely meant sending fossil fuels into the EU market, such as Russia accepting market rules. This now includes market policies aimed at Chinese products. In 2024 there are new tariffs on imported Chinese electric vehicles. In 2024, further steps may come for Chinese batteries and EVs produced in the EU, such as technology knowledge sharing. ‘Coming to play’ in the EU’s marketplace is evolving as the concept of energy security evolves.

The figure below demonstrates the expansion of the EU’s energy security framing. The EU’s internal market rules apply to its electricity and gas market. The foundation of these can be seen in the earlier energy packages, such as the Third Energy Package which ushered greater market liberalization and institutional reforms. These tied in and expanded the flow of fossil resources into the EU but largely enabled the gas market to embrace Russian and Central Asian gas. Later, these supply routes would become more involved in the geopolitics of gas, as the relationship between Russia and different EU member states changed. Now, as the EU shifts to electrification and the integration of renewables with battery storage technologies, the resources, processing, and manufacturing become wrapped into consideration of energy security. What was once the remit of industrial policy now has larger implications for the self-sufficiency of manufacturing capacity, knowledge, and access to the resources of a cleaner energy system.