An Energy (Dis)Union: Challenges and Opportunities in Europe's Emerging Energy Market

The formation of the EU brought with it four fundamentals: the free movement of goods, services, persons, and capital. While not explicitly mentioned, energy and its accompanying infrastructure fit well within the parameters of these four freedoms. Failure to include energy in unambiguous terms in the founding documents of the EU, combined with the growing demand for energy in all its forms, created a necessity for the further development of an integrated internal market. This new project of the European Commission, known as the energy union, envisions new institutional, market and operational structures meant to unlock Europe’s capacity to find, produce, import, refine, store and deliver energy seamlessly among its Member States.

The energy union has several goals, including lowered carbon emissions, greater reliability, more efficient connectivity, less expensive energy for consumers, and improved overall energy security. While the Commission lauds the plan, the multitude of political objectives within it constitutes a major roadblock to the realization of a single energy market. For example, a focus on de-carbonization decreases efficiency, which in turn reduces savings for consumers. Conflicting priorities like these pose a considerable challenge to an otherwise worthy and ambitious project and highlights the lack of unification and coordination within the current European energy markets.

The overarching mentality of solidarity characterizing the EU should prompt the creation of an energy union. All members would reap the benefits of shared resources, and several members would benefit dramatically, given the opportunity to overhaul domestic energy markets. Imagine a Europe where energy infrastructure enables the free and efficient transfer of renewables and fossil fuels from one part of the continent to the other. The benefits are obvious: a stable internal market system, which enhances each member state’s energy advantages – wind in Denmark or coal in Poland – while remedying supply and other gaps each member would struggle to bridge on its own.

A truly European market would result in adequate supply across a widely synchronized grid and the ability to manage a continent-wide fuel and infrastructure mix efficiently. Cooperation and collaboration in every sphere, including energy, are essential in order to achieve the levels of integration European countries seek to accomplish. This sense of unity, however, is sometimes undermined by minor disputes between member states or differences in national interests.

Europe’s internal energy union is a work in progress and will need continued support and guidance for successful future implementation. This paper also provides policy recommendations to assist in the successful creation of a unified energy market, taking into consideration the issues mentioned above. 

These recommendations include, but are not limited to the following:

1. Creation of a single institution dedicated to the promulgation, implementation and oversight of energy policy, and the integration of infrastructure;
2. Increased financing for energy infrastructure and connectivity;
3. Enforcement of integration deadlines;
4. Full exploitation of Europe’s geographical layout to maximize production of renewable energy;
5. Creation of interconnected regional grids;
6. Acknowledgment and use of natural gas as a significant bridge fuel.

To continue reading the full report, click here.

This report was originally published in Volume 6, Issue 1of the European Energy Journal. For information on how to read the full issue, click here. 

Brigham A. McCown (@BAMcCown) is the Chairman and CEO of Nouveau Inc., Co-Managing Member of Kilgore McCown, PLLC, and the Chairman and Founder of the Alliance for Innovation and Infrastructure. Please contact, info@nouveaucorp.com for press inquiries and more information.