Energy

When looking for scapegoats for the EU’s energy crisis and our dependence on Russian gas, it is all too easy to attack “district heating”.

District heating is the main way that cities are heated in eastern Europe and the Soviet-era infrastructure can often be wastefully inefficient, as we write about in a story today.

But don’t write it off too quickly. The truth is that western Europe is probably going to see a lot more of this technology in the next decade as it rethinks its urban energy consumption. 

Russia's Vladimir Putin at the launch of South Stream's Black Sea pipeline in 2012

Is it possible that, once again, one of Europe’s biggest strategic concerns ends up hinging on a Balkan intrigue?

This time, it is the Ukraine crisis, Europe’s fears about its energy security – and the influence of the king-making junior coalition party in the Bulgarian government, the Movement for Rights and Freedoms.

The concerns of Bulgaria’s small ethnic Turkish party may seem worlds away from the geopolitical confrontation between the Kremlin and the west. But on the group’s narrow shoulders could lie the fate of the landmark South Stream pipeline, a project that many believe will further cement Russia’s hold on Europe’s gas supplies. 

By Christian Oliver

Expectations from the EU’s 2030 energy and climate targets: The EU will on Wednesday propose a series of energy and climate targets that will have a profound impact on how the continent generates its power. The overarching goals will be accompanied by proposals on the development of shale gas and measures to rescue the EU’s carbon market, which has fallen into disarray. The measures are being hotly contested as the targets are seen as vital to determining power prices and industrial competitiveness.

Early drafts of the package and people close to the talks suggest that the following are the most likely outcomes: 

Brussels and Beijing appear to be nearing a settlement in a trade fight over solar panels that is the EU’s biggest ever anti-dumping case – based on the more than €20bn in Chinese-made solar products shipped to the bloc in 2011. Sometime on Friday afternoon, EU officials are expecting to learn whether or not their counterparts in Beijing have taken their latest offer.

In theory, the two sides have until August 6th to haggle over a deal. After that date, provisional duties imposed by the EU will jump from about 11 per cent to an average of 47 per cent. The reality is that they have probably already missed that deadline, according to diplomats, given the amount of legwork that Brussels must do to translate an agreement and circulate it among national governments. Hence, the next few days are crucial. 

Günther Oettinger, EU energy commissioner, proposed tweaking the biofuels policy last year

Among the EU’s less successful policies, the one governing biofuels looms as a particular case study in unintended consequences.

Five years ago, member states agreed to binding targets requiring each country to derive 10 per cent of all transport fuel from renewables by 2020. Those targets were meant to speed the adoption of environmentally-friendly biofuels and were part of a broader campaign by Brusselsto claim the lead in the fight against global warming.

These days, that policy is a mess. The increased demand for crop-based biofuels – made from corn, rape and soya, for example – has been blamed for a surge in world food prices. It also appears to contribute to deforestation as farmers in far corners of the world chop down rainforests to plant biofuel crops.

The EU is now seeking to correct that. The European Commission, the EU’s executive arm, made a new proposal last year that aims to phase out crop-based biofuels in favour of cleaner ones derived from waste products and algae, among other substances. The European parliament’s environment committee last week voted through its own version of the draft legislation.

But it seems even the revised biofuels policy may have its own unintended consequences, including a brewing fight between Europe’s oleochemicals industry – the folks who use processed animal fats to produce everything from lubricants to lipstick – and their suppliers. 

China’s solar panel manufacturers are facing an uphill battle in their legal fight against the EU, which last week targeted them as it launched the bloc’s biggest-ever an anti-dumping investigation. The case involves Chinese exports of solar panels, wafers and other products that totalled some €21bn last year.

More than half of such anti-dumping investigations result in tariffs being imposed, according to EU officials. Yet there are at least two technical factors at work in the solar dispute that could make the odds even worse for the Chinese. 

The European commission, the European Union’s executive arm, has been one of the staunchest supporters of the proposed Nabucco pipeline, a 3,900-kilometer behemoth that would carry natural gas from the Caspian region to Austria.

For the commission, Nabucco represents the backbone of a new southern corridor that would break Europe’s dependence on imported Russian gas. It has touted the project repeatedly over the years, and has also opened its wallet, committing up to €200m in funding.

But in a recent conversation with Brussels Blog, Gunther Oettinger, the energy commissioner, made a departure from the usual script and gave support to the growing suspicion that the full Nabucco may be a lost cause. 

Next week marks the one-year anniversary of the tidal wave that unleashed a disaster at Japan’s Fukushima nuclear facility and forced a profound shift in Europe’s nuclear debate.

Within weeks of the disaster, Angela Merkel, the German chancellor, decided to switch course and phase out the country’s nuclear plants – a move that was subsequently copied by Switzerland and Belgium.

Talk of a nuclear revival that once filled the air in Italy and other member states – encouraged by the industry and supportive governments – has been dashed. Even in France, Europe’s nuclear champion, public opinion has turned increasingly negative.

But in spite of Fukushima, one European Union member state has lost none of its nuclear ardour: Lithuania

When word filtered out on Tuesday that Russia’s Gazprom would be capping its gas shipments to the European Union, a shiver went through an unusually frigid Brussels.

After two major supply cuts in the last ten years – the most recent in 2009 – European policymakers have become conditioned to believe that any interruption in Russian gas may be the beginning of another full-blown crisis instigated by the Kremlin.

Gazprom said it was going to have to limit European sales in order to serve the needs of domestic consumers struggling through a cold winter. Fears appeared to subside a bit, though, when the company promised to try to make up the difference over the coming days.

Perhaps the most surprising thing about the incident is how quickly it has become a non-event. The reason, according to EU officials, is that the continent learned the lessons from the last gas crisis and has worked to make itself far less vulnerable to future Russian shocks. 

In the corridors of Brussels’ elegant Stanhope Hotel on Wednesday afternoon, the well-turned-out movers-and-shakers of the European energy world were marvelling at the sizeable budget and high-profile guest list for the event they were attending.