EU leaders should take the crucial leap and move on with an energy union; otherwise, the bloc will face the risk of deindustrialisation and being defeated in the global competition with the US and Asia.
The European Council has so far failed to provide an adequate answer to the energy crisis, asking the EU executive to come up with concrete proposals for the next meeting later this month.
According to World Bank data, the EU is the world’s largest energy importer, but in August, it paid almost nine times higher energy prices than the US. This may start a deindustrialisation process in Europe.
For its part, the European Commission has invited member states to reduce consumption and increase their energy storage. This is an intergovernmental solution: coordinate what each country does.
Most EU countries depended to some extent on Russia’s energy and felt this was at risk. They had to reduce consumption and increase storage to survive the next winter.
The coordination set a minimum standard and shared goals to pretend we were doing this together. Then each government would reduce the burden on its citizens and enterprises based on its fiscal capacity. However, this could eventually kill the single market as a level-playing field.
The federal solution would be for the union to act as a whole to ensure adequate energy supply at a cost that does not put the EU economy at risk of deindustrialisation in its global competition with the US and Asia.
If the EU had a federal government responsible for energy policy – i.e. an energy union – it could have changed the benchmark for gas prices; decoupled the cost of energy from that of gas; ensured joint purchases, which would avoid competition among EU countries towards the same suppliers who would thus be forced to negotiate long-term contracts at a reasonable price.
Exploiting the EU market power would lower prices just like a legal gas price cap. The federal government would finance the completion of the EU energy grid, which according to a study by the University College Dublin, would reduce energy prices by 32%. It would start creating a typical strategic reserve to face future and potentially asymmetric shock more effectively.
The EU did not do that because of national sovereignty on energy mix, different exposure to Russia, and contrasting interests. High gas prices are a bonanza for the Netherlands, Norway, and the US. Germany was so dependent on Russia that it feared any move would reduce Russian exports, which Russia cut anyway. France is so keen to sell its nuclear energy that it opposes the Midcat pipeline.
European citizens continue to pay the price of unanimity. The choice is clear: energy union or deindustrialisation.
(Roberto Castaldi | EURACTIV.it)
Source: euractiv.com
