The president of the European Commission, Von der Leyen, after a long search which cost a lot to the economy and society, has begun to speak positively about expanding the application of the so-called Iberian model. The governments of Spain and Portugal have moved to decouple the wholesale price of electricity from the international price of natural gas in an attempt to curb the cost of power generation. They had to bend the objections at the level of the European Council, but in the end they went ahead with good results for their economy. The Greek government did not follow their example by declaring that it prefers a European solution, even if it takes time.
Another von der Leyen initiative, which will probably also fall victim to compromises, has to do with changing the way international natural gas is priced in the EU. It tries to bypass – to some extent – the DTTF (Dutch Title Transfer Facility), which gives the reference prices. Many consider that the method of determining prices has been overtaken by developments since the quantities entering the international market via natural gas pipelines no longer play a role in it to the same extent as in the past.
The Commission is proposing a kind of emergency restriction on revaluations when they go beyond the limits.
There is the recurring debate about imposing a European ceiling on natural gas prices. This proposal is opposed by both Germany and the Netherlands on the grounds that it cannot work effectively in a free world market where cargo is directed to where the best prices are offered. In addition, they believe that any planned price reduction may lead to an unwanted increase in demand.
Chancellor Scholz believes that Germany successfully faced Russian blackmail and covered its natural gas needs mainly from the USA, Canada and Norway. He is concerned – for obvious reasons – with the question of accuracy but does not want to deal with it in a way that might call adequacy into question.
The main conclusion from the above is that there is not going to be a common European energy policy capable of getting us out of the crisis in the near future.
Member states will have to rely largely on their own forces. That’s why we see France going full speed back to nuclear power and countries like Germany, the Czech Republic, Slovakia and Poland steadily increasing the percentage of electricity generation from coal to 30%-50% of the total.
The European Commission wants to create dynamics to strengthen the common energy infrastructure so that, if necessary, one country can cover the needs of the other. But even on this issue, there are national contradictions. It took a lot of effort to get Macron and Sanchez to agree on joint infrastructure in the form of an undersea natural gas pipeline and, in the future, clean hydrogen.
The E.U. it moves slowly and through contrasts and contradictions in search of the necessary politics. Unfortunately, things are moving too fast for her, and the energy issue is not limited to Putin’s aggressive policy and blackmail.
There is a danger that the Europeans, after 2-3 difficult years, will be freed from the blackmail of the Russians, only to find that they are under the energy hegemony of China.
The Chinese have gone way ahead on green transition issues. They are world champions in the production of electric vehicles, batteries, in the mining of lithium and other strategically important minerals and especially in their processing. They are also first in the rate of development of renewable energy sources.
If the Europeans want to move quickly through the necessary transition by strengthening the international competitiveness of their economy and claiming strategic autonomy in the energy sector, they must change their method and goals. In this respect, Putin’s blackmail offers an important additional incentive.
