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I'm not sure how much this will interest you guys, but I have written a fairly long analysis of current European Commission proposals on energy policy over at the European Tribune. I am copying it below, trying to adapt it to a US audience and to explain a few more things. To me, it's part of a series on the relentless promotion these days of "liberalisation" (in the European meaning of deregulation) and "reform" policies, which, like in the US, have only one goal: make it easier for business to pay workers less, treat them worse, pay less tax, and suffer fewer regulatory cosntraints.

The EU has come up this week with a "Green Paper" (i.e. a strategy proposal to be discussed with Memeber States). I've been going through the various documents that have come out, trying to make sense of what has been said and what is being proposed. It's a strange mix of good statistics, reality-based thinking, political bromides, freemarketista ideology, and wishful thinking. Some sources, random extracts and analysis below.

Why Europe must act collectively on energy by Javier Solana (in the FT)
EU homepage energy (in English)
EU energy fact sheet 2004 (pdf, 4 pages)
EU Green paper (links to the strategy document and accompanying pieces)
Green Paper (pdf, 20p. - the strategy paper itself)
Green Paper slide presentation (pdf, 14p.)
Green Paper technical annex (pdf, 49p.)

First: a light note to those that find windfarms ugly: I can only point out first of all that the EU, like countless companies, find that wind turbine convey such a positive image that they are worth peppering on their home page:

More depressingly, EU statistics show that the EU still gets more 4 times more electricity from oil than from wind:

(and it also gets more electricity from biomass than from wind)

And Europe is no longer on target to meet its (modest) obligations under the Kyoto protocol:

But let's get to the meat of the proposals.

The fluff is exemplified by Solana's opening paragraphs:

Energy security has shot to the top of the European and wider international agenda. It is easy to see why. Europe will be importing a growing amount of its energy needs from abroad. We already rely on external sources for 50 per cent. Most estimates suggest this will rise to 90 per cent for oil and 70 per cent for gas by 2030. Russia's recent disputes with Ukraine, Georgia and Moldova over the terms of gas supplies have concentrated our minds.

If we are importing an ever greater amount of energy from abroad, we need to discuss this with foreign partners. It also makes sense to do this together, as Europeans. We are already working together on liberalising and integrating energy markets within the European Union. It makes sense to complement this with concerted action on the external side. If you negotiate together, you will have more influence.

Solana is the high representative for external relations, a job that's still looking for substance, especially after the Constitution that was meant to transform it into a EU Foreign Minister was rejected, so his article must be read to take that into account: it is Solana's attempt to muscle into EU negotiations with neighbors on energy, otherwise managed by the Energy directorate. I note that the only point he makes on domestic policies is that liberalisation is under way and that it is a good thing (presumably to fight import dependence and provide stability).

That theme comes across throughout the Green Paper - WITHOUT EVER BEING ARGUMENTED. It's just a fact:

Europe has not yet developed fully competitive internal energy markets. Only when such markets exist will EU citizens and businesses enjoy all the benefits of security of supply and lower prices. To achieve this aim, interconnections should be developed, effective legislative and regulatory frameworks must be in place and be fully applied in practice, and Community competition rules need to be rigorously enforced. Furthermore, the consolidation of the energy sector should be market driven if Europe is to respond successfully to the many challenges it faces and to invest properly for the future.

(that's the last item in the initial description in the paper of the "current energy landscape" - thus presented as a fact, like growing import dependency and global warming)

This slide (about the "common goals") exemplfies this:

The 6 main goals in the Green Paper are:

1. Completing the internal market for energy;
2. Diversification;
3. Solidarity;
4. Sustainability;
5. Innovation and technology;
6. Setting an external policy;

The first one is "liberalisation", the second one is seen in the same logic (it focuses on creating domestic competition in various EU countries), and the third one is about stripping national governments of their individual energy policies - especially for those that have comprehensive ones like France.

The good things in the Green Paper

  • there is a real focus on sustainability, including energy efficiency, demand reduction, giving priority to low carbon energy, and promoting R&D; it's sadly not in the headlines, but it takes the biggest chunk of the Green Paper itself, and all of it makes sense, including the acknowledgement that demand reduction and domestic renewable energy will be the best way to ensure security of supply;

  • calls for investment in networks, coordination of networks, build up of spare capacity and storage and planning for catastrophic events all make sense;

  • the goals of external dialogue are also reasonable, including suggestions to help neighboring producers built their export infrastructure towards Europe, and calls to extend carbon trading beyond Europe.

Solana also notes in his article that dependency is a two way street, and thus that cooperation and trust are the most important thing, and he acknowledges that in order to have a common external energy policy, one shoudl agree on its content (a point sorely missing from the Green Paper).

The intriguing things in the Green Paper

The Green Paper is pretty bullish on nuclear energy, and it even suggests that Europe should set itself a minimum share of low carbon electricity production. That's a pretty smart compromise, as it encourages renewable energies while keeping the door open to nuclear energy;

Both the Green Paper and Solana acknowledge the reality that energy is an eminently political issue, and thus that Member States will want to have their say. This is mostly coherent in Solana's paper (see extract below), but it borders on the schizophrenic in the Green Paper as it has just explained before that that the goals is to have the markets decide what are the best investments, to have private companies compete on a pan-European basis and not on national markets, and to have "coordinated" regulation of the sector in all countries... but Member States are still presumed to influence the choices of what kind of power generation is priviledged or not.

from Solana

Some question whether our member states, given their different outlooks and interests, can agree on a substantive set of messages. More dialogue, they say, sounds good. But what are we going to say? My answer would be that we should stress that most producers and all consumers have a shared interest in maintaining a stable, transparent framework in which the pricing mechanism can function as freely as possible. This means no unilateral measures and no "politicisation" of energy exports to punish foes or reward friends. What we need is an orderly combination of markets, law and consensual negotiations.

The crazy or silly stuff

This points us towards the question of Russia, which is after all the root cause of all this agitation thanks to the Ukrainian shenanigans earlier this year... Barroso (President of the European Commission) and Solana would love to get a strategic dialogue going with Russia, and the Green Paper dangles some apparently tempting carrots in front of the Russian: offer access to other countries to your network, and we'll let you enter our own downstream business, and treat you as an "equal partner".

The fact that Russia doesn't care so much about downstream, and that they certainly won't open their networks (and have every reason not to) doesn't seem to have registered, nor has the fact that, as all the pipelines go to Europe, it doesn't really matter. The parallel attempts to build infrastructure from the Caspian (both for oil and gas) bypassing Russia is also unlikely to be looked upon with kindness by Russia, but do make sense on their own.

This brings us to EU vs national countries issues.

Russia is clearly a topic where the EU is itching to take away responsibility from the Member States. With energy the single most important area of dialogue with Russia, and with France, Germany and Italy being the main conduits of this dialogue, taking over these negotiations would boost the EU versus the most annoying Member States... Which of course means that there is little chance of that happening, but many opportunities to brand these countries as "nationalistic" and "protectionist".

This graph (from the FT) shows how this would work on the vexing issue of gas storage, which I mentioned yesterday in this diary (Energy - the EU marketistas want their cake and to eat it too):

"Coordinate" these, and you effectively take power away from E.On, GDF (the evil protectionist "national champions" form Germany and France) and Snam (Italy) and give it to the European Commission or its new energy regulator.

Which gets us, as usual, to the underlying assumption that markets will solve everything. As quoted above, it is repeatedly stated throughout these documents that enforcing the liberalisation directives (and, once again, not just the letter of the directive, but also the spirit of the directive, i.e. the full unconstrained liberalisation) are the only way to ensure security of supply and lower prices. This means fighting national ("nationalist") energy policies, and eliminating "dominant" companies in their domestic markets.

The following questions are never discussed:

  • if nuclear is encouraged, how is this going to be (i) financed, (ii) supervised and (iii) who is going to deal with the waste?

    If State involvement in any of these is authorised, how is this made compatible with the denationalisation of the regulatory framework?

  • who gets to define policy viz. Russia (concerning mainly oil and gas)? Those that consume most gas? Those that import most gas as a portion of their consumption? Those that import most Russian gas (in volume or in proportion)? Those that have otherwise intense diplomatic links with Russia?

  • Are long term contracts to ensure stability and security of supply (which the EU has fought tooth and nail in recent years as incompatible with "market liberalisation") now encouraged? Who has the right to negotiate them? The companies? The EU regulator?

  • What's the criteria to know if a market is "competitive"? Price levels? Share of imports? Share of sales made by foreign companies? (And how do you define "foreign"? By the location of headquarters? Nationality of shareholders? Nationality of CEO? Origin of energy production?) Let's have objective criteria...

Fundamentally, the EU has yet to reconcile market "liberalisation" with security of supply and the need to forcefully regulate the sector if you want any results (renewables require subsidies and a supportive legal framework; energy efficiency requires public action on standards definition and enforcement, R&D, monetary incentives; security of supply requires long term commitments and diplomatic/commercial relations whose rigidity is precisely the opposite of how markets work).

The EU could be the appropriate level to regulate the sector, but not for so long as it keeps its pure market ideology. Countries that have been importers of energy for a long time - or those that want to impose environmental preoccupations know that security of supply and the accounting of externalities require consistent policies over the long term, serious enforcement power, a lot of political support - and that these goals have a price that markets on their own are not able to make private players pay.

If the EU gets to be the regulator today, it will, in its current incarnation, go for the most pro-business, lightest enforcement and short-termist version, and that's not going to respond to ANY of the stated goals.

Originally posted to Jerome a Paris on Thu Mar 09, 2006 at 07:31 AM PST.

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Comment Preferences

  •  Tip Jar - Mar. 9 (4.00)

    In the long run, we're all dead (Keynes)
    Read more on the European Tribune - bringing dKos to Europe

    by Jerome a Paris on Thu Mar 09, 2006 at 07:29:29 AM PST

  •  Are wind farms (none)
    the EU's secret "weapon" to get to compliance on Kyote?

    -1.63/ -1.49 "Speaking truth to power"

    by dopper0189 on Thu Mar 09, 2006 at 07:40:35 AM PST

    •  typo (none)
      get to compliance under the Kyoto treaty

      -1.63/ -1.49 "Speaking truth to power"

      by dopper0189 on Thu Mar 09, 2006 at 07:42:04 AM PST

      [ Parent ]

    •  Well, the secret to Kyoto (none)
      was to get rid of the coal-fired plants. A number of countries, starting with Germany and the UK did this - mostly by switching to gas-fired plants (and, to some extent, wind in places like Germany and Spain, but as you see above, the overall numbers are still small). Now that gas prices are very high and the corresponding power plants either unprofitable or causing electricity price rises, nobody knows what to do, thus the stagnation of the GHG numbers... Coal is out for that reason; wibnd iqs not yet enough, and nuclear is taboo in several countries

      In the long run, we're all dead (Keynes)
      Read more on the European Tribune - bringing dKos to Europe

      by Jerome a Paris on Thu Mar 09, 2006 at 08:09:40 AM PST

      [ Parent ]

  •  Big push for Nuke, right now (none)
    there are commercials on US tv touting Nuke as the 'clean air energy'. Green grass sunny skies kid with three arms flying a kite ...ok I made that last part up.

    Same thing for coal.

    Most likely coordinated with the SOTU 'addiction to oil' meme. Somebody found a way to get 'the payments' in, even without Abramoff as middle man.

    You can't lick the system...but you can give it a damn good fondling!

    by buhdydharma on Thu Mar 09, 2006 at 07:58:12 AM PST

    •  See my post further down (none)
      Crisis management is very profitable.  Economic triage is as much fun as playing Risk.  Same shit, different day.

      Meanwhile, our middle school is in a "hard lockdown" for the past 2 hours and still counting. Nobody is saying if it's real or just a drill.

      Gives me time to rant online!

  •  Question (none)
    Do you know how big a role environmental concerns play in accession?  I know that member states have veto over the process and I think I remember some specific spats between Austria and Hungary concerning environmental policy, but are the EU negotiations really all that concerned with environmental policy?  Particularly when the environment is compared to programs like CAP?  And what role do new member states play in further distancing the the EU from its environmental goals?  Maybe I should just read the papers you posted above...

    "Give me a f'ing banana"

    by linc on Thu Mar 09, 2006 at 07:59:11 AM PST

    •  yes, it was an issue (none)
      the accession countires had to put into their laws EU rules, and those on the environment were amongst those that were most difficult for them. There may have been transition periods. One big issue was the Slovak nuclear plant near the Austrian border, it's been a sore spot between the two countries and it did come into play during the negotiations (whether to close it or to improve its security)

      In the long run, we're all dead (Keynes)
      Read more on the European Tribune - bringing dKos to Europe

      by Jerome a Paris on Thu Mar 09, 2006 at 08:07:10 AM PST

      [ Parent ]

  •  "Free" Markets - Be careful (4.00)
    The old addages - "if it is free, it might be worth what you paid for it" and "be careful what you sak for - you might get "IT", though "IT" may not be what is what is imagined" are worth keeping in mind.

    On 3-8-05, the New England ISO basically laid out it's plan to crank up customer electricity rates for the next several years (about 15 %/yr for at least 4 years) to pay off the bad investments of those who built/installed/financed a large number of natural gas (Ngas) burning combined cycle plants. With Ngas prices far above what was projected, even in this "lull" time on the Ngas spot markets, these Ngas burners are going to be or already are money-losing operations. Maybe they are "too big to fail". Whatever. And without them,  New England can't be as wasteful with its electricity. The net effect of this is to make existing operating lower cost plants (coal-burners, old nukes, newer nukes with "stranded costs" paid off via the public) VERY profitable. And no new Ngas burners are going to get built anyway, unless the financiers of these projects either exact very high interest rates (to justify the risks) or else consume extra heaping bowls of stupid for breakfast and open up the low interest money taps.

    It seems that these "free market" - an oxymoronic term when the industry is beset by oligopic suppliers, some monopolistic ones, and the nature of electricity, which is difficult to store up, requires massive capital outlays, etc - advocates require a considreable stabilizing influence, such as a state owned power production entity in addition to a state owned/managed set of distribution ones. And the result will not necessarily be the low cost solution for time lengths of 20 years.

    Also, it allows many very wealthy an/or sadly misguided types to avoid installing wind turbines, due to possible alteration of their viewscape. Wind turbines can put a cap on the maximum price of electricity via more or less free market means. Relying on Ngas burners is a system doomed to very high prices as Ngas and oil prices start to rapidly rise in the near future (such as from the impending Hurricane saeson, or Nigerian grievances, or Iran getting the "sanction" treatment).  

    So, a "free market" system dependant on a commodity like Ngas that is anything but a free market determined price - especially for the future - is like an invitation to get stuck paying an ever increasing tab on a gambling habit. So don't bet the home on it - instead, provide competition to this "free market" so it will behave. Because if "IT" gets in the drivers seat, your in for a really expensive ride.

    DB

    •  Yup (none)
      The proposed New England "solution" is to add a premium to electric rates (about 12% per year is what I read) that will "encourage" but not "require" the energy firms to add new capacity. So the public will be required to give them more money in the simple hope that they'll decide it's better to invest that money in new capacity than to increase their salaries, or buy back stock, or pay larger dividends, or invest it elsewhere in who-knows-what.

      How would you like to have a job where people were required to pay you for services that you were entirely free not to perform? Yup, it's tough to be a power co.

      Fortunately, at least three states here are vowing to block the plan. We'll see. When deregulation went through a few years back in most New England states Vermont was the only holdout. It now has the cheapest electric rates in New England — although still high by national standards.

  •  OT? (none)
    Hey, Jerome, reading this valuable piece I instinctively (tin-foil-hattishly?) wonder if the newly founded neo-con think tanks in Europe are playing a part in this gambit?  I sure would love an update on those places.

    Talk about 5th columns.....

    •  They sure are (none)
      And increasingly, our coverage on European Tribune focuses on the bullshit they spew and which the press repeats without thought (or fully complicit). I deconstruct an article almost every day, and we comment on many more in our "European Breakfast" threads and others - I can only encourage you to come and read us - and participate - regularly!

      In the long run, we're all dead (Keynes)
      Read more on the European Tribune - bringing dKos to Europe

      by Jerome a Paris on Thu Mar 09, 2006 at 08:42:05 AM PST

      [ Parent ]

      •  thanks, (none)
        I haven't been by lately. But I surely will.

         This, btw, is a subject that would really interest kossacks, I think, given the presence of neo-s like Kristol on the board of these new orgs &, of course, the havoc they have wreaked so successfully around here.

  •  From the Oil Drum UK (none)
    or the three months October 2005 to December 2005 compared to the same period a year earlier:

    *    production of petroleum fell by 12.1 per cent;
    *    production of natural gas fell by 8.8 per cent;
    *    production of coal and other solid fuels fell by 11.7 per cent;
    *    electricity produced from nuclear sources fell by 1.6 per cent;
    *    electricity produced from wind and natural flow hydro fell by 10.4 per cent.
    (Source: Energy Trends 1.1)

    Deffeyes was right-December 2005 was PeakOil.

    As are Simmons and Baktiari:

    Oil reserve estimates were useful in the era before 'Peak Oil'. But, in the aftermath of the mighty Peak
    (as, for example, in the present 'Transition One' period), they tend to become stale and rather useless, as
    field-by-field analysis and prediction takes over (eg., Ghawar, Cantarell).
    So, it will not be long now before we will have to say goodbye to all these mesmerizing oil reserve
    figures and dump the whole reserves file into the all-encompassing 'dustbin of history'.....
    Dr. Samsam Bakhtiari is a senior expert with the National Iranian Oil Company (NIOC), with some
    35 years experience in the international oil and gas industry. He is among the pioneers of the global
    'Peak Oil' theory.

    http://www.evworld.com/...

    Everyone is wating preparing, watching to see who blinks first.

    Just like in 1914, once the orders are issued they will not
    be able to rescind them.

    Right now the internet whisper is that China is
    negotiating for Taiwan in exchange for Iran.

    James

  •  Thanks (none)
    This diary just saved me most of two days work Europeanizing a presentation I will be making in Turino at the end of April (on environment and federalism). Who needs to do work when dKos supplies all things? I was just feeling guilty about not working on it.
  •  4-Cornered (none)
    ,,,,if nuclear is encouraged, how is this going to be (i) financed, (ii) supervised and (iii) who is going to deal with the waste?

    I guess it's my responsibility to remind people about the forgotten issues of mining the shit in the first place.

    The Colorado AIM (American Indian Movement) blog has a couple very timely posts now about the issue.  One post is about an article in the Gallup Independent called,"Residents tell of mining's tragic impact".  

    The other posting is about the threat to peoples' water supply, as told by a local group called ENDAUM (Eastern Navajo Dine' Against Uranium Mining).

    These links provide a more or less clear story of the past, present, and future effects of uranium mining on REAL PEOPLE.

    Although I avoid generalizing, it is my opinion, based on world history I have learned, that European uranium will be coming from places like Niger, Australia, and other distant places, and that similar kinds of adverse mining effects will be tolerated by policymakers, just like all the other past exploitative practices have been tolerated.  And the rationales for it will be the same or similar to the ones used since time memorial when confronted with the ugliness of human mistreatment in distant places.

    What gives me the right to say all this?  Because I live in the Navajo Nation, and see it every day, but I hear very few people mention it whenever the discussion of nukes comes up in polite company.  

    The irony of it all is that right here, where the Uranium is mined, also exist 4 (soon to be 5) huge coal power plants that feed electricity to the big cities of the Western US- and turn the air around here a rich shade of sulphur brown.  At least the Mohave plant is closed down for now, thanks to such groups as the Center for Biological Diversity, the Grand Canyon Trust, the Black Mesa Trust, and others.

    To me, the only answer to wise energy use is a mix of conservation and non-renewables.  The other ways are mixes of kool-aid.

    •  WOW! (none)
      Blessings and Prayers to you Brother! The whole Four Corners, Black Mesa Tragedy has been on my radar since Ed Abbey's books about the SW. Unfortunately my radar screen is one solid blip, these days.

      And a lockdown! gosh your life is exciting, haha.

      I urge you to diary on this, hell, your post her would make a better diary than most! I'm going to subscribe.

      I know what a Sacred area that is, and want to really, deeply express my support and prayers for your stewardship and activism. There is no greater symbol, imo, of the worst part of America, and from what I've learned of The Hopi (ignorant on the Pueblo, sorry) also the best of Humanity.

      ERR, gotta stop before I get all angry again!

      I don't know your background, and as a white guy its always sensitive, for me, talking about/to Natives. But i have 'studied' in that direction and would love to talk more.

      You can't lick the system...but you can give it a damn good fondling!

      by buhdydharma on Thu Mar 09, 2006 at 09:56:02 AM PST

      [ Parent ]

      •  A good book (none)
        The currently definitive account of the uranium mining of the West US is a book by Peter Eichstaedt called, If You Poison Us, a poignant story of lies, damn lies and statistics.  Sound familiar?

        Basically, nobody ever told the miners about the consequences of handling, breathing, and building with, radioactive rocks.

        You know.... national security and all that.  Today, the victims have to jump through incredibly insulting hoops to receive any recompense provided them by congress.

        The companies behind it all have long since morphed into some other form of reptilian monster.

        And, the lockdown is over.  Someone brought a gun to the high school across the street.  Happy ending- this time!

        •  Just bought it, thanks (none)
          Always struck me, the idea of the world emerging there and the material to end it through the Bomb being mined there killing the People and the Land.

          Its like a preview of the prophecies

          You can't lick the system...but you can give it a damn good fondling!

          by buhdydharma on Thu Mar 09, 2006 at 11:34:02 AM PST

          [ Parent ]

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