As political unrest in the Ukraine continues, the European Commission is preparing to draw up contingency plans for member states on the eastern edge of the EU. Kristóf Kovács – a Commission policy officer for electricity and gas markets – explained the concept when speaking at the Energy Ireland conference.
National stress tests were proposed in the Commission’s energy security strategy, published in May. The tests are being recommended in the light of the forthcoming winter and “the energy-political difficulties with respect to those most vulnerable countries on the eastern part of the union.” Commission officials – “in co-operation with member states” – would look at the worst case scenario for cuts in energy supplies and the possible solutions. Choice, fair prices for consumers and secure energy supplies, he stated, will be the main benefits of the single European energy market.
Addressing delegates, Kovács mentioned one of the key questions facing policy-makers: How does Europe compete with the USA? Demands for higher prices in the emissions trading system have to be weighed against the impact of high prices on industrial competitiveness.
Kovács was impressed with the progress being made on harmonising rules but saw a need for more liquidity, specifically to connect Eastern and Western Europe.
Euro-sceptics and some governments will undoubtedly see the stress tests as a ‘power grab’ by the Commission. However, the stress tests are likely to be welcomed in Eastern European member states where economies can effectively be shut down by a disruption.
Four member states – Finland, Estonia, Latvia and Lithuania – are entirely dependent on Russia for their natural gas.
Likewise, Malta and Cyprus are almost totally dependent on imported oil although the construction of interconnectors – with Sicily and Israel respectively – is likely to add more security by 2020.
Ireland’s gas supply is mostly purchased from the UK but price spikes during a time of disruption underline how events in Eastern Europe can have an impact across the whole continent.