National interests have stood in the way of regional, all-European solutions that everyone can benefit from. This was the message conveyed by Professor John Driffill, Birkbeck College, University of London, who presented arguments for a European Energy Union at the conference at IFN. To overcome price inefficiency, increase competition in energy markets, and reduce greenhouse gas emissions, member states must increase collaboration, said Driffill. The subsequent discussion saw participants including researchers in the field of energy, experts from the energy intensive industry as well as relevant authorities and organizations.
John Driffill at IFN during the presentation of the chapter on energy in 2015 EEAG Report on the European Economy.
In the 2015 EEAG Report on the European Economy, published by the CESifo in Munich, professor John Driffill and his co-authors describe how the current EU-energy policy is poorly coordinated and that major efficiency gains would be obtained through closer cooperation between member states. The authors argue that an internal European energy union would allow trade gains and risk diversification.
Among the participants were (from left) Axle Nekham, Swedish Agency for Economic and Regional Growth (Tillväxtverket), Mohammad Reza Hesamzadeh, KTH, Julio Saavedra, CESifo, Marie Alpman, Ny Teknik, Magnus Henrekson, IFN and Sten Nyberg, Stockholm University.
During Monday's roundtable, which was conducted at IFN, Driffill pointed out areas in which European energy policy has failed and the challenges its member states face today. Among other things, he mentioned that the multiple goals of a secure, environmentally friendly and competitive energy supply that have been laid down by the European Union are problematic because they are in some respects contradictive. For example, renewable energy sources may be environmentally friendly, but are neither secure nor cheap. “Why discuss these three goals”, wondered Mats Bergman, professor at Södertörn University College. Bergman explained that it would be better to focus exclusively on reducing carbon emissions.
In the picture Katarina Areskoug Mascarenhas, head of the European Commission Representation in Sweden and Mats Bergman, Professor, Södertörn University College.
Participation by the European Commission
The discussion was moderated by Associate Professor Thomas Tangerås, IFN. Tangerås noted that Driffill’s report, unlike most reports, identifies challenges without giving an overconfident solution. Catherine Areskoug Mascarenhas, Head of the European Commission Representation in Sweden, agreed that different national interests currently contradict each other. As a solution, she suggested increased cooperation between member states. Within the EU an energy regulation is in place at the European level, but in reality there are 28 national regulations. The EU argues that this is unsustainable. Furthermore, the European Commission proposes an improvement of the infrastructure through increased interconnection between countries.
Martina Högberg, Deputy Director Minsitry of Environment and Energy, was one of the about 25 participants specially invited to participate in a discussion about Europe, EU and energy policies.
Discussion on policy issues
The discussions also covered various other policy issues. Participants discussed how to move away from poorly coordinated national policies, the future of the European carbon market (EU-ETS), and the reliability of Russia as an energy supplier to Europe. Mats Persson, director of trading and portfolio optimization, Fortum, explained that although trade with Russia is a politically charged issue, Russia has over the years proven to be a dependable supplier. He explained that energy exports to Europe remain an important Russian income although Russia today is trying to increase exports to the East. Still, this is a transformation that will take some time.
Among the participants (from left) Therese Hindmark Persson, Swedish Energy Markets Inspectorate (Energimarknadsinspektionen), Klaus Hammes, Swedish Energy Agency, Monika Hjeds Löfmark, SIEPS, Chloé Le Coq, Stockholm School of Economics, Lars Joelsson, Vattenfall AB, Henrik Horn, IFN, and Jesper Stärn, Bloomberg.
Objections to the Energy Union
Among the approximately 25 participants some skepticism was uttered in regards to a possible energy union. Today electricity prices vary greatly between European countries due to differences in investments. The question was raised as to why countries that have made large investments and subsequently have low electricity prices should not benefit, but "hand over profits" to other member states. Lina Palm, SCA, explained that Sweden is an example of a country that would suffer from this dilemma.
Text: Fredrik Andersson