The EU Energy Union Project Delivery for the Baltic States: Energy Security Solution & Regional Cooperation Platform?

Complex, reasonable, progressive, these are the adjectives usually seen when the ambitious EU Energy Union project is mentioned. The first State of the Energy Union has been introduced only nine months after the adoption of its Framework Strategy.[1] The fast-developing project now awaits its main delivery and implementation period. Does it have the power to bring a definite solution to the Baltic States’ energy security vulnerabilities? Is it going to deepen and stimulate the regional cooperation?

Why is this project remarkable?

The EU Energy Union project in today’s form differs from the previous EU initiatives on the topic. It contains several unique selling points. The project content is built on a clear and complex vision of the European energy governance. Grounded in five well-elaborated pillars, the project unifies two eternal rivals – energy and environment.[2] Its concept is accompanied by two strategic advantages that reflect a dedication of the creators. The first advantage is a real holistic principle of the EU Energy Union project. Not being based on a top-down approach only, the project provides a notable attentive EU support. The various consultations, recommendations and assessments of the national activities are available, visibly kicked-off by the Speaking Tour.[3] The second advantage is in better financial coverage of the project. “Political backbone” of the Investment Plan for Europe [4] brings to the game a funding package up to €650 million, which is precise and structured.

Solving the energy security problems?

Conceptually, the Baltic States find answers to the crucial elements of their energy security vulnerabilities in the EU Energy Union project. Long-term threats and risks are visibly matched with the priorities of the project declared in its first two pillars: Security of Supply and Internal Energy Market. Practically, the EU Energy Union project came with an updated and reinforced version of the Projects of Common Interests (PCIs) [5], which has bigger real impact compared to the older form. If a concrete project made it to the PCIs list, states are supposed to be permissive to its realisation on their territory. New Baltic Energy Market Interconnection Plan (BEMIP) expanded the scope of prospective solutions. 2015 version contains 5 natural gas pipelines, 3 Liquefied Natural Gas (LNG) terminals, 1 storage facility in Latvia, 4 high-voltage electricity lines, 2 electricity storages, 1 compressor station; all under the name “Baltic Integration and Synchronisation”.[6] While LitPol Link I. [7] is ready to be used, GIPL [8] is going to be launched only in 2019. The EU Energy Union project is definitely to speed up the process. When all these projects start operating, the Baltic States’ energy security problems shall be solved. Moreover, an inconvenient energy security situation gives the Baltic States an argumentation advantage when applying for EU funding. European Commission’s close monitoring of the implementation and proposing corrective measures where and when needed, seems to be an added value.

On the other hand, the EU Energy Union project or not, the Baltic States have already taken actions to solve their dependent “energy island” situation. According to the 2015 EU Energy Union State Factsheets, the Baltic States quantitatively progressed in the interconnection capacity for electricity (from 4% to 10%) and increased their general energy security of supply by launching or constructing many diversification projects in the gas and electricity markets (Baltic Connector [9], GIPL, EstLink [10], LitPol).[11] The bulk of EU funds went to BEMIP projects addressing the Baltic States’ urgent needs since 2008. But it is just to say that many projects have been inactive or slow. The dominant reasons for that are: time intensive project realisations, lack of political will, financial complications.

Stimulating the Baltic regional cooperation?

The Baltic States have delt with the energy issues more or less individually in the past (shut-down of Ignalina in Lithuania, the EU emission regulation related to oil shale-fired power plants in Estonia, harsh quarrels about the placement of LNG terminal). Despite the existence of regional platforms, the development of common projects was rather slow, going along with a lack of political will to change it. Positively, the Baltic States are united at least in their wish to synchronize the electricity power networks with the EU, especially since their power transmission systems are still synchronized and controlled by Moscow.[12] In contrast, the EU Energy Union project requires the regional synergy co-operations, while reassessing the current set-up. It encourages states to think in broader terms to satisfy their own energy needs. It calls for the logic to remove the barriers in a space where many actors do not possess the resources they need. The complicated dynamics of creating a single energy market mostly caused by pricing problem is promised to be removed by the EU Energy Union.[13] All in all, the project features may increase the trust among the Baltic States and their ability to strive for a common good.

The Baltic States officially supported the vision of the EU Energy Union project. The Baltic Energy Alliance (BEA) was created by Latvian Energy Efficiency Association (LATEA) as a potential centre of excellence contributing to the EU Energy Union project implementation and assisting on shaping energy security policies.[14] The fact of its initiation in Latvia is positive, since Latvia was considered the weakest regional link, unreliable partner in terms of energy security and also the most vulnerable and dependent Baltic State. It is necessary to ensure that this initiative has a real impact, to not let it turn into another blank and powerless institution. BEA has a chance to prove its position by facilitating professional discussion about the impact of Nord Stream II. in the Baltics. Significantly, political announcements often differ from the real acts, but they are a precondition of at least a minimal commitment. We can presume the Memorandum of Understanding with a modernised and strengthened BEMIP Action Plan, signed between the EC and the Baltic Sea region states, as a demonstration of political will, backing stronger energy cooperation in Europe. The document is well-structured in the six areas of action, naming the projects to be developed.[15]

The implementation phase is expected to come in 2017, when all the EU Energy Union legislation packages should be ready. Despite the demonstrated political will, the Baltic States may be not willing to adopt these policies in practise. The negotiation process can contain some clashes; the results to be achieved in such a long-term perspective are not attractive for the politicians. The Baltic States, awared what is needed to do, are still not used to “speak with one voice”. Apart from the EU Energy Union project strategy and legislative proposals, the real implementation cannot be enforced or delivered from the supranational level. There are also several internal asymmetries and external challenges to be mentioned. While Lithuania has a separate Ministry of Energy, Estonia has only one department of the Ministry of Economic Affairs and Communication that deals with the energy issues.[16] Latvia legally approved liberalization of the natural gas market.[17] However, practical implementation of this legislation is still seen very sceptically. Moreover, the external challenge, under the name Nord Stream II, still is in the play, despite the remarks from the Baltics about violating the European law.

Conclusion

The EU Energy Union projectaddresses a great deal of the Baltic States energy security vulnerabilities. It unlocks the space for potential practical cooperation among these states, although only on the rational pragmatic level. It is important to what extent the opportunities of this project are used in the future. Given the fact, that upcoming years will bring project delivery and implementation, existing and working regional cooperation is a crucial need. The Baltic States can be driven by the EU funding and monitoring to find the overlaps in their energy interests and political will to raise the united voice towards the energy governance. The Baltic States’ governments should write the Long-term national Energy and Climate Plans [18] in the regional spirit and not conserving them purely in the national view. This will be a test of the real impact of the Memorandum of Understanding and the reinforced BEMIP Action Plan.

The inspiration could be taken from another regional group, similar in size, real power and energy security issues – V4. For instance, IVF, an international organisation, serves as a financial instrument for the regional development and for the support of a civil society, nowadays with highly internationalized spectrum of donors. Looking at the Central and South Eastern Europe Gas Connectivity (CESEC) group for the natural gas interconnection of the Central and Southeastern Europe also should not be thrown away.

If the EU Energy Union project helps to eliminate the vulnerabilities by cumulating the common Baltic States’ energy action in a (usual) regional vacuum, I say the result was delivered. Now let’s wait for the first Energy Union legislation package.

[1] “State of the Energy Union,” European Commission, accessed November 23, 2015, http://ec.europa.eu/priorities/energy-union/state-energy-union/index_en.htm

[2] “Energy Union and Climate,” European Commission, accessed November 24, 2015, http://ec.europa.eu/priorities/energy-union/index_en.htm

[3] The EU Energy Union “Speaking Tour” is a set of national visits held by EU Commissioner Sefcovic to present the benefits that project offers to Europe.

[4] The EU Energy Union project was called “the political backbone of the Investment Plan for Europe” by EC president Juncker.

[5] PCI is a name of the list of key energy infrastructure projects drawn up by the EC. These are essential for completing the European internal energy market and for reaching the Union's energy policy objectives of affordable, secure and sustainable energy. More details on: https://ec.europa.eu/energy/en/topics/infrastructure/projects-common-interest

[6] „Memorandum of Understanding on the reinforced Baltic Energy Market Interconnection Plan ‘BEMIP’,” European Commission, accessed November 25, 2015, https://ec.europa.eu/energy/sites/ener/files/documents/BEMIP%20Memorandum%20of%20Understanding_2015.pdf

[7] “Lithuania-Poland electricity interconnection I.” is a first milestone of the LitPol Link, the power transmission interconnection between Poland and Lithuania.

[8] “Gas interconnection Poland-Linthuania” (GIPL) is a planned natural gas pipeline connecting the Baltic States with Poland, funded by the EU.

[9] “Baltic Connector” is a proposed natural gas pipeline between Estonia and Finland, which would increase energy security on both sides of the Gulf of Finland.

[10] “EstLink” is a set of submarine power cables between Estonia and Finland that integrate Baltic and Nordic energy markets.

[11] “State of the Energy Union,” European Commission, accessed November 23, 2015, http://ec.europa.eu/priorities/energy-union/state-energy-union/index_en.htm

[12] David Mardiste and Gederts Gelzis, “Baltic States look north to cut final energy cord with Russia,” Reuters.com, November 20, 2015, accessed November 26, 2015, http://www.reuters.com/article/baltic-russia-electricity-idUSL3N13F3AI20151120

[13] “Smerom k Energetickej Únii,” Euractiv.sk, updated December 02, 2015, accessed December 04, 2015, http://www.euractiv.sk/energetika/zoznam_liniek/energeticka-politika-eu-000335

[14] “The concept of Baltic Energy Alliance presented to support the fundamentals of EU Energy Union in Baltics,” The Baltic Course, October 27, 2015, accessed November 27, 2015, http://www.baltic-course.com/eng/energy/?doc=112179

[15] „Memorandum of Understanding on the reinforced Baltic Energy Market Interconnection Plan ‘BEMIP’,” European Commission, accessed November 25, 2015, https://ec.europa.eu/energy/sites/ener/files/documents/BEMIP%20Memorandum%20of%20Understanding_2015.pdf

[16] Ministry of Energy of the Republic of Lithuania. https://www.enmin.lt/en/ Ministry of Economic Affairs and Communications of Republic of Estonia. https://www.mkm.ee/en/ministry-contact/introduction-ministry

[17] “Saeima committee in Latvia agrees on gradual gas market liberalization,” The Baltic Course, February 13, 2014, accessed November 28, 2015, http://www.baltic-course.com/eng/energy/?doc=87724

[18] The national states are invited to write their Long-term National Energy and Climate Plans as a part of the EU Energy Union Governance. More details on: http://ec.europa.eu/priorities/energy-union/state-energy-union/docs/annex2-guidance-communication-state-energy-union_en.pdf