Put Energy at Top of Obama's Europe Agenda

March 25, 2014 Topic: Energy Region: Europe

Put Energy at Top of Obama's Europe Agenda

Do it for the environment. Do it to break Russia's grip.

Europe’s dependence on Russian natural gas is one of Putin’s main points of leverage over Europe as Western leaders consider economic and diplomatic sanctions.

Fortunately, America and its European allies together can take a series of strategic actions that can loosen Russia’s grip on EU gas supplies over time, while advancing transatlantic economic and environmental goals. Comprehensive measures by the Western powers now would also send a strong message to Russia—and to others who are watching U.S. actions closely—that the United States and Europe are ready and determined to act firmly, and for as long as it takes, to respond to Russian provocations, and to increase Europe’s energy resiliency as a strategic priority.

To that end, the United States and Europe should announce an energy plan to reduce Europe’s dependence on Russian energy as a top goal of President Obama’s meetings with European leaders this week.

Moscow’s dominant energy position has been a major element in its relations with its European neighbors for decades and, especially, since the breakup of the Soviet Union. Russian heavy handedness has often backfired, most famously, after Moscow’s ill-considered energy cutoffs in 2006 and 2009, which served to wake Europe up to the need to reduce its dependency on Moscow. Nonetheless, roughly 80 percent of Russian gas imported to Europe still flows through Ukraine, and Moscow continues to exploit this near monopoly position. Just last week, Russia indicated it plans to nearly double the cost of gas to Ukraine, when present contracts expire.

Moscow has worked avidly to prevent alternative energy supply routes and sources, whether through open competition or subterfuge. Russia has made it a priority, for example, to thwart Central European efforts to create a regional energy market. Russia is also widely believed to be working behind the scenes to finance and exploit anti-shale gas sentiment in parts of Europe.

Alternative supplies exist if the United States and the EU help facilitate access to them and spur needed investment. Under secretaries Clinton and Kerry, the United States has reorganized the State Department’s energy diplomacy, focusing both on diversifying sources and on supporting the construction of pipelines from vast supplies in Central Asia through Turkey to Southern Europe. Large gas supplies in North Africa, including Egypt and Libya, can also fill out supply and help provide needed revenue for those countries.

In the near term, the U.S. energy envoy, who just returned from Kiev, said that the United States is working to provide pipeline access from eastern and central Europe to Ukraine in the short and medium term.

The administration has also begun to approve licenses to permit U.S. LNG exports to countries that presently lack free trade agreements with the United States. Under present law, such exports are barred without approval by the Department of Energy. The administration can do more by announcing in Europe that the president will use his executive authority to speed approval of applications to export natural gas to allies and others in light of the current crisis. It is true that industry might ship some of these supplies to higher priced markets in Asia. Even so, overall gas supplies available to Europe will still be increased as resources from the Middle East and North Africa are freed up, and allies, who have been advocating for such a move, will see such an announcement as a strong signal of America’s commitment to strengthening transatlantic energy security.

There is also much Europe can and should do on its own. It can begin by seeking to develop European shale gas resources more systemically. Germany, according to one recent study, may have shale resources that by 2030 could displace its Russian imports. Poland, the UK, and, especially Ukraine are believed to have large shale gas reserves, although industrial-scale production of shale in Europe is still speculative, and is likely a decade or more away. The United States has a role to play by offering technical assistance, promoting loans through the international banks, and by sharing—and practicing at home—best environmental practices in domestic shale production.

Increasing gas supplies to Europe can also help America and the EU advance their shared goal to cut greenhouse-gas emissions. Right now, Germany, the United Kingdom, and the Netherlands are three of the top four destinations for U.S. coal, which has 50 percent higher carbon-dioxide emissions than natural gas. Also, unlike coal and nuclear power, natural gas is critical to integrating more renewable energy into electricity grids, since it allows rapid substitution for wind and solar when these intermittent sources are unavailable. And Russia’s Gazprom is notorious for “venting” huge amounts of unburned gas directly into the atmosphere as methane, which is twenty-three times more powerful as a greenhouse gas than carbon dioxide.

None of these actions, alone, will eliminate Russian leverage over EU gas supplies. But taken together they can alter the current state of affairs in which Russia’s natural-gas exports are an under challenged component of Moscow’s foreign-policy power, and a chief source financing Putin’s current policy of aggression.

By taking these steps, President Obama can reinforce his foreign-policy leadership, send a message of resolve to Moscow and the world, and reaffirm the strength of America’s relationships with its most important allies.

Paul Bledsoe, a member of President Clinton’s staff on climate, and Lee Feinstein, President Obama’s first Ambassador to Poland, and a former principal deputy director of Policy Planning at the Department of State, are senior fellows at the German Marshall Fund in Washington, DC.