June 9, 2014
The situation in Ukraine is causing the European Union (EU) to quickly rethink its energy security policy and reduce its dependence on Russian gas. As detailed in our earlier alert, the European Council recently took unprecedented steps to expedite its energy agenda and called on the European Commission (the EU’s executive branch) to develop a course of action.
On May 28, the European Commission issued its comprehensive European Energy Security Strategy and an underlying study. In line with the council’s recent recommendations, the commission’s strategy focuses on diversifying external energy supplies, upgrading energy infrastructure, developing domestic resources and unifying the EU’s energy policy.
At the outset, the commission proposes immediate “stress tests” to simulate a disruption of the gas supply in a given area. From these tests, authorities can assess where vulnerabilities exist and accordingly implement coping strategies before winter. This most likely will involve the installation of reverse-flow mechanisms on existing pipelines to allow the delivery of gas in either direction, depending on need.
For the long term, the commission listed several proposals covering key areas, including:
To facilitate the achievement of these goals, a list of 250 projects needed to strengthen interconnectivity and otherwise develop energy infrastructure (including the 33 that the commission identified as critical) are eligible for €5.85 billion ($7.96 billion) in EU co-funding under the new Connection Europe Facility (CEF) program. In addition, these projects will enjoy an expedited permitting process, and the commission has vowed to intensify its support and help accelerate their implementation by bringing together relevant stakeholders.
The heads of member state governments will discuss the commission’s proposals at the European Council’s next meeting on June 26. They are expected to be adopted and swiftly set in motion.
As Europe’s plans become more defined, so do the opportunities for U.S. companies to take part in the transformations of the EU energy market.
Questions? Ask any member of the McGuireWoods energy team in the United States and Europe. These attorneys have the knowledge, experience and connections to advise and assist you in the changing European energy landscape.
The full text of the proposed European Energy Security Strategy is available online.