Image: ©European Union

The year 2022 was particularly eventful for a variety of reasons. It was a momentous year, one in which many of the things we took for granted — starting with peace in Europe — have faltered. As the year draws to a close, I would like to provide an overview of how this year has been significant for energy and Europe.

The European Union had not needed to establish a common health policy until the emergence of Covid-19, and did not deem a Europe-wide energy policy to be important until Russia’s invasion of Ukraine posed a risk to the energy safety of the continent.

It is paradoxical and surprising that, despite the fact that the EU’s origins lie in the energy sector (with the ECSC – European Coal and Steel Community), we have not had a common energy policy for the last thirty years. The only areas where there has been some degree of cross-sector cooperation have been around environmental and competition issues.

Security of supply was considered to be assured and as such was a key component omitted from the European equation: each country had their own individualised energy mix, which varied significantly due to historical elements, geography, and other contributing factors. Germany selected renewable energy sources while maintaining a significant dependence on coal, and also utilising gas. France’s route to energy security was highly reliant on nuclear power. Spain took a unique approach, creating a diverse mix that strongly prioritised renewables whilst utilising natural gas for backup support for those sources as well as for domestic and industrial purposes.

In the context of gas supply, each country has traditionally adopted differing approaches due to its particular geopolitical environment.

Germany chose to supply its gas demand from Russia, at very competitive prices. Spain, being a peninsula and dependent on energy from other countries, saw itself as an “energy island”, like Japan or the United Kingdom, although it wasn’t actually an island.

Spain is a country that has always been cut off from the rest of Europe, but instead of seeing this as a weakness, it has used this to its advantage. 50 years ago, Spain decided to create a network of gas infrastructure that would allow it to receive gas from both North Africa by pipelines and anywhere else in the world by ship. To ensure a diverse and secure energy supply, Spain enacted the Hydrocarbons Law over 25 years ago. This law limits imports to no more than 60% of total gas from one country; this measure was updated in 2007 to restrict imports to 50%.

We can now comfortably say that Spain has achieved a greater degree of energy security, in comparison to other less secure European nations, thanks to its diversification efforts.

Across Europe, until a few months ago, each nation had different policies and regulations governing its own energy sector, causing fragmentation throughout the region, but on the whole, a Europe that felt secure.

On February 24, however, Russia invaded Ukraine, completely upending Europe’s status quo. Until then, the continent had not needed a common energy policy, but suddenly it became apparent that one was necessary. The European Commission swiftly formulated its response, the REPowerEU plan, and released an initial communication on March 8.

This European roadmap lays the foundation for a true Europe of energy around three axes: the first is decarbonisation, an area where there has been significant joint work and European leadership, with schemes such as the Green Deal or Fitfor55. The second is security of supply, which was not on the agenda until then and has now become a priority. And the third area is energy prices, which have begun an unsustainable escalation in Europe, with strong social and economic impacts on citizens and industry.

We live in a time of great geopolitical upheaval, and the old energy trilemma — security of supply, competitiveness, and sustainability — is more relevant than ever. We can never take any of these three corners for granted, and must always be mindful of the interplay between them.

REPowerEU has established objectives that are both ambitious and necessary. These include a goal of reaching 20 million tonnes of renewable hydrogen consumption by 2030, 10 of which should be produced in the EU. Additionally, there is a pressing need to reduce dependence on Russian gas following the Nord Stream 1 and 2 pipelines incident; this reliance should eventually be eliminated altogether by 2030.

The European Union, in collaboration with all relevant stakeholders in the sector, has taken a series of logical steps in recent months, which are proving successful. One of these significant advances was the adoption of a target for filling Europe’s gas storage facilities, which have been successfully met with levels well above 90%.

In recent weeks and days, we have seen how the Councils of European Energy Ministers have worked to reach an agreement on a gas price cap, after intense negotiations in which Spain has played a leading role. This is an example of how Europe is making great strides in addressing complex issues, despite differing opinions. With the adoption of this exceptional measure, Spain is very much a pioneer and has set an example for the rest of Europe. It is clear that achieving energy harmonisation across Europe will not be an easy task. However, the member countries of the EU, as well as businesses, need to seize this opportunity to agree on some key principles. By taking a long-term strategic approach, all parties can work together to create a shared vision for the future.

Europe faces a significant challenge in weaning itself off Russian gas, and all potential solutions must be considered. This includes promoting greater integration of European energy systems, with interconnected gas, electricity and hydrogen networks. Interconnections and future corridors such as the H2Med hydroduct are vitally important for Europe. In particular, for Spain these connections are indispensable in order to achieve a greater level of involvement and contribution towards ensuring Europe’s security of supply. This topic is important enough to warrant further discussion in a separate post.