Sometimes a common goal is not enough to unite a group of individuals. A leaked draft copy of the Group of Eight (G8) industrialized nations’ “Action Plan”, intended for publication in St Petersburg on July 16, states: “We believe that the development of nuclear energy would promote global security.” The draft plan calls for the “development and introduction of innovative nuclear power systems with natural safety barriers” that can prevent nuclear material from being used to create weapons and meet environmental concerns.
The statement was a reaction to the interruptions of Russian gas supply to Ukraine and Western Europe. The interruptions and continued high price of gas has highlighted Europe’s dependence on imported gas and has thrust energy security into the spotlight. But whether nuclear is the solution to improved security has divided members of the G8.
While the US, France and Canada have all backed efforts to get the G8 to endorse an expansion of nuclear power, Germany, Great Britain and Japan have opposed the G8 adopting this as formal policy. A spokesman for the German government said that the paper, which appeared to be drafted by the Russians, “does not represent Germany’s position at all”. He added that the proposals “were not acceptable to Germany”. At the same time environmental groups have also criticised the G8’s plan pointing out that it focuses solely on supply with no discussion of energy efficiency and conservation.
Meanwhile Russia defended its record as a reliable energy supplier. Alexander Medvedev, head of the export arm of Gazprom reassured that Gazprom was a commercial organization and not an arm of the Russian state. He was quoted in the press as saying: “Gazprom operates as a commercial organization according to international rules of commerce…”
You could argue that while Europe needs Russia, Russia also needs Europe. The EU imports around 30 per cent of its gas needs from Russia while Russia gets 20 per cent of all export earnings from selling gas to Europe. Taken in isolation, it is debatable who needs whom more. But we should not forget that it is a global market and that Russia does have options. Russia recently agreed to build two natural gas pipelines to China and become one of the country’s biggest suppliers within the next decade. Potentially, this puts Russia in a position where it could play Europe off against China. Russia recently said it would fulfil its current obligations to Europe. Yet interestingly, Sergei Kupryanov, a spokesperson for Gazprom hinted: “…future increases in gas supplies to Europe – in response to its growing demand – will be subject to arbitrage between China and European countries.” Russia said first gas would flow to China as early as 2011.
At this time Europe’s position will be severely weakened and it should aim to be already well down the road in implementing its strategy to secure power supply. If nuclear is to be the way forward, then Europe has to act now. Nuclear is a reasonable option and should come into the mix but environmentalists are correct in saying we must not forget that efficiency and conservation are also important and must be actively pursued.
Unfortunately, energy is all too often used as a political beating stick, or as a tool of “negotiation” between countries. The result is that some countries will develop a protectionist stance to their markets and will strive to develop national champions. We have recently seen evidence of this in France and Spain. The European Commission is asking Paris to explain its role in merging Gaz de France with Suez, and blocking a takeover of Suez by Enel. The Commission is also asking Spain to explain why it is fighting to keep Endesa from being taken over by Eon.
Actions like these fly in the face of the European ideal of creating a pan-European market capable of acting as a single bloc. José Manuel Barroso, European Commission president recently challenged European leaders asking: “Do we or do we not have the political will to forge a common European strategy on energy?”
At the recent summit in Brussels, ministers pledged to support a common energy policy but it will be no surprise when some behave exactly to the contrary. Ultimately, it is this die-hard protectionism that will keep Europe on the back foot when negotiating with the likes of Russia on energy supply.
Each member of the G8 would do well to remember that united we stand, divided we fall.
Publisher & Editorial Director