External Partners in the EU’s Energy Transition: New Dependencies or Similar Challenges?
Volume editor Judyta f iedin
Volume editor J udyta fiedin
external partners in the eu ’s e nergy
external partners in the eu ’s e nergy
New Dependencies or s imilar Challenges?
New Dependencies or s imilar Challenges?
College of europe in natolin WarsaW 2025
College of europe in natolin WarsaW 2025
Natolin Nests Series vol. 3
External partners in the EU’s energy transition: New dependencies or Similar Challanges?
AUthorS:
volUmE Editor:
ProofrEAd by:
PUbliCAtioN CoordiNAtor:
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dESigN ANd tyPESEttiNg:
PUbliShEr’S rEviEwErS:
PUbliShEd iN PolANd by:
Eric valdivia villanueva, fabio indeo, Jakub bednarek, Jarosław Pietras, Nicola mellere, Pablo Pastor vidal, Sébastien théron, tomasz obremski, Urszula Szalkowska Judyta fiedin
Judyta fiedin
dr barbara bobrowicz, College of Europe in Natolin
College of Europe in Natolin maja grodzicka
dr beatriz martinez romera, dr Anna herranz-Surrallés
College of Europe in Natolin www.coleurope.eu www.natolin.eu
funded by the European Union. views and opinions expressed are however those of the author(s) only and do not necessarily reflect those of the European Union or the European Education and Culture Executive Agency (EACEA). Neither the European Union nor EACEA can be held responsible for them.
Volume editor Judyta f iedin
external partners in the eu
’s
e nergy
New Dependencies or s imilar Challenges?
Natoli N Nests s eries vol. 3
SerieS editor dr BarBara BoBrowiCz College of europe in natolin
Dear Students of the Climate and Energy Transition Nest, David Sassoli Promotion 2022/2023, congratulations on a timely contribution that reflects your engagement with the real-world challanges of Europe’s evolving energy transition. Stay engaged.
e wa ośnie C ka-tame C ka, v i CE - rEC tor of th E Coll E g E of E U ro PE
foreword, Eric Valdivia Villanueva, Foreword
part i internal ChangeS in the eu Following the ruSSian inVaSion oF ukraine
Chapter 1. Eric Valdivia Villanueva, The paradox of the EU’s energy transition: Between old and new (inter)dependency pathways
Chapter 2. Fabio Indeo, The vulnerability of the EU’s reshaped energy security: The unsolved knot of import dependence
Chapter 3. Sébastien Théron, ‘Industry Fit for 55’? Assessing the path towards an EU solar industrial policy part ii the eu and itS neighbourhood
Chapter 4. Pablo Pastor Vidal, New energy partnerships, old colonial ties: Why European energy deals are not new for the southern neighbourhood
Chapter 5. Nicola Mellere, EU energy governance in the Eastern Neighbourhood: Balancing energy security and decarbonisation goals amid potential EU integration
Chapter 6. Jakub Bednarek, LL. M., The Carbon Border Adjustment Mechanism in the light of the right to development
Chapter 7. Jarosław Pietras, The role of European climate and energy diplomacy in promoting international cooperation on climate change. Normative Power Europe in action
Chapter 8. Tomasz Obremski, External partners in the EU’s energy transition: new dependencies or similar challenges?
Chapter 9. Urszula Szalkowska, The EU’s intentional and unintentional impact on third countries’ energy, environmentaland climate policies
Since 2018, the Natolin Energy and Climate Nest has aimed to provide a balanced and comprehensive understanding of the role of energy in global politics and environmental sustainability. Our mission encompasses the critical examination of energy policies, the dynamics of energy markets, and approaches to climate change. The Nest is committed to integrating academic study with practical experiences, including participation in major conferences, professional encounters with energy experts, and engagements with a variety of energy and climate stakeholders. The approach is to equip students with a well-rounded perspective that recognises the complexities of transitioning away from fossil energy and the socio-economic considerations involved. By engaging with diverse topics such as green finance and energy and climate governance, as well as specific case studies such as Ukraine’s energy sector, Natolin Energy and Climate Nest strives to foster informed discussions and research that contribute to balanced, forward-thinking learning in the fields of energy and climate.
Mentor of the Natolin Climate and Energy Transition Nest
Artur Lorkowski
Source: Włodzimierz Wasyluk / Polska Agencja Fotografów / Forum
foreword
by vAldiviA villANUEvA EriC
The cohort of students of the David Sassoli Promotion (2022/2023) arrived at the College of Europe in Natolin during a pivotal time in European history, marked by Russia’s invasion of Ukraine on 24 February 2022 and the subsequent energy crisis that impacted the whole continent. In the vicinity of the Natolin Campus, a billboard exhibited an image of an electric transmission tower, its shadow cast in the form of a rifle. This visual was accompanied by a message from the Polish Electricity Association, which read: ‘Wysokie ceny energii to też jego broń’ [High Energy Prices are his [Putin’s] weapon as well]. The initiative formed part of an effort to combat Russian disinformation and to raise awareness of energy efficiency in Poland. Throughout Europe, governments issued a series of recommendations aimed at mitigating the economic disruption caused by energy weaponisation. Energy emerged as a pivotal issue in debates and policymaking processes at the heart of EU institutions and across European capitals.
In this context, a motivated group of Natolin students decided to convene as members of the Natolin Climate and Energy Transition Nest in the early weeks of the academic year, to facilitate discussion and collaboration on student-led projects related to energy, climate change and environment. The Natolin Nests function as distinctive platforms that bridge academic instruction and research, driven by student contributions and supported by external partners and the College of Europe in Natolin.
In addition to a number of initiatives that were organised throughout the academic year, and building upon the efforts and legacy of previous Natolin students, the Sassoli cohort at the Nest conceptualised the plan for organising a new, fourth edition of the annual student-led Natolin Energy Conference. This conference was envisioned as a pivotal platform that would bring together academics and experts from diverse European institutions. The discussions held during this conference were meticulously catalogued, resulting in the creation of an interdisciplinary compendium of articles. The objective of this initiative was to disseminate the insights and reflections gathered to a broader audience, thereby ensuring the dissemination of valuable knowledge and ideas. The vision articulated in these pages is a testament to the commitment of the Sassoli cohort to continue the legacy of the student-led Natolin Energy Conference.
The Natolin Energy and Climate Nest members collaborated as a cohesive team to ensure the successful culmination of the conference. The members of the Nest were involved in every stage of the conference’s organisation, from the selection of the conference theme and the design of its visual identity, to the drafting of the call for papers and the creation of content for the social media campaign aimed at promoting the event. The members of the Nest committed their time and effort to transform the initial concept into a tangible reality.
The theme of the conference was ‘External Partners in the EU’s Energy Transition: New Dependencies or Similar Challenges?’. The event invited students, researchers and energy professionals to present their findings on the changes in the EU’s climate and energy policy following the 2022 energy crisis, its external energy engagement with neighbouring countries, and the global impact of these policies on nations and regions around the world. On 22 June 2023, the papers constituting this collection were presented by their respective authors and discussed with their fellow panellists and the audience. The Conference proceedings are available on the College of Europe Natolin’s YouTube channel,1 offering access to the insightful discussions and presentations that formed the foundation of the nine chapters of this book divided into three Parts.
Part I, ‘Internal changes in the EU following the Russian invasion of Ukraine’, examines changes in the EU climate and energy policy in the context of the respective energy crises, and comprises three chapters.
In the opening chapter, Eric Valdivia Villanueva puts forward the argument that the EU must implement a comprehensive overhaul of its energy system in order to effectively combat the ongoing energy crisis. This overhaul, as he asserts, must involve a strategic pivot towards the promotion of renewable energy sources. However, it is crucial to recognise the emergence of dependencies on imported critical raw materials in this process. Linking this contemporary predicament to past energy crises, Villanueva issues a cautionary note, emphasising the potential for new global interdependencies to hinder the EU’s energy independence.
In Chapter 2, Fabio Indeo explores alternative natural gas suppliers to replace Russia, including North African, Eastern Mediterranean, Azerbaijani and Qatari sources. He identifies infrastructure and supply chain hurdles, including LNG and pipeline projects, and considers the role of hydrogen in the EU’s decarbonisation efforts.
In the third chapter, Sébastien Francois Théron analyses the EU’s reliance on imported photovoltaic (PV) technology, despite its leading role in solar capacity expansion, and notes a shift towards integrated solar policies that consider supply chains, with EU institutions and member states aligning industrial and energy transition goals.
1 See College of Europe Natolin, ‘Natolin Energy and Climate Nest Conference: “External Partners in the EU’s Energy Transition”’ (22 June 2023) <https://www.youtube.com/watch?v=8SMq4ImGUxY&ab_channel=CollegeofEuropeinNatolin> accessed 17 February 2025.
The second part of the present volume, entitled ‘The EU and its Neighbourhood’, comprises two chapters that analyse countries in the EU’s southern and eastern neighbourhoods. Chapter four, written by Pablo Pastor Vidal, critiques the EU’s post-colonial approach to energy relations with the southern Mediterranean countries under the REPowerEU initiative, arguing that this hinders equitable partnerships and sustainable development.
In Chapter 5, Nicola Mellere discusses how the Russian invasion of Ukraine led to a shift in the EU’s focus from climate goals to energy security. This shift resulted in the resurgence of energy diplomacy, while simultaneously underscoring the challenges associated with exporting EU climate rules to neighbouring countries grappling with energy policies. Additionally, Mellere issues a warning that the Carbon Border Adjustment Mechanism (CBAM) could potentially exacerbate existing issues.
Part III of the present volume, entitled ‘The global effects of EU policies’, comprises four chapters that examine the global effects of the EU’s climate, energy and environmental policies. The chapters focus in particular on the CBAM, but also examine other ways in which the EU affects other countries in different regions.
In Chapter 6, Jakub Bednarek critiques the CBAM for potentially violating the development rights of least developed countries reliant on exports to the EU, suggesting exemptions or compensatory programmes to mitigate negative impacts, emphasising these nations’ minimal contribution to global carbon emissions.
In Chapter 7, Jarosław Pietras examines the EU’s climate and energy policies through the lens of Normative Power Europe (NPE), arguing that while internal cohesion enables global leadership in climate policy, internal struggles in energy policy undermine its external influence.
Tomasz Obremski emphasises the EU’s utilisation of initiatives such as the Global Gateway and the Just Energy Transition Partnerships to exert influence over ASEAN’s energy sector through value-based cooperation. However, he also acknowledges the existence of disparities between policy ambitions and practical implementation, a phenomenon attributable to the economic realities of Southeast Asia.
In the ninth chapter, Urszula Szalkowska explores the manner in which EU policies, such as the CBAM, influence the energy strategies of third countries. She employs case studies of Zimbabwe and Curaçao to illustrate the divergent impacts of EU regulatory influence,
contrasting the adoption of EU expertise by Curaçao and the rejection of such expertise by Zimbabwe.
We would like to express our profound gratitude to all those who contributed to the success of the 4th Natolin Energy Conference and the present publication. We would like to extend a special acknowledgement to H.E. Ambassador Artur Lorkowski, Barbara Bobrowicz and Alvaro Garrote Fuentes, who generously dedicated innumerable hours to our project, offering their invaluable insights and contributions to our ideas for the conference and guiding us through the intricacies of organising a student-led initiative of such magnitude. We are especially grateful to Professor Katja Biedenkopf for her role in chairing the conference and leading the scientific committee, in collaboration with Nolwenn Arlin, Anna-Maria Christoph, Giulia Turco and Marco Sericola, whose dedication, time and commitment were instrumental in the selection of the papers that have been compiled in this volume. Additionally, we would like to acknowledge the invaluable contributions of Judyta Fiedin, who has been instrumental in the editing process, and all those involved in this project, whose efforts have ensured the successful publication of this book.
Finally, we would like to express our sincere gratitude to our fellow students from the David Sassoli promotion for their invaluable support throughout the remarkable academic year that we shared, as well as to every member of the Natolin Energy and Climate Nest. Their contributions were instrumental in the successful organisation of the conference and this publication. The conference marked the conclusion of our year at the College of Europe in Natolin and served as a symbol of the embodiment of the core values that united us during this transformative year: the pursuit of academic excellence and the collective aspiration to shape the future of Europe.
part i iN t E r NA l Ch AN g ES i N th E EU f ollowi N g th E rUSS i AN iN vAS io N of Ukr A i NE
C hapter 1
The paradox of the EU’s energy transition:
Between old and new (inter)dependency pathways
by EriC vAldiviA villANUEvA
Valdi V ia Villan UEVa
Eric valdivia villanueva is a graduate of the College of Europe, specialising in energy and climate transition issues. he holds a double bachelor’s degree in Political Science and Sociology from the University of valencia. in the past, he’s been actively involved in Equipo Europa, a pro-European youth association, participating in various projects related to the European green deal.
We must not allow the complexity and gravity of the problems of the moment to cause us to lose sight of the other problems we shall have to face in the future. 1
Commission of the European Communities, 1975.
introduCtion
The European Union (EU) has been forced to redraw its energy map and look for alternative energy suppliers in the wake of the energy crisis resulting from Russia’s invasion of Ukraine. This is particularly relevant in the context of natural gas, as liquefied natural gas (LNG) is expected to play a critical role in filling the gap left by Russia’s reduced supply.
However, instead of replicating previous crisis solutions, namely fossil fuel substitution and supply diversification, the long-term exit from this new crisis will require transforming the nature of the European energy system itself. The acceleration of the green energy transition outlined in the REPowerEU Communication was ultimately a blueprint for accelerating the transition from the current energy model based on fossil fuels to a new model based on renewable energy sources and the electrification of most economic sectors.
In this sense, the official European narrative is that by decoupling from Russian energy and by progressively replacing fossil fuels with renewable energy sources, the European Union will reduce its energy dependence on third country suppliers. In other words, the EU is determined to achieve a greater degree of relative self-sufficiency, which is seen as essential to achieving “strategic autonomy” in its energy engagement with the world.
As the President of the European Commission, Ursula von der Leyen said in a speech at Bocconi University: ‘[r]enewable energies are (…) good for our [European] independence because they are home-grown’.2 However, while seeking to avoid the fossil dependency track, the acceleration of the green energy transition could simultaneously create new and challenging dependencies for the EU’s energy and industrial sectors on specific elements,
1 Commission of the European Communities, ‘Communication from the Commission to the Council – The Community’s supplies of raw materials’ (1975) 5 February 1975 COM(75) 50 final <https://aei.pitt.edu/1481/1/ raw_materials_COM_75_50.pdf> accessed 29 December 2024.
2 European Commission, ‘Keynote speech by President von der Leyen on the occasion of the 120th anniversary of Bocconi University’ (Milan 7 December 2022) <https://ec.europa.eu/commission/presscorner/detail/en/ SPEECH_22_7547> accessed 29 December 2024.
such as so-called critical raw materials.3 In the same speech, von der Leyen recognised that the European Union is ‘developing an over-dependency on China regarding raw materials that are critical for our green transition’.4
This article analyses this dependency paradox. While the energy transition will enhance Europe’s independence from primary energy supply through domestic production of renewable energy, it will also increase the EU’s dependence on so-called “prime movers” (the technology that converts primary energy into mechanical or electrical power). In this sense, the article examines the supply chain challenges associated with critical raw materials and explores how the rapid deployment of green technologies – driven by a policy-led acceleration of the green transition – may lead the EU to develop growing dependencies on resource-rich countries (and those with significant mineral processing capabilities, such as China) for the production of clean energy technologies in the coming decades.
The study then analyses of the EU’s historical foreign policy approach to raw materials supply and assesses the extent to which new policy initiatives, in particular the Critical Raw Materials Act (CRMA), can address emerging challenges by mitigating supply risks and furthering the EU’s quest for strategic autonomy.
In the final section of the article, the author offers some suggestions for strengthening the external dimension of the CRMA These recommendations aim to address the EU’s potential over-dependence on raw materials and green technology components, while fostering mutually beneficial partnerships with third countries.
2. methodology
This study uses a qualitative research methodology to examine the European Union’s increasing reliance on critical and strategic raw materials essential for the production of clean energy technologies and the EU’s evolving policy approach to critical raw materials (CRMs).5
3 Eric Valdivia Villanueva, ‘Avoiding the Dependency Track: Towards a New European Model for International Energy and Raw Materials Cooperation’ in Six Selected Master’s Theses by College of Europe Students (2023) De Europa European and Global Studies Journal 201.
4 European Commission, ‘Keynote speech by President von der Leyen on the occasion of the 120th anniversary of Bocconi University’ (n 2).
5 This article should be contextualised within the broader research framework of the author’s Master’s thesis, completed during his studies at the College of Europe Natolin (previously published in De Europa Journal, n 3). Although the focus is not identical, both publications share certain content elements.
The study is guided by two primary research questions:
1. To what extent could the European Union’s future dependence on critical raw materials replace its current reliance on fossil fuels?
2. How has the EU’s policy approach to critical raw materials evolved over the last two decades to cope with potential supply disruptions?
The following hypotheses are proposed to address these questions:
H1: The acceleration of the energy transition will transform the EU’s resource dependencies, creating new geopolitical and security challenges.
H2: The Critical Raw Materials Act represents a significant policy shift in the EU’s approach to critical raw materials.
In order to test the above hypotheses, the author uses qualitative inductive reasoning to draw broad conclusions from specific observations and collected data. The research design is based on a combination of a literature review and a comprehensive policy analysis: an extensive review of primary documents related to energy and critical raw materials policies in order to critically analyse the EU’s historical and current approach to these specific policy areas.
3. ConCeptualising the european green energy transition
The significant impact of the global energy crisis stemming from the Russian invasion of Ukraine has had a major impact not only in Europe but also on the international community. This explains why the UNFCCC COP 27 resolution underlined the urgency to ‘rapidly transform’ energy systems and accelerate the transitions to clean-renewable energy worldwide.6
According to the literature, energy transitions are composed of two main elements. First, ‘[a]n energy transition encompasses the time that elapses between the introduction of a new primary energy source (…) and its rise to claiming a substantial share of the overall
6 United Nations, Decision -/CP.27 Sharm el-Sheikh Implementation Plan (2022) Advance unedited version <https://unfccc.int/sites/default/files/resource/cop27_auv_2_cover%20decision.pdf> accessed 29 December 2024.
market’.7 Following this definition, we could describe the ongoing green energy transition as a shift towards ‘low-carbon [energy] sources and the electrification’8 of traditionally polluting economic sectors, such as transport, chemical or steel industries.
However, the European energy transition outlined above is much more than just a fuel switch. According to the International Renewable Energy Agency (IRENA), this transition is unprecedented in terms of ‘its scale and the profound impact on the established socio-economic, technological, and geopolitical trends around the world’.9 It is a transition towards an energy model ‘fundamentally and structurally different from today’s’10 model, ‘with [new] commensurate political, technical, environmental, and economic disruptions’.11
This brings us to the second element of energy transitions: the gradual diffusion of new prime movers. In other words, the widespread adoption of technological devices ‘converting primary energies into [different types of] (…) power’.12 In this sense, the green energy transition will be based not only on a myriad of new clean technologies to produce renewable energy, but also on prime movers that will use such clean energy sources13 in the different productive activities of the future European economy.
7 Vaclav Smil, ‘The Pace of Energy Transitions’ in Vaclav Smil, Energy Myths and Realities: Bringing Science to the Energy Policy Debate (AEI Press 2010) 133–49, 136.
8 Elmer Rietveld et al., Bruegel-TNO-VVA, ‘Strengthening the Security of Supply of Products Containing Critical Raw Materials for the Green Transition and Decarbonisation’ (2022) European Parliament D-G for Internal Policies Policy Department for Economic, Scientific and Quality of Life Policies 20 <https://www.europarl.europa. eu/cmsdata/267347/QA-04-22-302-EN-C.pdf> accessed 29 December 2024.
9 International Renewable Energy Agency, ‘Geopolitics of the Energy Transformation. The Hydrogen Factor’ (2022) IRENA 10 <https://www.irena.org/-/media/Files/IRENA/Agency/Publication/2022/Jan/IRENA_Geopolitics_ Hydrogen_2022.pdf> accessed 29 December 2024.
10 European Commission and High Representative of the Union for Foreign Affairs and Security Policy, ‘Joint Communication to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions – EU external energy engagement in a changing world’ JOIN (2022) 23 final 17 <https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52022JC0023> accessed 29 December 2024.
11 International Renewable Energy Agency, ‘Geopolitics of the Energy Transformation. The Hydrogen Factor’ (n 9) 10.
12 Vaclav Smil, ‘The Pace of Energy Transitions’ (n 7) 138.
13 Some (such as li-ion batteries, fuel cells, electrolysers, wind turbines, traction motors, heat pumps or hydrogen direct reduced iron and electric arc furnaces) are considered by the European Commission as “strategic technologies” which will drive the world of tomorrow.
Thus, this transition will not only be an opportunity to build a more sustainable energy system, but also ‘a wealth of opportunity to the EU industry as the world follows our lead in developing markets for clean new technologies and products’.14
The reasons for accelerating the EU’s energy transition are therefore many and varied. The incentives range from the ambition to meet climate change targets to other financial and economic reasons15 related to industrial evolution, competitiveness and innovation.16
However, the main reasons for the recent acceleration of the EU’s green transition are – as seen in the REPowerEU Communication – are related to geopolitical motives and the necessity to ‘rapidly reduc[e] our [strategic energy] dependence on Russian fossil fuels’.17
According to the European Commission, the REPowerEU Plan is to rapidly substitute Europe’s fossil fuel consumption by boosting renewable energy, especially solar and wind, accelerating efforts to deploy green hydrogen production and transport infrastructure, and increasing the use of biomethane. The ultimate goal would be to combine import diversification with energy conservation efforts and accelerated clean energy transition and electrification to ‘deliver as soon as possible the equivalent of the fossil fuels Europe currently imports from Russia every year’.18
However, accelerating the green transition, according to the current European plan outlined in the REPowerEU communication, will face two major challenges.
Firstly, the acceleration of energy transformations often involves a significant degree of risk due to the inherently slow and gradual pace of such transformations.19 There are two main reasons for this. The first is the rigidity of energy systems, resulting from the
14 European Commission, ‘Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions – “Fit for 55”: delivering the EU’s 2030 Climate Target on the way to climate neutrality’ (2021) 14.7.2021 COM(2021) 550 final <https://eur-lex. europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52021DC0550&from=EN> accessed 29 December 2024.
15 ibid
16 Marjolein de Ridder, ‘The Geopolitics of Mineral Resources for Renewable Energy Technologies’ (2013) The Hague Centre for Strategic Studies.
17 European Commission, ‘Communication from the Commission to the European Parliament, the European Council, the Council, the European Economic and Social Committee and the Committee of the Regions – REPowerEU Plan’ (2022) 18.05.2022 COM(2022) 230 final <https://eur-lex.europa.eu/resource.html?uri=cellar:fc930f14-d7ae-11ec-a95f-01aa75ed71a1.0001.02/DOC_1&format=PDF> accessed 29 December 2024.
18 ibid
19 Vaclav Smil, ‘The Pace of Energy Transitions’ (n 7).
massive costs of financing energy infrastructure (such as pipelines, refineries or a network of petrol stations), which will later become stranded assets after future transformations.20
Second, there is a degree of market inertia, in terms of individual and corporate resistance to change in everyday behaviour,21 and political inertia, in terms of policy legacies that are shaped by long-established political and economic relationships between countries.22
In this sense, the REPowerEU Plan targets for renewable energy capacity in 2030 are so ambitious that they exceed the most optimistic International Energy Agency scenarios projected for the European Union in the same period (see Table 1).
Table 1. Comparison of ‘REPowerEU’ and IEA estimated benchmarks for the EU by sector.
segment repowereu benchmarks, 2030 iea main case / accelerated case benchmarks, 2027
heating and cooling
Share of renewable energy in heating and cooling
2.3-percentage-point average annual increase to 2030
/
0.9-percentage-point average annual increase to 2030.
Share of renewable energy in the industry 1.9-percentage-point average annual increase to 2030 0.9-percentage-point average annual increase to 2030
of renewable energy in buildings sector (final energy consumption)
Historically, political commitments to accelerate energy transformations and improve self-sufficiency have proved easy to promise but hard to deliver.23 In this sense, it remains to be seen whether the policy objectives behind REPowerEU will end up as yet another unfulfilled promise, or as the great green European achievement of the century.
20 Jean-Marie Chevalier, The New Energy Crisis: Climate, Economics and Geopolitics (Palgrave Macmillan 2009).
21 ibid
22 Luca Franza, Coby van der Linde and Pier Stapersma, ‘The Internal and External Dynamics of EU Energy Relations’ (2018) 72(2) Clingendael Spectator <https://spectator.clingendael.org/pub/2018/2/eu-energy-relations/> accessed 3 February 2025.
23 Vaclav Smil, ‘The Pace of Energy Transitions’ (n 7).
Assuming that the objectives of REPowerEU and the EU’s green transition are ultimately accelerated according to the outlined plan, the European Union will face a second major challenge: meeting and securing the supply chain requirements for new green and digital technologies.
Apart from the reasons mentioned above, energy transitions are often slowed down by the intrinsic characteristics of the development of prime movers. The main concern in this case is that a rapid transition to a new technology can lead to unforeseen problems and setbacks. For the market, an old technology would initially be preferred to a potentially cleaner and more efficient technology whose performance weaknesses and shortcomings are still unknown. In this sense, ‘[p]redictability may, for a long time, outweigh a potentially superior performance’24 when deciding to transition from an old to a modern technology.
An important reason for this resistance to technological change is the unanticipated problems associated with the new supply chain requirements for such technologies. In the past, sufficient refining capacity to produce fuels and the existence of an extensive network of service stations were crucial to the widespread use of land transport as we know it today. But in the future, as we will see in the next section, supply chain risks will shift from traditional fossil fuels to strategic raw materials that are important for the production of key technologies.
The green and digital transitions will transform the industrial landscape of the European Union. Although most of the new changes and transformations will be market-driven, policy objectives and guidelines will also play an important role in shaping the trajectory and speed of these transitions.25 In this sense, an acceleration policy without a comprehensive strategy to anticipate and secure the supply chain requirements of new technologies could create major problems for the European industrial and energy sectors. Placing political objectives beyond market transition capacity could jeopardise the ‘predictability’ of the green transition and make Europe more vulnerable to supply chain disruptions. This is especially worrying in the case of disruptions in the supply of certain strategic and critical raw materials needed for key technologies, for which the European Union is particularly dependent on third countries.
24 ibid 140.
25 Elmer Rietveld et al., Bruegel-TNO-VVA, ‘Strengthening the Security of Supply of Products Containing Critical Raw Materials for the Green Transition and Decarbonisation’ (n 8).
4. strategiC and CritiCal raw materials: naVigating the risks of the eu green transition26
The dominant narrative behind the EU’s green energy transition often tends to oversimplify the situation, with statements such as ‘it’s better to depend on the sun and the wind (…) than to depend on Russian gas and Saudi oil’.27 But this reductive view often masks a more complex reality. As we increasingly turn to renewable energy sources to power our societies, we are also deepening our dependence on critical raw materials.
The term ‘raw materials’ covers a wide range of resources, including metallic and industrial minerals, as well as other construction materials.28 In recent years, demand for these materials has grown rapidly, driven by both traditional industrialised economies and new emerging and developing economies such as China, leading to increased extraction, trade and consumption of these raw materials.29 Of all the materials included in this catch-all category, the European Union has been working since 2011 with a regularly updated list of ‘critical raw materials’ that are crucial for its industrial and military sectors. But of all the ‘critical raw materials’, the most important for our analysis are those recently categorised by the European Commission as ‘strategic raw materials’.30 These materials are characterised by a combination of their high strategic importance, a potentially significant gap between global supply and projected demand, and the difficulty of increasing production31 (see Figure 1).
26 The information in the following section has been extracted from a previous publication by the author. For more detailed information on this topic, see Eric Valdivia Villanueva, ‘Avoiding the Dependency Track: Towards a New European Model for International Energy and Raw Materials Cooperation’ (n 3).
27 Statement by Yannick Javot, Green MEP, quoted by Guillaume Pitron, ‘Dirty Rare Metals: Digging Deeper into the Energy Transition’ (2018) Green European Journal 1–5, 4 <https://www.greeneuropeanjournal.eu/wp-content/ uploads/pdf/dirty-rare-metals-digging-deeper-into-the-energy-transition.pdf> 4 accessed 30 December 2024. See also Guillaume Pitron, The Rare Metals War: The Dark Side of Clean Energy and Digital Technologies (Bianca Jacobsohn (tr), Scribe Publications 2020).
28 European Commission, ‘Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions – Tackling the challenges in commodity markets and on raw materials’ (2011) 2.2.2011 COM(2011) 25 final <https://eur-lex.europa.eu/ legal-content/EN/TXT/HTML/?uri=CELEX:52011DC0025&from=en> accessed 1 May 2023.
29 Marcin Szczepański, ‘Critical Raw Materials in EU External Policies. Improving Access and Raising Global Standards’ (2021) European Parliamentary Research Service Briefing PE 690.606 <https://www.europarl.europa. eu/RegData/etudes/BRIE/2021/690606/EPRS_BRI(2021)690606_EN.pdf> accessed 30 December 2024.
30 Eric Valdivia Villanueva, ‘Avoiding the Dependency Track: Towards a New European Model for International Energy and Raw Materials Cooperation’ (n 3).
31 European Commission, ‘Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions – A secure and sustainable supply of critical raw materials in support of the twin transition’ (2023) 16.3.2023 COM(2023) 165 final <https:// eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52023DC0165> accessed 30 December 2024.
Figure 1. Critical and Strategic Raw Materials Assessment Methodology.
high SUPPly ChAllENgES { forecasted demand growth difficulty increasing production
Source: Own elaboration based on European Commission, ‘Commission Staff Working Document – Impact Assessment Report accompanying the document Proposal for a Regulation of the European Parliament and of the Council establishing a framework for ensuring a secure and sustainable supply of critical raw materials and amending Regulations (EU) 168/2013, (EU) 2018/858, 2018/1724 and (EU) 2019/1020’ (2023) 16.3.2023
SWD(2023) 161 final <https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52023SC0161> accessed 30 December 2024.
According to World Bank and OECD projections, demand for critical and strategic raw materials is expected to rise sharply in the coming decades, driven by their key role in the global energy transformation.32 Thus, we are expected to extract more rare metals33 from the Earth’s crust in the next 25 years than in the rest of human history.34
32 European Commission, ‘Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions – Critical Raw Materials Resilience: Charting a path towards greater security and sustainability’ (2020) 3.9.2020 COM(2020) 474 final <https:// eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52020DC0474> accessed 30 December 2024.
33 Terminology used by Guillaume Pitron.
34 Guillaume Pitron, ‘Dirty Rare Metals: Digging Deeper into the Energy Transition’ (n 27).
Table 2. First European Commission Strategic Raw Materials for the EU, 2023.
2023 list of strategiC raw materials
lithium – battery grade
bismuth
boron – metallurgy grade
Cobalt
Copper gallium
germanium
magnesium metal
manganese – battery grade
Natural graphite
– battery grade
Nickel – battery grade
Platinum group metals
rare Earth Elements for magnets (Nd, Pr, tb, dy, gd, Sm and Ce)
Silicon metal
titanium metal tungsten
Source: European Commission, ‘Proposal for a Regulation of the European Parliament and of the Council establishing a framework for ensuring a secure and sustainable supply of critical raw materials and amending Regulations (EU) 168/2013, (EU) 2018/858, 2018/1724 and (EU) 2019/1020’ (2023) COM(2023) 160 final 2023/0079 (COD) <https://eur-lex.europa.eu/resource.html?uri=cellar:903d35cc-c4a2-11ed-a05c-01aa75ed71a1.0001.02/DOC_1&format=PDF> accessed 30 December 2024.
In her special address to the World Economic Forum, European Commission President Ursula von der Leyen emphasised that ‘[t]he economies of the future will no longer rely on oil and coal, but on lithium for batteries; on silicon metal for chips; on rare earth permanent magnets for electric vehicles and wind turbines. And it is sure: the green and digital transitions will massively increase our need for these materials’.35 Her speech highlighted the EU’s growing dependence on critical and strategic raw materials, a trend that is likely to intensify with the implementation of REPowerEU and the Green Deal Industrial Plan if current materials supply policies remain unchanged.
As the EU becomes more dependent on CRM for its industrial and energy needs grows, two critical questions arise: Will this new dependence on CRM replace the current reliance on fossil fuels? Moreover, will the geopolitical context of this new dependence be more favourable than the current situation with fossil fuels, or potentially more challenging?
35 European Commission, ‘Special Address by President von der Leyen at the World Economic Forum’ (2022) <https://ec.europa.eu/commission/presscorner/detail/it/speech_22_3282> accessed 30 December 2024.
4.1. From oil to strategic raw materials, similar challenges?
The International Energy Agency stated in its 2022 Energy Outlook that ‘[a]s clean energy transitions gather pace, there accordingly will be a shift of focus from the supply of traditional fuels to the supply of critical minerals’.36 As a result, while the EU may be reducing its dependence on the fossil fuels that powered previous industrial revolutions, it will inevitably become dependent on raw materials that are essential for large-scale production and implementation of green technologies. Not surprisingly, EU Commission President von der Leyen emphasised that ‘lithium and rare earths will soon be more important than oil and gas’.37
It should be noted, of course, that the impact of a disruption in the supply of CRMs is very different from that of a shortage of fossil fuels. Today’s industrial societies are less vulnerable to disruptions in the supply of critical raw materials. While a sudden shortage of lithium, nickel or rare earths would pose significant challenges, it would not prevent European citizens from heating their homes in winter, as would an insufficient supply of natural gas.
Despite the differences, both fossil fuels and strategic raw materials could pose potential risks if Europe’s relations with producing countries are not properly managed. Firstly, the emerging “geopolitics of raw materials” could create new risks and challenges for the EU as an import-dependent region, similar to the current geopolitics of fossil fuels. Second, unexpected disruptions to CRMs could negatively affect industrial supply chains. For example, a sudden disruption in the supply of a strategic raw material for electric vehicles (EV) batteries – for natural or political reasons – could block the EV production chain, leading to a production shortage. Finally, while fossil fuel supply shocks typically translate into severe inflation, raw material shortages (albeit on a smaller scale) can translate into price volatility in the production of key clean energy technologies, delaying the green transition and making it more expensive.
The key question, of course, is the evolution of risk and probability. It is necessary to consider whether the risks (see Figure 2) – and therefore the probabilities of possible disruptive effects – of this new dependence on CRMs are higher or lower than the current dependence on natural gas and oil. However, an examination of the concentration of minerals (in the extraction and refining process) suggests that the associated geo-economic risks may be even
36 Internation Energy Agency, ‘World Energy Outlook 2022’ Report (2022) IEA 318.
37 Original fragment, in German: ‘Lithium und seltene Erden werden bald wichtiger sein als Öl und Gas’. European Commission, ‘2022 State of the Union Address by President von der Leyen’(2022) <https://ec.europa.eu/commission/presscorner/detail/ov/SPEECH_22_5493> accessed 30 December 2024.
more challenging than those related to fossil fuels. A brief look at the new international and geopolitical context of critical raw materials does not provide much cause for optimism.
Figure 2: Critical Raw Materials Problem Tree.
risk of future geopolitical vulnerability
risk of adverse environmental and social adverse effects
risk of unforseen disruptions to industrial supply chains
risk of high and volatile prices delaying green transition
of seCure aCCess to CritiCal raw materials
risk of dominant Crm suppliers leveraging market power in downstream industries
the green and digital transitions depend on critical raw materials, leading to vastly increased demand in the EU and globally
Significant supply demand gaps for critical raw materials are projected in the medium term
Supply of critical raw materials ar both the exraction and processing stage is highly concentrated
Source: Eric Valdivia Villanueva, ‘Avoiding the Dependency Track’ (n 3).
4.2. Dealing with a challenging geopolitical and geo-economic environment
The world has witnessed significant geopolitical shifts in recent years. Many analysts interpret these changes as indicators of a gradual transition to a multipolar world order,38 which is likely to increase international tensions. For example, the increasing weaponisation of energy and rising trade disputes signal the resurgence of confrontational geopolitics.39
38 Marjolein de Ridder, ‘The Geopolitics of Mineral Resources for Renewable Energy Technologies’ (n 16).
39 European Commission, ‘Special Address by President von der Leyen at the World Economic Forum’ (2023) <https://ec.europa.eu/commission/presscorner/detail/en/speech_23_232> accessed 30 December 2024.
These developments have notable implications for the natural resources sector. State capitalism (access and trade restrictions, state intervention40 and protectionism) is becoming more prominent in international raw material relations, reinforced by the growing ideological adoption of resource nationalism in resource-rich countries.41
The concept of resource nationalism is based on the belief that states should retain control over their natural resources, including the conditions for exploration, access, production and export of those resources.42 As Guillaume Pitron notes in his book: ‘A surge of nationalism over mining resources is sweeping across Asia, Africa and Latin America (…) increasingly weakening Western positions’.43 Far from being a few isolated cases, the ideology of resource nationalism is spreading in a domino effect with a growing number of countries either denying or restricting external companies’ access to their natural resources.44
In line with this ideological framework, government involvement in natural resource management is becoming increasingly prevalent. As the pendulum swings towards state interventionism in markets, emerging players in the raw materials sector are implementing various government policies to protect their resources and promote domestic downstream industries. These trade-restrictive measures range from price-fixing, export taxes and quotas45 to more severe measures such as export bans or even nationalisation of industries.46
The OECD’s recognition of this growing trend is of particular concern to the EU,47 as it could, if not reversed, lead to increased dependence on third countries for certain critical raw materials. A recent study highlights this issue, showing that export restrictions on
40 Bram Buijs and Henrike Sievers, ‘Critical Thinking about Critical Minerals. Assessing Risks Related to Resource Security’ (2011) BGR – CIEP <https://www.bgr.bund.de/DE/Themen/Min_rohstoffe/Downloads/Polinares_ Critical_Thinking.pdf?__blob=publicationFile&v=3> accessed 30 December 2024.
41 Marjolein de Ridder, ‘The Geopolitics of Mineral Resources for Renewable Energy Technologies’ (n 16).
42 Jean-Marie Chevalier (ed.), The New Energy Crisis: Climate, Economics and Geopolitics (Palgrave Macmillan 2009) 30–32.
43 Guillaume Pitron, The Rare Metals War: The Dark Side of Clean Energy and Digital Technologies (n 27) 76–77.
44 Guillaume Pitron, The Rare Metals War: The Dark Side of Clean Energy and Digital Technologies (n 27).
45 Commission of the European Communities, ‘Communication from the Commission to the European Parliament and the Council – The raw materials initiative – meeting our critical needs for growth and jobs in Europe’ (2008) 4.11.2008 COM(2008) 699 final <https://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2008:0699: FIN:en:PDF> accessed 30 December 2024.
46 Mexico and Chile have already set plans to nationalise their respective lithium industries.
47 Marcin Szczepański, ‘Critical Raw Materials in EU External Policies. Improving Access and Raising Global Standards’ (n 29).
CRMs affecting OECD countries have become more common in recent decades. This trend has a direct impact on both the price and availability of CRMs on the global market.
The challenges for the European Union become clearer when one considers that this unfavourable international environment is combined with a highly concentrated international production (extraction and refining) of strategic raw materials (see Figure 3).
Figure 3: Share of top three producing countries in production of minerals and fossil fuels, 2022.
Notes: lNg = liquefies natural gas; US = United States. the values for copper processing are for refining operations.
Source: International Energy Agency, The Role of Critical Minerals in Clean Energy Transitions (IEA 2022).
What is particularly alarming is China’s dominant position in the entire global supply chain. For example, China’s market concentration in the extraction and processing stages of certain raw materials that are key to the production of clean energy technologies can reach levels of up to 90%. This level of concentration significantly exceeds the market shares of leading countries in the extraction and processing of fossil fuels. Moreover, China’s market share dominance extends beyond the upstream side of CRM It also includes the downstream sector, where China plays a much more prominent role in the mass production of manufactured components for clean energy technologies. Figure 4 shows that while Western
countries retain manufacturing leadership in selected technologies such as electrolysers, fuel cells and heat pumps, China controls most of the world’s production of the remaining spectrum of clean energy technology components.
Figure 4. Regional shares of manufacturing capacity for selected mass-manufactured clean energy technologies and components, 2021.
Source: International Energy Agency, Energy Technology Perspectives (IEA 2023).
In summary, this section has focused on explaining how a new set of critical raw materials is emerging as a key resource for the future of energy. It has also shown that the geopolitics surrounding CRM pose challenges comparable to, and often exceeding, those associated with fossil fuels in terms of resource concentration, supply risks and potential for geopolitical leverage. As a result, the increasing dependence on CRM is a cause for concern for the EU and other import-dependent nations.
The following sections examine the EU’s historical policy approach to critical raw materials and explore alternative strategies to enhance the potential of the external dimension of the Critical Raw Materials Act to ensure a reliable, sustainable and cost-effective supply of CRMs and components for clean energy technologies.
5. the european approaCh
Critical raw materials have been a source of concern for policymakers since the 1950s. However, it was not until 1975 – after the oil crisis – that the European Communities (now the European Union) began to question the possible consequences of its dependence on certain raw materials.48
In a clear parallel between the oil crisis of the 1970s and the energy crisis of 2022 stemming from Russia’s invasion of Ukraine, the weaponisation of energy supplies by producer countries has prompted the overly import-dependent European Union to scrutinise its supply chains for energy and non-energy commodities. At times, critical minerals (or critical raw materials, as they are known in EU jargon) have received special attention from European policymakers. Although significant progress has been made since the 1970s, the remarkable similarity between the political response and the policy narrative in official EU documents shows that many challenges remain to be addressed at the European level.
5.1. The consequences of the oil crisis of the 70s
Fifty years ago, in October 1973, the Arab members of the Organization of Petroleum Exporting Countries (OPEC) announced an embargo on oil exports to Western countries in retaliation for their support of Israel in the Yom Kippur War. This strategic move in the Middle East, weaponizing energy exports as a geopolitical tool, led to a global energy crisis with severe economic consequences, especially for Western industrialised and energy import dependent countries.
Energy security became a mainstream concept among policymakers, and the urgent need for cooperation on oil security led to the creation of the International Energy Agency (IEA) by OECD countries a year later.49
48 Eric Valdivia Villanueva, ‘Avoiding the Dependency Track’ (n 3).
49 Richard Scott, The History of the International Energy Agency: The First 20 Years Vol 1 (1994) OECD/IEA <https:// web.archive.org/web/20070415071141/http:/www.iea.org/Textbase/nppdf/free/1990/1-ieahistory.pdf> accessed 31 December 2024.
In addition, the 1973 oil shock was a major catalyst for change in the energy systems of Western Europe. The uncertainty of oil supply led to increased energy efficiency efforts and the need to diversify the energy mix. Accordingly, the aftermath of the oil crisis – and the geopolitical context of the Cold War expansion in Europe – led to an exponential increase in natural gas imports from the USSR,50 which rose from almost 7 billion cubic metres (bcm) in 1973 to 54.8 bcm by the end of the decade.51 At the same time, other countries, such as France, invested heavily in nuclear power to ensure energy security and domestic self-sufficiency.52
Still, aside from strategies for fuel replacement, the European Communities (now European Union), launched a comprehensive review of its industrial system, carefully checking its supply chains and reconsidering its vulnerabilities, determined to get ready for anticipating and addressing potential disruptions in the future. As stated in one key European Communities Communication: ‘We must not allow the complexity and gravity of the problems of the moment [the 1970s oil crisis] to cause us to lose sight of the other problems we shall have to face in the future’.53
5.2. Beyond oil: The European Communities’ concern on raw materials In 1975, the Commission of the European Communities published an insightful communication on the Community’s raw materials supply.54 Fearing the creation of OPEC-style organisations for raw materials and potential supply disruptions, the European Communities undertook a ‘serious examination of possible future problems in the supply of raw materials for Europe’.55
50 Luca Franza, ‘Bone of Contention or Instrument of Peace? The Role of Gas in the EU’s Relations with Suppliers’ (2018) 72(2) Clingendael Spectator <https://spectator.clingendael.org/pub/2018/2/the-role-of-gas/> accessed 31 December 2024.
51 Jonathan Stern, ‘The Future of Russian Gas and Gazprom’ (2005) The Oxford Institute for Energy Studies OIES <http://www.centrex.at/en/files/study_stern_e.pdf> accessed 31 December 2024.
52 International Institute of Nuclear Energy, ‘Brief History of French Nuclear Energy’ I2EN <https://www.i2en.fr/ en/brief-history-of-french-nuclear-energy/> accessed 31 December 2024.
53 Commission of the European Communities, ‘Communication from the Commission to the Council –The Community’s supplies of raw materials’ (n 1).
54 ibid
55 The statement quoted above in the text, in which the Commission of the European Communities in its Communication declared that ‘we must not allow the complexity and gravity of the problems of the moment to cause us to lose sight of other problems that we shall have to face in the future’, can be considered rather prophetic. Commission of the European Communities, ‘Communication from the Commission to the Council – The Community’s supplies of raw materials’ (n 1).
Recognising that Europe could not be self-sufficient in the production of raw materials critical to its strategic industries and defence, the document made several policy proposals to address future problems in its raw material supply chains.
In the external dimension, the European Communities recognised the need to maintain and diversify their sources of supply from developing countries by offering multilateral and bilateral agreements on mutually beneficial terms (including profit-sharing and processing of raw materials in their country of origin).
In the internal dimension, proposals ranged from building emergency stocks of strategic raw materials, to exploiting North Sea seabed resources, to reducing import needs through recycling, substitution and resource efficiency measures. However, such proposals required the difficult coordination of a whole range of national and Community policies, which never materialised.
However, the political concern for the security of raw materials diminished after the collapse of the Soviet Union. The economic breakdown of the 1990s led the ex-Soviet countries of Eastern Europe to sell off large quantities of critical minerals that had previously been stockpiled to meet the potential material needs of the Soviet industrial-military complex in the event of a conflict with the West.56 Similarly, the United States decided in 1998 to sell most of its stockpile,57 created in 1939 by the Strategic and Critical Materials Stock Piling Act.58 In anticipation of growing concerns about Japanese expansionism in the Pacific and the impending war in Europe, a national stockpile of critical minerals was created and later maintained for strategic purposes during the Cold War. Despite the historic strategic importance of the stockpile, the abundance of minerals on the market led to a reassessment of its potential need, and the US Congress decided to sell 99 per cent of the National Stockpile after declaring it to be ‘excess to the needs of the DoD’.59 The massive influx of critical minerals onto the global market and the dissipation of the communist threat rendered European stockpiles both obsolete and unnecessarily costly. Virtually overnight,
56 Vincent Donnen, ‘Vers une ère métallisée: renforcer la résilience des industries par un mécanisme de stockage stratégique de métaux critiques’ (2022) IFRI <https://www.ifri.org/fr/notes/vers-une-ere-metallisee-renforcer-laresilience-des-industries-par-un-mecanisme-de-stockage> accessed 11 February 2025.
57 Andrew Glencross, ‘The Geopolitics of Supply Chains: The EU’s Efforts to Ensure Security of Supply and their Impact on the Liberal International Order’ (2024) Global Policy 0.1111/1758-5899.13388 <https://hal.science/ hal-04571547v1> accessed 31 December 2024.
58 US Congress, Strategic and Critical Materials Stock Piling Act (1939) <https://www.govinfo.gov/content/pkg/ COMPS-674/pdf/COMPS-674.pdf> accessed 31 December 2024.
59 US Department of Defense, Evaluation Report ‘Strategic and Critical Materials in the Defense National Stockpile’ (1998) Office of the Inspector General <https://media.defense.gov/1998/Dec/03/2001715517/-1/-1/1/99-044. pdf> accessed 31 December 2024.
the European – and international – political perception of critical raw materials shifted from strategic resources to ordinary commodities managed by global market forces.
It was not until the arrival of the new century that critical minerals became indispensable to modern industry. The digitalisation and robotization of consumer and military goods, reinforced by the recent emergence of the ‘Internet of Things’, has increased the demand for new minerals and materials.
As a result, by the end of the first decade of the 21st century, the European Union moved to formulate a more holistic approach to addressing critical raw materials issues. This new strategy was initiated in 2008 with the launch of the Critical Raw Materials Initiative, the main objective of which was to reduce the EU’s dependence on external sources of raw materials. The initiative was based on three fundamental principles. First, it sought to secure access to global raw materials markets on undistorted terms. Secondly, it aimed to promote the sustainable extraction of raw materials from within Europe. Finally, it focused on reducing the EU’s consumption of CRMs through improved resource efficiency and the use and development of alternative materials. In addition, the Commission emphasised the importance of establishing a clear definition of CRMs, developing a robust methodology for their classification and committing to regularly update a single list of critical raw materials for the EU.
Since then, the European Commission has updated its list of identified critical raw materials every three years, sometimes accompanied by related foresight studies from the European Commission’s Joint Research Centre. In addition, critical raw materials have also been discussed in the European Parliament in 2011 and 2021, leading to the adoption of the corresponding European Parliament resolutions.60
Thus, until 2023, the EU based its strategy on non-regulatory documents that set some guidelines and broad strategies, but this ‘modus operandi’ proved insufficient to address the new global dynamics of critical minerals resulting from the acceleration of the European Green and Digital transition in a context of growing geopolitical instability. As the European Commission recognised: ‘the game has changed and we need to do more’.61
60 European Parliament, ‘European Parliament resolution of 13 September 2011 on an effective raw materials strategy for Europe’ (2011/2056(INI)) <https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52011IP0364> accessed 31 December 2024; European Parliament, ‘A European strategy for critical raw materials. European Parliament resolution of 24 November 2021 on a European strategy for critical raw materials’ (2021/2011(INI)) <https://www.europarl.europa.eu/doceo/document/TA-9-2021-0468_EN.pdf> accessed 31 December 2024.
61 European Commission, ‘Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions – A secure and sustainable supply of critical raw minerals in support of the twin transition’ (n 31).
5.3. New crisis, old recipes
There is a well-known quote from Jean Monnet, who said: ‘I have always believed that Europe would be built through crises, and that it would be the sum of their solutions’. While this may not always be the case,62 certain parallels can be drawn in the European Union’s response to global energy crises.
Just as the energy crisis of the 1970s accelerated the use of Soviet natural gas and nuclear power as alternatives to oil, the recent energy crisis of 2022-2023 has accelerated new changes in the EU’s overall energy policy. As mentioned earlier in this chapter, the EU set out a strategy in its REPowerEU Communication to diversify its natural gas imports through LNG and to accelerate the clean energy transition with massive renewable energy deployment.63
Similarly, critical minerals have returned as an issue of concern to the European policy agenda with renewed vigour.
On 11 March 2022, EU leaders held a historic European Summit to discuss the consequences of Russia’s invasion of Ukraine and, in the Versailles Declaration, recognised the need to phase out EU’s strategic dependence on Russian fossil fuels and to secure the EU’s supply of critical raw materials.64 Thirteen days later, on 24 March 2022, the IEA received a ministerial mandate65 from its member governments to expand the Agency’s portfolio beyond oil, gas and electricity and to deepen its work on critical minerals. A similar request66 was also made by the G7 to provide support on critical minerals with its ‘Five-Point Plan for Critical Minerals Security’.67
62 Jean Monnet, Memoirs (Richard Mayne (tr), Doubleday 1978) 417; Stefan Lehne, ‘The EU and the Creative and Destructive Impact of Crises’ (2022) Carnegie Endowment for International Peace <https://carnegieendowment. org/research/2022/10/the-eu-and-the-creative-and-destructive-impact-of-crises?lang=en¢er=europe> accessed 31 December 2024.
63 European Commission, ‘Communication from the Commission to the European Parliament, the European Council, the Council, the European Economic and Social Committee and the Committee of the Regions – REPowerEU Plan’ (n 17).
64 European Council, Informal meeting of the Heads of State or Government ‘Versailles Declaration’ (2022) <https:// www.consilium.europa.eu/media/54773/20220311-versailles-declaration-en.pdf> accessed 31 December 2024.
65 International Energy Agency, ‘2022 IEA Ministerial Communiqué’ (24 March 2022) IEA <https://www.iea.org/ news/2022-iea-ministerial-communique> accessed 31 December 2024.
66 G7 Ministers’ Meeting on Climate, Energy and Environment, ‘G7 Climate, Energy and Environment Ministers’ Communiqué’ (2023) 16 April <https://www.meti.go.jp/information/g7hirosima/energy/pdf/G7MinistersCommunique2023. pdf> accessed 1 January 2025.
67 G7 Ministers’ Meeting on Climate, Energy and Environment, Annex to the Climate, Energy and Environment Ministers’ Communiqué ‘Five-Point Plan for Critical Minerals Security’ (2023) 16 April <https://www.meti. go.jp/information/g7hirosima/energy/pdf/Annex005.pdf> accessed 1 January 2025.
The EU’s prospects for a rapid transition to clean energy, and the resulting increase in demand for critical minerals to produce net-zero technologies domestically, justified European policymakers’ concern. If the strategic supply chains for clean technologies and the foundations of the green energy transition are not properly managed, the European Union could find itself in a dependency paradox. The consequences for Europe could be like jumping out of the frying pan of Russian fossil fuels into the fire of raw materials and clean energy technologies.
Following this idea, the European Commission launched the Critical Raw Materials Act in March 2023, proposing for the first time a European Regulation establishing the framework for ensuring a secure and sustainable supply of CRMs.68 This new initiative – framed within the Green Deal Industrial Plan69 – represented a significant step forward from previous non-regulatory measures such as the 2008 Raw Materials Initiative and the 2020 Action Plan, although many of its objectives and proposals still bore a striking resemblance to those outlined in the aforementioned 1975 Communication from the Commission of the European Communities. By proposing this Regulation, the Commission demonstrated its firm commitment to securing the future of its energy and industrial sectors and maintaining its strategic independence in an increasingly volatile global political landscape.
In the internal dimension of the proposal, the Commission plans to strengthen all stages of the value chains of strategic minerals, proposing ambitious targets for domestic extraction, processing and recycling capacity by 2030. To achieve these, the EU will establish a favourable regulatory framework, offer priority status and facilitate financial access to selected strategic projects. In addition, the European Commission will take on an additional key role in monitoring and coordinating national stockpiles of strategic raw materials. It is also envisaged that it might be possible to organise joint purchases of critical minerals, if needed, along the lines of the EU Energy Platform for joint purchases of gas, which the EU set up to diversify gas imports after the Russian invasion of Ukraine. Finally, the proposal also emphasises the need to promote innovation, improve resource efficiency and encourage materials substitution strategies where possible.
68 European Commission, ‘Proposal for a Regulation of the European Parliament and of the Council establishing a framework for ensuring a secure and sustainable supply of critical raw materials and amending Regulations (EU) 168/2013, (EU) 2018/858, 2018/1724 and (EU) 2019/1020’ (2023) COM(2023) 160 final 2023/0079 (COD) <https://eur-lex.europa.eu/resource.html?uri=cellar:903d35cc-c4a2-11ed-a05c-01aa75ed71a1.0001.02/ DOC_1&format=PDF> accessed 30 December 2024.
69 European Commission, ‘Green Deal Industrial Plan: Putting Europe’s net-zero industry in the lead’ (2023) Press Release 1 February <https://ec.europa.eu/commission/presscorner/detail/en/ip_23_510> accessed 1 January 2025.
In the external dimension, the Commission aims to diversify the Union’s import sources for strategic minerals. To achieve this, the Commission is determined to limit the supply from any single country to no more than 65% of the EU’s annual consumption of each critical resource. This will be done through international cooperation and the development of mutually beneficial strategic partnerships with strategic projects in third countries. According to the Regulation, strategic projects developed outside the EU will be assessed on the basis of their commitment to promoting the economic and social development of partner countries, leveraging the potential of the Global Gateway to catalyse investment and contribute to local value creation (including downstream activities), ultimately benefiting both the European Union and the partner country.
While the Critical Raw Materials Act represents an important policy improvement for the EU’s ability to secure its mineral supply chains, there is much more room for improvement and policy ambition beyond this European regulation. As discussed in the next section, advancing the EU’s ambition to secure its global supply chains would require effective coordination of foreign trade and development cooperation policies, led by a renewed push for a dedicated European diplomacy on energy and resources.
6. a new approaCh to energy and resourCes diplomaCy
The EU’s energy diplomacy is expected to face a double challenge in the coming years. As it adopts the new strategy for the external dimension of the European Green Deal, it must simultaneously navigate the ‘profound geo-economic and geopolitical shifts’70 resulting from the dynamics of the global energy transition. This evolving context calls for a new approach to the EU’s energy and natural resources diplomacy, one that carefully balances climate, energy, trade, industrial and development policies while promoting meaningful engagement and partnerships with third countries.
A key aspect of this approach is to develop a framework for genuine dialogue based on mutual interests when engaging with potential partners, moving beyond the traditional model of natural resource extraction and addressing the legitimate interests and concerns of both parties.
70 Maria Pastukhova, Jacopo Pepe and Kirsten Westphal, ‘Beyond the Green Deal: Upgrading the EU’s Energy Diplomacy for a New Era’ (2020) German Institute for International and Security Affairs SWP Comment 31 <https://www.swp-berlin.org/publications/products/comments/2020C31_EnergyDiplomacy.pdf> accessed 1 January 2025.
EU development cooperation policy should be mobilised to establish cooperation projects with like-minded and resource-rich developing countries. These initiatives would serve the dual purpose of diversifying the EU’s resource supply options while funding projects that contribute to the achievement of the Sustainable Development Goals in partner countries.
Another important way in which the EU engages with the world is through its trade policy, which uses a range of instruments, including free trade agreements (FTAs), Sustainable Investment Facilitation Agreements, and Memoranda of Understanding (MoUs), to ensure secure access to global markets for natural resources such as critical raw materials. However, the effectiveness of these instruments is increasingly challenged by growing trade tensions and global protectionist tendencies. In addition, there are significant differences in perspectives and objectives between the EU and third countries regarding FTAs, as developing countries may be reluctant to sign such agreements, questioning the actual benefits they stand to gain.
It is worth noting the current paradigm in which the EU is immersed, trying to promote the system of open trade and globalisation, while moving towards a more centripetal dynamic for re-shoring its industrial policy, or other similar strategies such as near-shoring or friend-shoring, which can help mitigate future risks to its industrial supply chains.
However, these approaches have limitations and potential drawbacks. Re-shoring aims to bring production back to the EU but may face challenges in terms of price competitiveness. Nearshoring to neighbouring countries could reduce supply chain risks, but may not address dependence on dominant players such as China. Finally, friend-shoring to like-minded partners poses challenges in defining reliable long-term allies.
To address these constraints, a more ambitious solution could be a multi-shoring approach. This strategy involves integrating a network of resource-rich countries into new stages of the global value chain, particularly in mineral processing and production of resource-intensive technologies. By spreading the current Chinese quasi-monopoly across a large number of resource-rich countries, the EU could enhance the security and sustainability of its clean technology supply chains, while creating opportunities for further political and economic cooperation.
The positive outcomes of this proposed multi-shoring approach could be twofold: firstly, it aims to reduce dependence on China for raw materials and clean technology value chains, creating new partnerships and cooperation dynamics with and between third countries. Second, a well-implemented multi-shoring approach (incentivising European
public and private investment for the development of clean-technology industries in third countries) could be used to meet global climate commitments and advance the Sustainable Development Goals, while reinforcing the dynamics of globalisation and reducing the potential for market disruption.
In order to implement this ambitious diplomatic approach, the European External Action Service (EEAS) should be given a broader remit. It should develop the competencies and internal know-how to effectively strengthen strategic partnerships and policy dialogues with resource-rich countries in order to increase supply diversification and enhance security. The EEAS should also engage with other import-dependent countries to identify common approaches and build alliances, while actively participating in international organisations such as the UN, OECD, and G20 to advance multilateral agendas on natural resource governance and trade rules.
Finally, the creation of ‘climate clubs’ and other international energy and climate partnership forums could be an essential element in building international consensus and organising joint concrete steps to secure critical raw material supply chains globally. In addition, these forums would provide platforms for collaboration, knowledge sharing and joint initiatives to address the challenges of global energy transition and raw materials supply.
7. ConClusion
As discussed above, the acceleration of the European Union’s green transition and the associated geopolitical risks to critical raw materials supply chains will inevitably reshape and create a new map of global interdependencies between resource-rich and consumer countries. Although this new landscape of dependencies differs in nature and scale from the current fossil fuel dependency, it certainly has the potential to create both common and differentiated challenges to the EU’s strategic autonomy.
It will be impossible for the EU to achieve strategic self-sufficiency in critical minerals, and future legislation must reflect this reality. Recognising the current context of geopolitical risks,71 the European Commission has set ambitious targets for 2030 in the Critical Raw Materials Act to develop its strategic self-sufficiency in critical minerals. However, relying
71 A recent report by IRENA explores six major political risks: supply shocks, resource nationalism, export restrictions, political instability and social unrest, mineral cartels, and market manipulation. See International Renewable Energy Agency, ‘Geopolitics of the Energy Transition: Critical Materials’ (2023) IRENA <https://www.irena. org/-/media/Files/IRENA/Agency/Publication/2023/Jul/IRENA_Geopolitics_energy_transition_critical_materials_2023.pdf> accessed 29 December 2024.
solely on domestic capabilities will not be sufficient to meet annual demand and the EU will still need significant imports from developing third countries. Consequently, while the Critical Raw Materials Act provides an important framework for enhancing European capabilities, a more robust initiative is needed to secure and diversify the EU’s external supply chains for critical minerals.
Accordingly, the cornerstone of the EU’s future external action in energy and critical minerals should be the need for mutually beneficial cooperation with third countries. Over the past five decades, the EU has sought to establish long-term, mutually satisfactory agreements and projects, a principle now enshrined in the new European regulation. However, the IEA stated in its 2023 Critical Minerals Market Review Report72 that there is still a global gap between the interests of resource-rich nations to increase the value-added of their mineral industries to their local economies, and the need for resource-consuming countries to diversify their mineral supplies.
After decades of a non-regulatory policy framework, the European Union now has the opportunity to address this situation through the effective implementation of the Critical Raw Materials Act and a renewed approach with a new sector-specific raw materials diplomacy strategy, leveraging new and existing policy tools such as strategic partnerships on raw materials, and the implementation of Global Gateway investment projects in third countries.
Only a comprehensive approach, combining a European minerals industry awakening, international cooperation and innovative policy tools, will pave the way for sustainable and resilient EU critical minerals supply chains.
72 International Energy Agency, ‘Critical Minerals Market Review 2023’ (2023) IEA <https://iea.blob.core.windows. net/assets/c7716240-ab4f-4f5d-b138-291e76c6a7c7/CriticalMineralsMarketReview2023.pdf> accessed 1 January 2025.
C hapter 2
The vulnerability of the EU’s reshaped energy security: The unsolved knot of import dependence
fAbio iNdEo
fabio indeo holds a Phd in geopolitics. he is currently research fellow on Energy Security at the department of Political Science, University of Siena (italy) and analyst on Central Asia at the Nato defense College foundation (rome). in 2022 he was an analyst at the Energy Policy Strategic observatory at irAd (italian ministry of defence). research areas: Energy security and geopolitics; analysis of the international energy scenario; diversification strategy; geopolitics of pipelines, chokepoints and maritime transport routes.
1. introduCtion
The combination of the impact of the current energy crisis – triggered by Russia’s invasion of Ukraine in February 2022 and the ensuing war – and EU’s commitment to achieve carbon neutrality (elimination of greenhouse gas emissions) by 2050 will reshape the energy security landscape for the European Union. On the one hand, the progressive halt of Russian gas imports will push the EU to further develop its diversification strategy and increase gas imports from alternative suppliers in the medium term. On the other hand, EU countries will necessarily have to increase their domestic production of clean electricity (from renewable energy sources) in order to partially meet internal demand: nevertheless, imports of clean electricity (mainly ‘green’ renewable hydrogen, which appears to be a promising energy carrier for achieving the goal of climate neutrality) will continue to play an important role in the coming years, allowing the EU’s energy security to be strengthened.
By 2030, a new energy geopolitical scenario will emerge in which some suppliers (of both natural gas and clean electricity) will become key energy partners for the European Union, such as the Caspian Sea countries (Azerbaijan and Kazakhstan), the Eastern Mediterranean and North African countries (Israel, Egypt, Algeria and especially Morocco electricity and hydrogen production from RES), the US and Qatar.
The main objective of this chapter is to analyse the new EU energy security architecture and the role that external energy suppliers could play in achieving a state of energy security (i.e. regularity of supply without interruptions). The research question is to assess whether the bilateral and multilateral energy partnership developed by both Member States and the EU to enhance energy security through the implementation of a strategy of geographical diversification of gas imports could concretely meet the EU’s needs or fail to achieve a long-term condition of security of gas supply.
To this end, I developed a comparative study which included the EU’s main energy partners, highlighting the strengths (mainly a wider diversification of suppliers) and weaknesses affecting the development of reliable energy partnerships with these supplier states, affected by ‘vulnerabilities’ in terms of domestic political stability, real commitment to supply the EU and the influence of external actors (i.e. Russia in the Caspian basin, Turkey in the Mediterranean), factors which could all delay the EU’s energy transition, while also preventing regular supplies. The aim of this chapter is to show that – despite a promising energy diplomacy based on enhancing the EU’s energy security and diversification – the EU will have to face the persistent risk of an unchanged dependence on energy imports, with
new suppliers that could become ‘unreliable’ due to the combination of the geopolitical context and domestic distortions, paving the way for a new energy crisis.
The data supporting this analysis comes from official EU documents (as specific targets included in REPower EU) and open-source literature (articles, policy briefs, book chapters).
The chapter begins by describing the EU energy scenario after February 2022 and the EU Commission’s efforts to implement a strategy aimed at finding new energy suppliers to compensate for the reduction in Russian imports. This priority has been the backbone of the comprehensive energy diplomacy jointly promoted by the EU Commission and the Member States.
The following sections focus on an in-depth analysis of the pros and cons of the EU’s energy cooperation with North African countries, Azerbaijan, Qatar, and Eastern Mediterranean suppliers: the analysis revealed that all the energy partners involved are affected by some vulnerabilities that undermine the EU’s energy diplomacy aimed at ensuring the regularity of gas imports without interruptions.
Finally, I will draw some conclusions, highlighting how the recent tensions and conflicts have contributed to the spread a state of high instability that undermines the prospects for a long-term energy partnership between the EU and these gas suppliers.
Russia’s invasion of Ukraine has represented a serious threat to the EU’s energy security, defined by the International Energy Agency as being ‘not just about having uninterrupted access to energy, but also about securing energy supplies at an affordable price’.1 It should be noted that this definition primarily reflects the perspective of energy consuming countries (as in the case of the European Union), but it is also important to define this concept from the perspective of supplier countries: for them, energy security means the guarantee of reliable revenues from their end markets, not least because very often supplier countries are heavily dependent on high revenues from energy exports.2 Consequently, a prolonged interruption of energy flows to the markets represents a serious threat to the
1 International Energy Agency, ‘World Energy Outlook 2022. Energy Security in Energy Transitions’ (2022) IEA <https://www.iea.org/reports/world-energy-outlook-2022/energy-security-in-energy-transitions> accessed 14 January 2025.
2 Daniel Yergin, ‘Ensuring Energy Security’ (2006) 85(2) Foreign Affairs 69–82.
2. eu energy sCenario after feBruary 2022
energy security status of both producer and consumer actors, highlighting their potential state of vulnerability if they have not successfully implemented a strategy of geographical diversification of supply (import and export) routes. This is particularly evident in the case of EU-Russia energy relations, due to Ukraine’s role as a transit country between producer and consumer markets: deteriorating political relations (not to mention a war) between the transit country and the consumer/supplier actor have a negative impact on the regularity of supply. Another factor to consider carefully is the state of energy interdependence (which existed before February 2022), as Russia was also heavily dependent on European markets for exports, accounting for more than 70 per cent of the total.3
Starting from this assumption, we can see that the unbalanced dependence on Russian gas imports has highlighted a state of high vulnerability for the European Union in the event of a sudden interruption of energy flows: before February 2022, the EU received 46 per cent of its natural gas imports from Russia, followed by Norway (21 per cent), Algeria (11 per cent), the United States (6.3 per cent), Qatar (4.3 per cent), the United Kingdom, Nigeria, Libya and Azerbaijan, while the EU’s dependence on natural gas imports amounts to 83.6 per cent.4 Moscow’s unreliability as an energy partner has prompted the EU to look to international markets for additional gas supplies to replace the shortfall in Russian imports. At the same time, however, this energy crisis triggered by the Russian war against Ukraine represents a great opportunity for the EU to make a concrete and full commitment to achieving carbon neutrality (zero emissions) by 2050, thus implementing the Green Deal and the ‘Fit for 55’ climate package – i.e. reducing its GHG (greenhouse gas) emissions by 55 per cent by 2030 compared to 1990 levels5 – increasing the use of renewable energy sources (RES) and green hydrogen, and gradually phasing out the consumption of hydrocarbons.
The combination of these strategic needs (replacing Russian gas imports in the short term and accelerating the green energy transition) led the EU Commission to adopt the REPowerEU plan in March 2022, which aims to achieve the very ambitious target of completely phasing out Russian gas imports by 2027 – in line with the implementation of the ‘Fit for 55’ plan,
3 British Petroleum, ‘Statistical Review of World Energy’ (2022) 34 <https://www.bp.com/content/dam/bp/business-sites/en/global/corporate/pdfs/energy-economics/statistical-review/bp-stats-review-2022-full-report.pdf> accessed 28 April 2023.
4 Eurostat, ‘EU Energy Mix and Import Dependency’ (2022) <https://ec.europa.eu/eurostat/statistics-explained/ index.php?title=Archive:EU_energy_mix_and_import_dependency> accessed 2 May 2023.
5 European Commission, ‘The European Green Deal’ (2019) <https://commission.europa.eu/strategy-and-policy/ priorities-2019-2024/european-green-deal_en> accessed 2 May 2023; European Commission, ‘Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions – “Fit for 55”: Delivering the EU’s 2030 Climate Target on the way to climate neutrality’ (2021) 14.7.2021 COM(2021) 550 final <https://eur-lex.europa.eu/legal-content/EN/TXT/ PDF/?uri=CELEX:52021DC0550&from=EN> accessed 2 May 2023.
according to which the EU will reduce annual fossil gas consumption by 100 billion cubic metres (bcm) by 2030 – and to meet higher renewable energy targets by 2030.6
In order to replace and substitute Russian gas imports, the REPowerEU plan sets out various strategic measures, such as diversifying suppliers and supply routes, increasing the use of clean energy from renewable sources, improving energy efficiency. According to the European Commission, 1/3 of Russian imports (50 bcm in 2022) can be replaced by increasing imports of LNG (Liquefied Natural Gas) from traditional supply partners such as Qatar, the United States and Algeria, and expanding cooperation with Egypt and other West and East African suppliers. Moreover, a further 10 bcm can be obtained by increasing imports through the existing gas pipelines, thus filling the gap between the nominal transport capacity and the volumes actually delivered to the market (spare capacity). Energy storage is also an issue of strategic relevance, and the European Commission has decided that the existing underground gas storage facilities (which are considered critical infrastructure) must be filled to at least 90 per cent of their capacity by 1 October each year in order to increase the resilience of countries and their ability to deal with sudden disruptions. In addition to adopting energy efficiency measures, the EU also aims to increase the production of biomethane and energy from renewable sources (solar, wind and green hydrogen) in order to gradually reduce dependence on fossil fuels and eliminate polluting emissions.7In the gas sector, REPowerEU has been designed to further implement the three key priorities of the 2014 Energy Security Strategy, namely increasing LNG imports, achieving geographical diversification of suppliers, and realising regional interconnections to ensure reverse energy flows.8 In terms of LNG, European countries have sought to increase their capacity (building new offshore LNG terminals) and develop sub-regional interconnections to address some of the existing imbalances: in February 2022, the EU benefited from an estimated regasification capacity of 157 bcm per year (which, however, was largely unused until the Russian-Ukrainian war, considering that in 2021, the EU countries imported about 77 bcm of LNG), whose terminals, however, are geographically located along the coasts of Western Europe facing the Atlantic (Spain and France are the main importing countries, 21.3 and
6 European Commission, ‘Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions – REPowerEU: Joint European Action for more affordable, secure and sustainable energy’ (2022) 8.3.2022 COM(2022) 108 final <https://eurlex.europa.eu/legal-content/EN/TXT/?uri=CELEX:52022DC0108> accessed 16 December 2024; European Commission, ‘“Fit for 55”: Delivering the EU’s 2030 Climate Target on the way to climate neutrality’ (n 5).
7 Fabio Indeo, ‘REPowerEU: The EU Strategy of Energy Diversification in the Context of Russia-Ukraine Conflict’ (2022) 1 IRAD Energy Policies Strategic Observatory.
8 European Commission, ‘Communication from the Commission to the European Parliament and the Council European Energy Security Strategy’ (2014) 28.5.2014 COM(2014) 330 final <https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52014DC0330&from=EN> accessed 2 May 2023.
18.3 bcm respectively) and are often not connected to the Eastern European markets, which are heavily dependent on Russian imports.9 As part of the REPowerEU plan, the European Commission and Member States have embarked on a dynamic energy diplomacy aimed at strengthening cooperation with traditional suppliers and developing partnerships with new potential suppliers in order to increase energy imports in the short-term and pave the way for future ‘clean energy cooperation’ based on imports of electricity produced from renewable energy sources and hydrogen.
The EU is committed to laying the foundations of a reshaped energy security architecture, implementing a partnership with new actors and suppliers capable of providing regular energy imports (both gas and clean electricity) in a framework of geographical diversification that will make it possible to improve the condition of energy security. Despite the progress made, one of the most relevant and challenging issues remains to assess the longterm reliability of these suppliers, because even if these partners have an energy potential to export to the EU, on the other hand they are severely affected by critical ‘vulnerabilities’ (i.e. domestic political instability, influence of external actors, transit chokepoints) that potentially undermine this energy cooperation.10 This is not the case for the United States and Norway, which can be considered reliable energy partners due to their large contribution to the EU’s energy needs after February 2022. The US has become the EU’s main LNG supplier, covering 50% of total gas imports in liquefied form:11 following the European Council summit in mid-March, US President Biden pledged to supply the EU with an additional 15 bcm of LNG in 2022, with the aim of reaching 50 bcm per year by 2030,12 promoting an engaging transatlantic energy cooperation.
Norway certainly appears to be a reliable energy partner in terms of regularity of supply: since Russia’s invasion of Ukraine and the ensuing war, this European country has increased its energy cooperation with EU member states, considering that in February 2022, Norway
9 European Council, ‘Infographic – Liquefied natural gas infrastructure in the EU’ (2022) <https://www.consilium. europa.eu/en/infographics/lng-infrastructure-in-the-eu/> accessed 2 May 2023; European Commission, ‘In focus: Reducing the EU’s Dependence on Imported Fossil Fuels (2022) <https://ec.europa.eu/info/news/focus-reducing-eus-dependence-imported-fossil-fuels-2022-apr-20_en> accessed 2 May 2023.
10 Moniek De Jong, ‘Uncovering Uncomfortable Truths: The Geopolitics of EU Gas Imports in the Aftermath of the Invasion of Ukraine’ (2023) 307 Egmont Royal Institute for International Relations Security Policy Brief <https://www.egmontinstitute.be/uncovering-uncomfortable-truths/> accessed 28 October 2023.
11 European Council, ‘Infographic – Liquefied natural gas infrastructure in the EU’ (n 9).
12 The White House, ‘FACT SHEET: United States and European Commission Announce Task Force to Reduce Europe’s Dependence on Russian Fossil Fuels’ (2022) <https://www.whitehouse.gov/briefing-room/ statements-releases/2022/03/25/fact-sheet-united-states-and-european-commission-announce-task-force-to-reduce-europes-dependence-on-russian-fossil-fuels/> accessed 2 May 2023.
covered 20 per cent of European imports, while it is now the first supplier with over 25 per cent. In 2022, Norway supplied more than 90 bcm of natural gas to the EU, mostly through underwater pipelines – the Europipe gas pipeline system and the recently completed Baltic gas pipeline (with a nominal capacity of 10 bcm of natural gas from Norway to Poland via Denmark), which has a major geopolitical impact as it allows Poland to fully substitute Russian imports – also using LNG tankers.13
2. north afriCa region: mediterranean energy Cooperation
Given the combination of its geographical proximity to the southern coast of the European Union and the availability of huge oil and gas reserves, the North African region has traditionally been involved in long-term energy cooperation with the EU: in addition to the LNG option, Spain and the southern part of Italy are connected to an underwater gas pipeline from Algeria and Libya.
Following the reduction of Russian gas supplies after February 2022, Algeria has become one of the main gas suppliers to the EU, together with Norway, increasing its share of EU gas imports from 10% in 2021 to 12% in 2022, using both natural gas pipelines and LNG options:14 Algeria has the second largest natural gas reserves (2,300 bcm)15 in Africa after Nigeria and is immediately expressing its commitment to increase exports to the EU.
The Italian peninsula is the main natural hub to receive the potential increase in Algerian gas exports to the EU, through the Transmed sub-sea pipeline (with a nominal capacity of 35 bcm/y) – which connects the Hassi R’Mel fields with Mazara del Vallo in Sicily, crossing Tunisia – and in LNG form delivered to the Panigaglia regasification plant in Liguria. Consequently, in the first months of 2022, Italy – as a member of the EU and in order to strengthen its internal energy security – has been pursuing an active energy diplomacy aimed at deepening energy relations and cooperation with Algeria. During two
13 Lisa Jucca, ‘Norway Gas Lifeline for Europe is the Smart Move’ Reuters (9 September 2022) <https://www.reuters. com/breakingviews/norway-gas-lifeline-europe-is-smart-move-2022-09-09/#:~:text=Norwaypercent20ispercent20expectedpercent20topercent20export,thepercent20country’spercent20totalpercent20gaspercent20demand> accessed 2 May 2023; Alexandra Krzysztoszek, ‘Baltic Pipe Gas Pipeline Opens, Connects Norway and Poland’ Euractiv (28 September 2022) <https://www.euractiv.com/section/energy-environment/news/baltic-pipe-gaspipeline-opens-connects-norway-and-poland/> accessed 2 May 2023.
14 Hasan Butt, ‘Algerian Gas Flows to Europe Shrink, but Italy Gains as Trade Ties Strengthen’ (2023) S&P Global <https://www.spglobal.com/commodityinsights/en/market-insights/latest-news/natural-gas/013123-algerian-gasflows-to-europe-shrink-but-italy-gains-as-trade-ties-strengthen> accessed 28 April 2023.
15 British Petroleum, ‘Statistical Review of World Energy’ (2021) 34 BP <https://www.bp.com/content/dam/bp/ business-sites/en/global/corporate/pdfs/energy-economics/statistical-review/bp-stats-review-2021-full-report.pdf> accessed 28 April 2023.
official visits by former Prime Minister Draghi to Algiers (April and July 2022), the parties signed a Memorandum of Understanding on energy cooperation, with Algeria committing to increase gas exports up to 9 bcm by 2024, using the spare capacity (i.e. the difference between the nominal capacity of the pipeline and the volumes actually transported on the Transmed pipeline) of 12 bcm.16 In January 2023, Italy’s new Prime Minister, Giorgia Meloni, made official visits to Algeria and Libya to strengthen Italy’s energy trade relations with its southern Mediterranean gas suppliers in North Africa.17 Algeria’s importance in the EU’s energy diversification strategy, which aims to increase the share of non- Russian gas imports, is also evident when considering the available spare capacity via LNG: the country has two LNG terminals (Skikda and Arzew) with a combined capacity of 34 bcm/yr, but in 2021 Algeria exported 16 bcm, meaning that the potentially available spare capacity is 17.9 bcm.18 However, despite its large export capacity, Algeria has not been able to massively increase its gas production in the short term for a variety of reasons, including political and technical obstacles, scarcity of foreign investment in the exploration of new fields and the high cost of production, a growing domestic demand that absorbs half of national production and must be met in order to avoid dangerous social tensions.19 The national company Sonatrach has decided to invest more than $30 billion in exploration and production activities to increase gas production in the short term and develop new projects to meet Italy’s additional gas import needs agreed in 2022.20 Yet, if we analyse the 2022 data, we can see that while Algeria’s share of EU gas imports has increased (12 per cent in 2022, compared to 10 per cent in 2021), Algerian gas flows to Europe have decreased by around 6 bcm in 2022, with a total of 44 bcm exported via pipelines and LNG tankers.21 The main reason for this is
16 Eni, ‘Eni and Sonatrach Agree to Increase Gas Supplies from Algeria Through Transmed’ (2022) Eni Press Release <https://www.eni.com/en-IT/media/press-release/2022/04/eni-and-sonatrach-agree-to-increase-gas-supplies-fromalgeria-through-transmed.html> accessed 28 April 2023.
17 Allan Kaval, ‘Giorgia Meloni Launches Her Mediterranean Policy in Algiers – Eager to Increase Its Gas Imports from Africa, Italy Wants to Become an ‘Energy Hub’ between Europe and the Southern Mediterranean’ Le Monde (24 January 2023) <https://www.lemonde.fr/en/international/article/2023/01/24/giorgia-meloni-launches-her-mediterranean-policy-in-algiers_6012947_4.html> accessed 28 April 2023.
18 Manfred Hafner, ‘EU Energy Policy and the MENA Region in the Wake of Russia’s Invasion of Ukraine’ in Valeria Talbot (ed.), Energy Politics in the MENA Region: From Hydrocarbons to Renewables? (Ledizioni LediPublishing 2022) 13–33, 28, 31; US Energy Information Administration, ‘Country Analysis Brief: Algeria’ (2023) EIA <https://www.eia.gov/international/content/analysis/countries_long/Algeria/algeria.pdf> accessed 28 April 2023.
19 Szymon Kardaś, ‘Conscious Uncoupling: Europeans’ Russian Gas Challenge in 2023’ (2023) ECFR Commentary <https://ecfr.eu/article/conscious-uncoupling-europeans-russian-gas-challenge-in-2023/> accessed 28 April 2023.
20 Aydin Calik, ‘Algeria’s Sonatrach Targets “Rapid New Output”: Exclusive MEES Interview with CEO Toufik Hakkar’ MEES (Nicosia 2023) <https://www.mees.com/2023/1/6/corporate/algerias-sonatrach-targets-rapid-newoutput-exclusive-mees-interview-with-ceo-toufik-hakkar/55e111f0-8dc3-11ed-b111-630c86e3be0d> accessed 28 April 2023.
21 Hasan Butt, ‘Algerian Gas Flows to Europe Shrink, but Italy Gains as Trade Ties Strengthen’ (n 14).
the cessation of Algerian gas exports to Spain via the Maghreb-Europe Gas Pipeline (MEG, with a nominal capacity of 12 bcm, but used at 50 per cent of its capacity) at the end of 2021, due to the deterioration of diplomatic relations with Spain and Morocco (transit country for this pipeline) over the Western Sahara issue and the role of the Polisario Front. This loss was only partially offset by the increase in gas exports to Italy, which reached 22 bcm in 2022. At present, Algeria only exports 9 bcm of gas to Spain via the Medgaz sub-sea pipeline (in addition to LNG exports), and unfortunately these diplomatic tensions undermine the possibility of using the spare capacity of the MEG (almost 7 bcm) to increase exports to the EU via Spanish territory.22 Moreover, financial investments are needed for the realisation of new transport infrastructures, such as the Trans-Saharan Gas Pipeline, which should deliver natural gas from Nigeria and Algeria to EU markets, and the Galsi pipeline project (from Algeria to Italy via the island of Sardinia), which was originally conceived to deliver natural gas but has now been reconfigured to deliver green hydrogen, which would be produced in Algeria. No final investment decision has been announced for either of these projects, so they remain as proposals which cannot at present contribute to the EU’s energy security.23 The state of permanent conflict in Libya unfortunately hinders the exploitation of Libya’s huge gas potential and its full involvement as a reliable energy partner for the EU: exploration campaigns to find new oil and gas fields are frozen due to the high instability, hampering the possibility of increasing hydrocarbon production and delivering it regularly to international markets. Libya has the third largest natural gas reserves in Africa (estimated at 1,400 bcm), but they are largely untapped: at present, the country only exports gas to Italian markets through the Greenstream sub-sea pipeline, which connects Libya’s gas fields in the west of the country directly to Gela in Sicily. This pipeline has a nominal capacity of 8 bcm, but is operating below its nominal capacity.24 The state of instability affects the regularity of supplies, creating a state of vulnerability: In March 2011, during the so-called ‘Arab Spring’ that led to the ousting of Qaddafi, the Greenstream gas pipeline was closed for 6-8 months (until 2011, Libya was Italy’s third largest gas supplier), while infrastructure badly damaged by the uprising had to be rehabilitated.25 As part of Italy’s energy diplomacy aimed at securing additional gas volumes
22 Intissar Fakir, ‘Given Capacity Constraints, Algeria is No Quick Fix for Europe’s Russian Gas Concerns’ (2022) Middle East Institute <https://www.mei.edu/publications/given-capacity-constraints-algeria-no-quick-fix-europes-russian-gas-concerns> accessed 28 April 2023; Hasan Butt, ‘Algerian Gas Flows to Europe Shrink, but Italy Gains as Trade Ties Strengthen’ (n 14).
23 US Energy Information Administration, ‘Country Analysis Brief: Algeria’ (n 18).
24 British Petroleum, ‘Statistical Review of World Energy’ (n 15) 34.
25 Fabio Indeo, ‘The Geopolitics of Energy in the Mediterranean Region: Regional Needs, Security, Logistics and Interdependency – A Prospective View’ (2012) CEMISS Research Project, The Italian Military Center for Strategic Studies 14–15.
for the EU, during Prime Minister Meloni’s visit to Libya in January 2023, Italy’s Eni and Libya’s National Oil Corporation signed an $8 billion agreement to develop Libya’s offshore hydrocarbon Structure A and E (western region) ‘aimed at increasing gas production to supply the Libyan domestic market as well as to ensure export to Europe’.26 Under conditions of political stability and security, production is not expected to start until 2026 (8 bcm/y).27 Nevertheless, Libya’s domestic scenario remains characterised by high volatility, a condition that affects its reliability as a stable energy supplier for the EU and Italy: in fact, a few days after the ENI-NOC agreement mentioned above, a group of protesters temporarily closed the gas pipeline linking Mellitah to Italy.28 Another interesting area of energy cooperation is the implementation of clean electricity interconnections between the two shores of the Mediterranean, exploiting the huge potential of solar and wind power as well as green hydrogen. Currently, the Spain–Morocco interconnector (1,400 MW capacity) is the only electricity link between North Africa and the EU, but several projects are on the agenda, such as the 600 MW submarine interconnector between Italy and Tunisia, which has been included in the EU’s list of projects of common interest (PCI).29 The REPowerEU strategy will encourage the parties to deepen cooperation in the fields of renewable energy and green hydrogen, given that one of the objectives is to import 10 Mt of green hydrogen by 2030: North African countries appear to be reliable partners in this ‘clean energy cooperation’, given their geographical proximity to EU markets and the huge potential expected in terms of production.30 In the field of renewable energies, Morocco is the EU’s most important and reliable partner, as the country already exports clean electricity to Spain: in October 2022, the EU and Morocco signed a ‘green partnership’ agreement, which they hope will strengthen cooperation in the field of renewable energies, mainly solar energy produced in large solar parks (Noor and Ourzazate) and wind, which is also
26 Eni, ‘Eni Launches a Major Gas Development Project in Libya’ (2023) <https://www.eni.com/en-IT/media/press-release/2023/01/eni-launches-a-major-gas-development-project-in-libya.html> accessed 28 April 2023.
27 Moustefa Ouki, ‘Italy and Its North African Gas Interconnections: A Potential Mediterranean Gas “Hub”?’ (2023) The Oxford Institute for Energy Studies OIES Energy Comment <https://www.oxfordenergy.org/publications/ italy-and-its-north-african-gas-interconnections-a-potential-mediterranean-gas-hub/> accessed 28 April 2023.
28 Abdulkader Assad, ‘Protesters Shut Green Stream Gas Pipeline from Libya to Italy’ The Libya Observer (29 January 2023) <https://libyaobserver.ly/news/protesters-shut-green-stream-gas-pipeline-libya-italy#:~:text=Apercent20grouppercent20ofpercent20graduatespercent20of,NOC)percent20didpercent20notpercent20includepercent20them> accessed 28 April 2023.
29 Manfred Hafner, ‘EU Energy Policy and the MENA Region in the Wake of Russia’s Invasion of Ukraine’ (n 18) 31.
30 Martin Lambert, ‘RePowerEU: Can Renewable Gas Help Reduce Russian Gas Imports by 2030?’ (2022) The Oxford Institute for Energy Studies OIES Comment <https://www.oxfordenergy.org/wpcms/wp-content/uploads/2022/07/RePowerEU-Can-Renewable-Gas-help-reduce-Russian-gas-imports-by-2030.pdf> accessed 11 January 2025.
the basis for the production of green hydrogen.31 Egypt also has huge potential to develop a green hydrogen production industry (under construction) and is also the world’s seventh largest ammonia producer, which are on factors that form the basis of the strategic partnership on renewable hydrogen signed with the EU in November 2022.32 Despite the great opportunities to develop a promising ‘clean energy cooperation’, the main precondition remains to ensure a scenario of domestic stability and to guarantee the security of infrastructures, to protect the expensive financial investments made by states, international banks and consortia, and to preserve the future regularity of electricity supply.
3. azerBai Jan and the full implementation of the southern gas Corridor (sgC)
With the launch of the Trans Adriatic Pipeline (TAP) in December 2020, Azerbaijan has further legitimised itself as a reliable energy partner for the EU, opening and fuelling a new and alternative energy route designed to deliver non-Russian gas to the EU. A cornerstone of the EU’s diversification strategy to enhance energy security, TAP is the final segment of the Southern Energy Corridor – an EU flagship project that also links the South Caucasus Pipeline to the Trans Anatolian Pipeline – to transport natural gas from the Caspian Sea through Georgia and Turkey to Greece, Bulgaria and Italy as final markets.33 Following the outbreak of the current energy crisis, the EU has turned its attention to Azerbaijan, with the aim of increasing gas exports to the EU by using the spare capacity of TAP, which is an existing and operational infrastructure. Currently, the maximum capacity of TAP is 10 bcm/y, although the TAP consortium has already planned to double the infrastructure capacity to 20 bcm/y.
In July 2022, European Commission President Ursula von der Leyen and Energy Commissioner Kadri Simpson met with Azerbaijani President Aliyev in Baku and signed a Memorandum of Understanding on the export of an additional 10 bcm/y of gas from Azerbaijan to Europe from 2027: on the basis of the enhanced energy cooperation, Azerbaijan is already
31 European Commission Directorate-General for Neighbourhood and Enlargement Negotiations, ‘The EU and Morocco Launch the First Green Partnership on Energy, Climate and the Environment Ahead of COP 27’ (2022) <https://neighbourhood-enlargement.ec.europa.eu/news/eu-and-morocco-launch-first-green-partnership-energyclimate-and-environment-ahead-cop-27-2022-10-18_en> accessed 27 April 2023.
32 European Commission, ‘Memorandum of Understanding on a strategic partnership on renewable hydrogen between the European Union and the Arab Republic of Egypt’ (16 November 2022) <https://energy.ec.europa. eu/publications/memorandum-understanding-strategic-partnership-renewable-hydrogen-between-european-union-and-arab_en> accessed 27 April 2023.
33 Trans Adriatic Pipeline, ‘Trans Adriatic Pipeline: The Big Picture’ (2023) <https://www.tap-ag.com/about-tap/ the-big-picture> accessed 26 April 2023.
increasing gas supplies to the EU from 8.1 bcm in 2021 to an expected 12 bcm in 2022.34 However, the expansion of TAP’s capacity (as well as of the other two segments) will be influenced by several factors, such as concrete interest from potential European buyers and subsequent purchase agreements as a precondition for final investment decisions (FID).35
Another key and related issue is Azerbaijan’s ability to increase gas production from new fields, taking into account the rising domestic demand and other commitments. At present, the giant Shah Deniz gas field is the only source of gas for TAP, but it alone cannot provide the expected additional 10 bcm of gas required by the EU, as well as future gas production from other small fields in Azerbaijan, which will not be sufficient to fill the infrastructure.36 Another relevant factor is Russia’s influence in the Caspian basin as one of the five littoral states, together with Kazakhstan, Turkmenistan and Iran.
Even if the Caspian Convention signed in 2018 would formally allow the realisation of the Trans-Caspian underwater gas pipeline37 connecting Turkmenistan (which has the fourth largest gas reserves in the world) with Azerbaijan fully, with the full implementation of the SGC project, Russia always opposes any project to realise energy transport infrastructure connecting the Central Asian shore with the Caucasian one, citing alleged environmental concerns.38 In February 2022, Azerbaijani President Aliyev and Russian President Putin
34 European Commission, ‘EU and Azerbaijan enhance bilateral relations, including energy cooperation’ (2019) Press Release 18 July 2019 <https://ec.europa.eu/commission/presscorner/detail/en/ip_22_4550> accessed 26 April 2023.
35 Gulmira Rzayeva, ‘Expansion of the Southern Gas Corridor Pipelines and Future Supplies to Europe’ (2023) The Oxford Institute for Energy Studies OIES Paper 180 <https://www.oxfordenergy.org/publications/expansion-ofthe-southern-gas-corridor-pipelines-and-future-supplies-to-europe/> accessed 26 April 2023.
36 David O’Byrne, ‘Azerbaijan’s Russian Gas Deal Raises Uncomfortable Questions for Europe’ (2022) Eurasianet <https://eurasianet.org/azerbaijans-russian-gas-deal-raises-uncomfortable-questions-for-europe> accessed 26 April 2023.
37 The Convention on the Legal Status of the Caspian Sea, signed in August 2018, established that the Caspian Sea is a ‘closed sea’ (and not an ‘international lake’). Furthermore, Article 14 recognises the right to build an underwater gas pipeline if there is an agreement between the countries involved in the route (a position that Azerbaijan and Turkmenistan jointly supported for years), but these projects must be in the accordance with internationally recognised ecological requirements and standards: this means that the implementation of this project could be influenced in case of potential and almost obvious negative observations on this matter from the Russian and Iranian sides. For the full text of the Convention, see e.g. Convention on the Legal Status of the Caspian Sea (2019) International Legal Materials 58(2) 403–13 <https://www.jstor.org/stable/26643935> accessed 18 December 2024.
38 Azad Garibov, ‘Key Disputes Remain Unsettled in the Caspian Sea Despite the Signing of the Convention on Legal Status’ (2019) IEP/CIFE EUCACIS in Brief 8 <http://archiv.iep-berlin.de/wp-content/uploads/2019/06/ EUCACIS-inBrief-Garibov.pdf?it=wp-content/uploads/2019/06/EUCACIS-inBrief-Garibov.pdf> accessed 26 April 2023; Convention on the Legal Status of the Caspian Sea (n 37); Mariana Liakopoulou, Fabio Indeo, ‘The Agreement on the Dostluk Field and the Outlook for Caspian Energy Security’ (2021) NATO Association of Canada/Association Canadienne pour l’OTAN Energy Security Program Research Study 2 <https://natoassociation. ca/the-agreement-on-the-dostluk-field-and-the-outlook-for-caspian-energy-security/> accessed 26 April 2023.
39
signed a high-level agreement stating that both countries ‘promise to refrain from carrying out any economic activity that directly or indirectly harms the interests of the other side’.
This agreement could undermine Azerbaijan’s potential support for the construction of the Trans-Caspian gas pipeline, in order to avoid a negative Russian stance on the geopolitical and economic damage caused by the development of this energy export route. Nevertheless, the parties continue to negotiate. Turkey seems very interested in opening the TransAnatolian pipeline TANAP (the middle section of the SGC) to transport Turkmen gas to Europe. To circumvent Russian opposition, one possible option is a project backed by a US company, based on the realisation of a gas pipeline connecting the Turkmen offshore Magtymguly field with the Azeri-Chirag-Gunashli field in Azerbaijan (with a capacity of 10–12 bcm), which could deliver Turkmen gas through the TANAP pipeline.40 In addition, Azerbaijan is also committed to increasing its role as an EU energy supplier in the field of renewable energy by promoting a renewable energy transmission corridor under the Black Sea – from Azerbaijan via Georgia to Romania and on to Hungary – exploiting its huge solar and wind potential, while the European Commission would propose hydrogen transport via the Southern Gas Corridor, taking into account Azerbaijan’s interest in starting domestic production of green hydrogen.41
5. qatar and energy Chokepoint ConCerns
Another important partner that could contribute to the EU’s diversification strategy is Qatar, which has the world’s third largest natural gas reserves and is the world’s second largest LNG exporter after Australia.42 The Emirate is a traditional energy partner for the EU as the second largest LNG exporter after the US – Italy, Spain, Belgium (and the UK) are the main EU markets for Qatar’s LNG exports – and is looking to consolidate its position: following Russia’s invasion of Ukraine, the Qatari authorities expressed solidarity with the EU and
39 Vasif Huseynov, ‘Azerbaijan and Russia Sign Declaration on Allied Cooperation’ (2022) 19(25) Eurasia Daily Monitor <https://jamestown.org/program/azerbaijan-and-russia-sign-declaration-on-allied-cooperation/> accessed 26 April 2023 (emphasis added).
40 David O’Byrne, ‘Turkey Looking to Transit Turkmen Gas via Azerbaijan’ (2022) Eurasianet <https://eurasianet. org/turkey-looking-to-transit-turkmen-gas-via-azerbaijan> accessed 26 April 2023.
41 Mateusz Kubiak, ‘Azerbaijan Set to Become a Green Energy Supplier to the EU’ (2023) Eurasia Daily Monitor 20/3 <https://jamestown.org/program/azerbaijan-set-to-become-a-green-energy-supplier-to-the-eu/> accessed 26 April 2023.
42 British Petroleum, ‘Statistical Review of World Energy’ (n 15) 36.
pledged to provide additional volumes of natural gas to enhance energy security.43 Qatar’s involvement could also pay dividends in promoting the LNG option to further diversify supply routes and reduce the dependence on gas imports via land pipelines.
Italian and German politicians visited Qatar to sign agreements to increase LNG imports from that country, while French energy companies signed a cooperation agreement with Qatar Energy to work on the North Field expansion project, which is expected to be the main source of future growth in Qatari LNG exports.
Due to fierce competition from the US and Australia in the LNG markets and rising global demand, in 2017 Qatar lifted its moratorium on further development of the North Field (the world’s largest single non-associated natural gas field, located offshore the northeastern peninsula of Qatar), allowing it to increase production and expand export capacity from 77 million tonnes per annum (Mtpa) to 110 Mtpa in 2026 and ultimately to 126 Mtpa by 2027, meaning an additional 65 bcm/y of LNG will be available for export over the next few years.44 However, Qatar does not appear to be in a position to consistently increase LNG exports to the EU in the short term, as 70 per cent of its LNG exports are currently delivered to East Asian markets (China, Japan, South Korea, Taiwan) on the basis of longterm contracts and therefore cannot be redirected to the EU.45 Due to this lack of spare LNG export capacity, the Doha authorities estimated that only 10–15 per cent of its LNG exports could be made available to Europe, which would amount to 15.5 bcm per year of additional supply, or about 10 per cent of what the EU needs to replace Russian gas imports.46 The combination of the expected increase in gas production and the expiration of longterm contracts means that by 2030 more than 60 per cent of Qatar’s export capacity will be uncontracted. This is a huge window of opportunity for the EU: Germany has signed a deal to buy 2 million tonnes of LNG a year from 2026.47 Nevertheless, EU member states
43 Matthew Amlot, ‘Qatar Stands “In Solidarity” with Europe, Will Continue to Supply Gas: Energy Minister’ (2022) Oil&Gas <https://www.oilandgasmiddleeast.com/news/qatar-stands-in-solidarity-with-europe-will-continue-to-supply-gas-energy-minister> accessed 29 April 2023.
44 John Calabrese, ‘Qatar Doubles Down on LNG Amid Energy Market Volatility’ (2023) MEI Middle East <https:// www.mei.edu/publications/qatar-doubles-down-lng-amid-energy-market-volatility> accessed 29 April 2023.
45 Pier Paolo Raimondi ‘A Scramble for Gas: Qatari LNG and EU Diversification Plans’ (2022) Istituto Affari Internazionali IAI Commentaries 22/18 <https://www.iai.it/sites/default/files/iaicom2218.pdf> accessed 29 April 2023.
46 Economist Intelligence Unit, ‘Can the Middle East and Africa Meet Europe’s Energy Needs?’ (2022) <https:// country.eiu.com/article.aspx?articleid=1982106581&Country=Algeria&topic=Economy&subtopic=O_4> accessed 29 April 2023; Naser Al-Tamimi, ‘UAE and Qatar: A New Road to the EU Energy Market’ in Valeria Talbot (ed.), Energy Politics in the MENA Region: From Hydrocarbons to Renewables? (Ledizioni LediPublishing 2022) 93–116, 95.
47 John Calabrese, ‘Qatar Doubles Down on LNG Amid Energy Market Volatility’ (n 44).
will face stiff competition from China (and other energy-hungry East Asian markets): in November 2022, China signed a 27-year supply agreement with Qatar (worth $60 billion) to buy 4 million tonnes of LNG per year.48 One element of vulnerability that EU member states need to take seriously into account is that Qatar can only export its natural gas in liquefied form – due to a lack of land pipelines – which must necessarily cross the Strait of Hormuz, a geo-energy chokepoint between Iran and Oman: Consequently, a possible interruption of energy flows through Hormuz – due to a natural disaster or linked to a state of instability or conflict in the Persian Gulf – could lead to a dangerous interruption of LNG exports to the EU, seriously affecting both the EU’s and Qatar’s energy security due to the impossibility of reaching international markets. To address this vulnerability, Qatar could focus on the Dolphin pipeline (which currently exports Qatari gas to the UAE and Oman) and use its spare capacity of 13 bcm/y to deliver gas via LNG terminals in Oman, bypassing Hormuz and reaching the Arabian Sea directly.49 In addition to these concerns, Qatari LNG tankers must pass through another vulnerable chokepoint, the Bab el Mandeb Strait (between Yemen, Djibouti and Eritrea), on their way through the Red Sea to the Mediterranean, which is under severe threat from rocket and drone attacks by Houthi groups. A state of instability and insecurity along the Bab el Mandeb Strait could force LNG tankers from the Persian Gulf to reroute and divert around the southern tip of Africa, increasing transit time and shipping costs.50
6. eastern mediterranean and the tripartite energy Cooperation
Following the energy crisis triggered by the Russian invasion of Ukraine, the development of enhanced energy cooperation with the Eastern Mediterranean countries has gradually become a strategic priority for the EU, which aims to strengthen its energy security developing alternative natural gas supply corridors as part of a broader strategy of geographic diversification of suppliers to replace energy imports from Russia.
In addition to its geographical proximity to the EU, the Eastern Mediterranean can benefit from huge natural gas reserves (at least 10,000 bcm): the Levant Basin alone (an area that
48 Elis Gjevori, ‘Qatar and China Sign Long-term LNG Deal Worth $60bn’ (2022) Middle East Eye <https://www. middleeasteye.net/news/china-qatar-lng-deal-largest-signs> accessed 29 April 2023.
49 Rami Shabaneh, Bertrand Rioux and Steve Griffiths, ‘Can Cooperation Enhance Natural Gas Utilization in the GCC?’ (2020) Kapsarc Commentary <https://www.kapsarc.org/research/publications/can-cooperation-enhance-natural-gas-utilization-in-the-gcc/> accessed 19 December 2024.
50 US Energy Information Administration, ‘The Bab el-Mandeb Strait Is a Strategic Route for Oil and Natural Gas Shipments’ (2019) EIA <https://www.eia.gov/todayinenergy/detail.php?id=41073> accessed 29 April 2023.
includes Cyprus, Israel and Lebanon) would have reserves of almost 3,400 bcm, estimates that seem realistic given that natural gas reserves discovered in the territorial waters of Israel and Cyprus already exceed 1,300 bcm.51 Moreover, the largest offshore gas fields – Zohr in Egypt (reserves estimated at 850 bcm), Leviathan (605 bcm) and Tamar (307 bcm) in Israeli territorial waters – are already in production and represent a concrete opportunity for the EU to successfully implement its diversification strategy.52 The creation of the East Mediterranean Gas Forum (EMGF)53 in 2019 – bringing together prospective regional suppliers such as Israel, Egypt and Cyprus with EU consumers such as Italy and Greece – and the political agreement to implement the Eastmed sub-sea gas pipeline between Israel, Cyprus and Greece in 2020, are designed to pave the way for the implementation of a regional gas market offering the EU a new alternative supply corridor and allowing regional producers to find promising markets for their exports.
On 15 June 2022, the President of the European Commission Ursula von der Leyen signed a Memorandum of Understanding with the Energy Ministers of Egypt and Israel, establishing a five-year framework for increased gas exports from the Eastern Mediterranean to the EU 54 This tripartite energy partnership is characterised by several strategic strengths: Egypt can easily play the role of a key energy hub, is geographically closer to the EU’s southern markets (Italy, Greece, Spain, France), and benefits from existing and operational export terminals such as the Idku and Damietta LNG terminals (with a combined nominal capacity of 17 bcm), which can re-export natural gas supplied by the Leviathan gas field in Israeli offshore waters. At present, Egypt has committed to increase LNG exports to the EU from 2 to 5 bcm/y, but the expected increase in gas production at both Leviathan and Zohr fields will allow to fully fill the remaining spare capacity of the existing LNG terminals, which regularly provide the EU with 17 bcm/y of non-Russian gas. Cyprus is also planning to supply natural gas from the Aphrodite fields to the Egyptian liquefaction terminals of Idku and
51 U.S. Energy Information Administration, ‘Overview of Oil and Natural Gas in the Eastern Mediterranean Region’ (2013) EIA <https://www.eia.gov/international/content/analysis/regions_of_interest/Eastern_Mediterranean/ eastern-mediterranean.pdf> accessed 30 April 2023.
52 Charles Ellinas, ‘Energy and Geopolitics in the Eastern Mediterranean’ (2022) Atlantic Council Global Energy Center Issue Brief February <https://www.atlanticcouncil.org/wp-content/uploads/2022/03/Eastern-Mediterranean_Final. pdf> accessed 30 April 2023.
53 The East Mediterranean Gas Forum (2024) <https://emgf.org/> accessed 19 December 2024.
54 European Commission, ‘Memorandum of Understanding on Cooperation Related to Trade, Transport, and Export of Natural Gas to the European Union between the European Union Represented by the European Commission, the Arab Republic of Egypt Represented by the Ministry of Petroleum and Mineral Resources, the State of Israel Represented by the Ministry of Energy’ [EU-Egypt-Israel Memorandum of Understanding] (2022) <https://energy. ec.europa.eu/eu-egypt-israel-memorandum-understanding_en> accessed 30 April 2023.
Damietta through a sub-sea gas pipeline to be completed by 2025.55 As a member of the EU, Cyprus’ involvement is important as it could contribute to increasing the availability of natural gas to the continental EU market: Aphrodite (which alone holds 124 bcm) and the other three gas discoveries allow Cyprus to benefit from about 390 bcm of combined reserves, with a promising potential to become a regional gas supplier.
For the EU (but also for the suppliers that have started to sell gas to the European markets), this option has an immediate impact by providing the EU with additional gas supplies in the short term, without having to wait for the realisation of new transport infrastructures, namely the EastMed sub-sea gas pipeline: Indeed, according to the Edison–DEFA consortium, this pipeline should transport 9–12 bcm of gas per year from the Cypriot and Israeli fields to Italy by 2026 through four underwater pipeline segments,56 an option that does not coincide with the EU’s urgent energy needs to have immediately additional gas volumes, also considering that the potential realisation of Eastmed is strongly affected and complicated by the tense relations in the regional geopolitical scenario.
Turkey is the main opponent of the realisation of any energy infrastructure project in the Eastern Mediterranean that does not involve Ankara (which was also excluded by the EMGF due to the opposition of the other members). The Turkish government claims that any project aimed at realising energy infrastructure and any energy exploration activities in the Cypriot territorial waters undertaken by the government in Nicosia are illegal, as the current status of Cyprus as a divided country should lead to an equitable distribution of economic revenues and exploration rights.57
In addition, Turkey and Libya signed a bilateral agreement in 2019 to define a very large joint exclusive economic zone (EEZ, which has never been recognised by the international community) that includes parts of the island of Crete and Greece’s EEZ, potentially allowing Ankara to oppose the realisation of Eastmed, as its expected initial route will have to cross this disputed area, where the EEZs of Greece and Turkey partially meet.
55 Karolina Zielińska, ‘Israel’s Mediterranean Gas: The Potential for Gas Export to Europe and the Dynamic of Regional Cooperation’ (2022) Centre for Eastern Studies OSW Commentary <https://www.osw.waw.pl/sites/ default/files/OSW_Commentary_466.pdf> accessed 30 April 2023; Al Monitor, ‘Egypt, Cyprus Focus on Natural Gas Pipeline Amid Tensions in Eastern Mediterranean’ (2020) <https://www.al-monitor.com/originals/2020/09/ egypt-cyprus-natural-gas-pipeline-east-mediteranean-turkey.html#ixzz7edsJV4Yt> accessed 30 April 2023.
56 Edison, ‘EastMed-Poseidon Project’ (2023) <https://www.edison.it/en/eastmed-poseidon-project> accessed 30 April 2023.
57 Simone Tagliapietra, ‘Will the European Market Need East Mediterranean Gas?’ in Angelos Giannakopoulos (ed.), Energy Cooperation and Security in the Eastern Mediterranean: A Seismic Shift towards Peace or Conflict? (Tel Aviv University edn 2016) 97–108.
Nevertheless, in the post-February 2022 reshaped energy scenario, the European Commission has tried to revive the Eastmed project, although it depends on its economic and commercial feasibility, as well as its ability to contribute to the objectives of the Green Deal and the EU REPower: this pipeline is already considered an EU Project of Common Interest (PCI) – and therefore eligible for European funding, even if based on natural gas – because it would be built to also supply green hydrogen to European markets.58 In the coming years, Israel aims to double production from the Leviathan gas field (from 12 to 21 bcm), while the US-brokered 2022 agreement between Israel and Lebanon to resolve their maritime border dispute has opened up new opportunities for cooperation, increased energy production and the availability of additional volumes of natural gas to the markets. Israel’s Karish (located within Israel’s EEZ but subsequently claimed by Lebanon) and Tanin fields could also supply more gas to Europe. International energy companies are working on a project to realise a floating LNG terminal at Vasilikos (Cyprus) to process LNG from Cypriot and Israeli gas supplies, with a capacity of 4 bcm/year.59
However, the latent state of instability in the Levant region following the Israel-Hamas conflict and its spill-over into Lebanon could potentially delay or freeze the implementation of planned energy projects, thus undermining the possibility of fully exploiting the huge hydrocarbon potential that exists.
With the addition of natural gas supplies from Cyprus, the Eastern Mediterranean’s surplus supply for export could total 40 bcm by 2030,60 accounting for almost 1/3 of EU’s gas imports from Russia in 2021. However, the lack of infrastructure (LNG terminals) remains the main challenge for these suppliers to maximise their exports: regional countries need to work with the EU and international oil companies to attract financial investment for the development of LNG terminals, with priority given to the floating liquefied natural gas (FLNG) option, which can overcome existing geopolitical obstacles.
58 Sarantis Michalopoulos, ‘Ukraine War Revives EastMed Gas Pipe Talks but EU Insists on Feasibility’ Euractiv (5 April 2022) <https://www.euractiv.com/section/energy/news/ukraine-war-revives-eastmed-gas-pipe-talks-but-euinsists-on-feasibility/> accessed 30 April 2023.
59 Charles Ellinas, ‘At Last, a Bankable LNG Project for Cyprus’ Cyprus Mail (Nicosia, 24 April 2022) <https:// cyprus-mail.com/2022/04/24/at-last-a-bankable-lng-project-for-cyprus/> accessed 30 April 2023.
60 David Butter, ‘Egypt’s Energy Ambitions and its Eastern Mediterranean Policy’ in Michaël Tanchum (ed.), Eastern Mediterranean in Uncharted Waters: Perspectives on Emerging Geo-Political Realities (Konrad Adenauer Stiftung 2020) 69–79.
7. ConClusion
The European Union has successfully worked to improve its energy security by developing a broader strategy of diversification and involving new suppliers in a wider framework of cooperation. Following Russia’s invasion of Ukraine, EU countries have upgraded their LNG capacity (Italy, Poland) or created new terminals (Germany): the Floating Storage and Regasification Unit (FSRU) is undoubtedly a viable option for European countries to increase the availability of gas supply in the short term and a faster solution than building a gas pipeline.
However, the EU’s diversification strategy remains seriously affected by significant distortions that place the EU’s energy security in a dangerous state of vulnerability, in particular the unchanged dependence on energy imports (both natural gas, RES/clean electricity and hydrogen). The main precondition of regular and uninterrupted supply appears to be negatively undermined and threatened by geopolitical constraints (in the Eastern Mediterranean and the Caspian basin) and by the inability of these supplier countries to increase their production in a concrete way to meet the EU’s needs (Algeria, Azerbaijan).
On the basis of the chapter’s research question, the EU’s energy diplomacy has effectively broadened the portfolio of suppliers, marginalising the share of Russian gas in a normal condition of security and stability: nevertheless, all these suppliers suffer from vulnerabilities that could lead to a halt in exports to the EU, thus affecting the regularity of supply and the coveted condition of energy security.
Among the various options, LNG imports from the Eastern Mediterranean and the tripartite energy cooperation between the EU, Israel and Egypt appear to be the most viable in the short term, opening up a new energy route as an alternative to the Southern Gas Corridor.
However, the potential threat to LNG traffic through the Bab el Mandeb has become a real concern following the Israel-Hamas war, which has prompted the Houthi militias to increase terrorist attacks on maritime traffic through the Red Sea and forced Qatari LNG tankers to change their route to European markets. Moreover, the widespread state of instability in Middle East could lead to a possible halt in Israeli gas exports to the EU and has indefinitely frozen promising prospects such as the positive results following the demarcation of the maritime border between Israel and Lebanon for the exploitation of offshore gas fields in the Levantine basin.
As with gas pipelines, clean energy interconnections need stability to attract financial investment for their realisation and to ensure regular supply: this is particularly true for the North Africa region, where full exploitation of the huge renewable energy potential and access to the EU market can only be achieved if apolitical stability and security are maintained.
Particular attention should be paid to the green hydrogen option: despite a good renewable potential (solar and wind) and the adoption of a hydrogen development strategy, the future production of green hydrogen in the European Union will not be sufficient to guarantee energy security, making it necessary to import green hydrogen to satisfy domestic demand, essentially re-proposing the current scenario of vulnerability characterised by dependence on imports and threats to the regularity of supply. REPowerEU envisages that by 2030, 10 Mt/year of renewable hydrogen will be produced in the EU and 10 Mt/year of renewable hydrogen will be imported from abroad, by tanker or through three main import corridors identified by the EU Commission: across the Mediterranean (Morocco, Algeria, Egypt), through the North Sea (Norway) and, when conditions allow, with Ukraine.
It is clear that this state of vulnerability could only be addressed by a strong reduction of import dependence, combined with energy efficiency and savings measures, as well as an increase in EU production of RES, while avoiding the negative impact of geopolitical volatility of external energy partners.
C hapter 3
‘industry Fit for 55’? assessing the path towards an EU solar industrial policy
SébAStiEN théroN
séBastien Théron
the author was a student at the College of Europe during the 2022/2023 academic year, in the European Public Affairs and Policies speciality of the European interdisciplinary Studies master’s programme. he has always been interested in economic policies and has specialised in industrial and, more recently, energy policies. A former graduate of ilEri and the University of luxembourg, he has also participated in the CEPS industrial policy task forces and the Eib summer school, internships (Consultative Commission on industrial Change, European Economic and Social Committee), contributed to works on the role of the Eib in the energy transition, luxembourg’s economic diplomacy, and obtained the European merit Prize for his first master’s thesis on the renaissance of European industrial policy. in his own words, he has “the will to contribute to the most recent positive and strategic European developments in terms of EU productive capacities, notably related to the energy transition but also to traditional industries.
This study started in September 2022 when the author entered the College of Europe in Natolin. It was presented at the Natolin NEST Energy and Climate Conference on 22 June 2023. A lot has happened between June 2023 and October 2024 when the text was finalised, but the main findings of the article are still relevant and the data used is similar to that used during the writing of this paper. After having graduated from the College, the author now works for a French multinational energy company. The content of this article reflects the views of the author and not those of his employer or the College.
1. introduCtion
‘I’m all for putting 450 billion euros a year into the ecological transition. But if it means buying Chinese solar panels and losing our jobs, I say no’.1
‘[Th]e twin transitions will be fuelled by raw materials [RMs]. (…) So we have to avoid falling into the same dependency as with oil and gas. (…) Let’s make sure that the future of industry is made in Europe’.2
These two quotes, from the former Commissioner for Internal Market and Industry and the President of the European Commission (EC) respectively, are very significant.
Indeed, less than 3% of the solar panels3 installed in Europe are produced in Europe,4 while Europe is the world’s second largest market, with China accounting for more than 80% of world production5 and aiming for 95%.6 This is the situation that the above-mentioned European policy-makers are trying to avoid.
Moreover, while it is the most concentrated and vulnerable clean energy, facing supply disruptions,7 it is also the energy with the largest increase in EU targets: from 257GW of installed
1 Thierry Breton (2023) ‘C dans l’air’ <https://twitter.com/Cdanslair/status/1612230506892128257> accessed 2 January 2025 [‘Je veux bien qu’on mette 450 milliards d’euros par an dans la transition écologique. Mais si c’est pour acheter des panneaux solaires chinois et perdre nos emplois, je dis non’].
2 European Commission, ‘2022 State of the Union Address by President von der Leyen’ (2022) <https://ec.europa. eu/commission/presscorner/detail/en/speech_22_5493> accessed 26 March 2023.
3 Throughout this paper, ‘solar’ means photovoltaic, often referred to as PV.
4 Commissariat à l’énergie atomique et aux énergies alternatives [Alternative Energies and Atomic Energy Commission] ‘Le solaire photovoltaïque, un atout pour l’Europe’ (2022) CEA <https://www.cea.fr/presse/Pages/actualites-communiques/energies/solaire-photovoltaique-atout-pour-europe.aspx> accessed 25 December 2022.
5 International Energy Agency, ‘Special Report on Solar PV Global Supply Chains’ (2022) 7 IEA <https://iea.blob. core.windows.net/assets/d2ee601d-6b1a-4cd2-a0e8-db02dc64332c/SpecialReportonSolarPVGlobalSupplyChains. pdf> accessed 25 December 2023.
6 Seema Prasad, ‘China to Dominate 95% of Solar Panel Supply Chain” (2022) DownToEarth <https://www.downtoearth. org.in/news/energy/china-to-dominate-95-of-solar-panel-supply-chain-83651> accessed 2 January 2025.
7 International Energy Agency, ‘Securing Clean Energy Technology Supply Chains’ (2022) IEA 18–19 <https://iea.blob. core.windows.net/assets/0fe16228-521a-43d9-8da6-bbf08cc9f2b4/SecuringCleanEnergyTechnologySupplyChains. pdf> accessed 26 December 2022.
solar capacity in 20238 to 600GW by 20309 (750GW for the EU solar sector10), while wind would increase from 218GW in 2023 to 510GW in 2030.11 This is part of the REPowerEU plan, which readjusts the Green Deal and ‘Fit for 55’ targets following Russia’s invasion of Ukraine.
One of the most recent responses to the above concerns has been the publication of a European strategy for solar energy,12 which goes hand in hand with the major initiatives launched by the Green Deal Industrial Plan:13 the Critical Raw Materials Act14 and the Net Zero Industry Act (NZIA),15 the European response to the US IRA (Inflation Reduction Act).
All this means that solar energy will play a central role in Europe’s future energy mix, while this energy and the industry that supports it is the one that will see the largest increase
8 International Renewable Energy Agency, ‘Renewable Capacity Statistics’ (2024) IRENA <https://www.irena.org/ Publications/2024/Mar/Renewable-capacity-statistics-2024> accessed 29 March 2024.
9 European Commission, ‘Communication from the Commission to the European Parliament, the European Council, the Council, the European Economic and Social Committee and the Committee of the Regions – REPowerEU Plan’ (2022) 18.5.2022 COM(2022) 230 final 6 <https://eur-lex.europa.eu/resource.html?uri=cellar:fc930f14-d7ae-11ec-a95f-01aa75ed71a1.0001.02/DOC_1&format=PDF> accessed 25 December 2022.
10 SolarPower Europe, ‘National Energy and Climate Plans’ (2023) SolarPower Europe <https://www.solarpowereurope.org/advocacy/national-energy-and-climate-plans> accessed 29 March 2024.
11 European Commission, ‘Commission Staff Working Document Implementing the REPOWER EU Action Plan: Investment Needs, Hydrogen Accelerator and Achieving the Bio-Methane Targets Accompanying the Document (…) REPowerEU Plan COM(2022) 230 final’ (2022) 18.5.2022 SWD(2022) 230 final 16 <https://eur-lex. europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52022SC0230> accessed 29 March 2024.
12 European Commission, ‘Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions – EU Solar Energy Strategy’ (2022) 18.5.2022 COM(2022) 231 final <https://eur-lex.europa.eu/resource.html?uri=cellar:516a902d-d7a0-11ec-a95f-01aa75ed71a1.0001.02/DOC_1&format=PDF> accessed 25 December 2022.
13 European Commission, ‘Communication from the Commission to the European Parliament, the European Council, the Council, the European Economic and Social Committee and the Committee of the Regions – A Green Deal Industrial Plan for the Net-Zero Age’ (2023) 1.2.2023 COM(2023) 62 final <https://eur-lex.europa. eu/legal-content/EN/TXT/PDF/?uri=CELEX:52023DC0062> accessed 29 March 2024.
14 European Commission, ‘Proposal for a Regulation of the European Parliament and of the Council establishing a framework for ensuring a secure and sustainable supply of critical raw materials and amending Regulations (EU) 168/2013, (EU) 2018/858, 2018/1724 and (EU) 2019/1020’ (2023) 16.3.2023 COM(2023) 160 final 2023/0079 (COD) <https://eur-lex.europa.eu/resource.html?uri=cellar:903d35cc-c4a2-11ed-a05c-01aa75ed71a1.0001.02/ DOC_1&format=PDF> accessed 26 March 2023.
15 European Commission, ‘Proposal for a Regulation of the European Parliament and of the Council on establishing a framework of measures for strengthening Europe’s net-zero technology products manufacturing ecosystem (Net Zero Industry Act)’ (2023) 16.3.2023 COM(2023) 161 final 2023/0081 (COD) 17 <https://eur-lex.europa.eu/ resource.html?uri=cellar:6448c360-c4dd-11ed-a05c-01aa75ed71a1.0001.02/DOC_1&format=PDF> accessed 26 March 2023.
in deployment and production worldwide,16 with production capacity levels above those needed to meet the deployment requirements of the Paris Agreement.17 This trend can also be seen in the fact that in 2023, for the first time in history, investment in solar exceeded that in upstream oil.18
From these developments around the energy transition as a potential transition of dependencies, in a wider context of industrial policy rebirth and geo-economic wars, a question emerges: What are the origins and developments that favour an EU solar industrial strategy?
The research interests fit into each of the gaps in the various areas of literature presented below, to form an integrated (energy and industrial) analysis with solid conceptual tools, theoretical frameworks and empirical data.
The main benefit of the work is to understand the origins and directions of a very recent but developing EU policy on solar energy and related industries, linked to the energy transition but also to the (re)industrialisation of Europe and the search for sustainable growth.
1.1. Literature review
The literature inspiring this work is not abundant, but it is evolving. As with fossil fuels,19 a growing literature is developing on the geopolitics of renewable energy.20 Such contribu-
16 International Energy Agency, ‘Special Report on Solar PV Global Supply Chains’ (2022) 117 (n 5); Intergovernmental Panel on Climate Change, ‘Synthesis Report of the IPCC Sixth Assessment Report (AR6) – Summary for Policymakers’ (2023) IPCC 28 <https://www.ipcc.ch/report/ar6/syr/downloads/report/IPCC_AR6_SYR_SPM. pdf> accessed 2 January 2025.
17 International Energy Agency, ‘The State of Clean Technology Manufacturing. An Energy Technology Perspectives Special Briefing – November 2023 Update’ (2023) IEA 9 <https://iea.blob.core.windows.net/assets/710264f60cb8-4f5c-8c95-4ae2ea64998a/TheStateofCleanTechnologyManufacturing_November2023Update.pdf> accessed 29 March 2024.
18 International Energy Agency, ‘World Energy Investment 2023. Overview and Key Findings – Energy Investment in 2023’ (2023) IEA <https://www.iea.org/reports/world-energy-investment-2023/overview-and-key-findings> accessed 29 March 2024.
19 Per Högselius, Energy and Geopolitics (Routledge 2019).
20 Daniel Scholten (ed.), The Geopolitics of Renewables (Springer 2018); Joel B. Eisen, ‘New Energy Geopolitics?: China, Renewable Energy, and the “Greentech Race”’ (2011) 86(9) Chicago Kent Law Review 9–58; International Renewable Energy Agency, ‘A New World. The Geopolitics of the Energy Transformation’ (2019) IRENA <https:// www.irena.org/-/media/files/irena/agency/publication/2019/jan/global_commission_geopolitics_new_world_2019. pdf> accessed 25 December 2022; Mark Leonard, Jean Pisani-Ferry, Jeremy Shapiro, Simone Tagliapietra and Guntram Wolff, ‘The Geopolitics of the Green Deal’ (2021) 04 Bruegel Policy Contribution 1–23 <https://www. bruegel.org/system/files/wp_attachments/PC-04-GrenDeal-2021-1.pdf> accessed 3 January 2025; Hosuk LeeMakiyama, ‘The EU Green Deal and Its Industrial and Political Significance’ (2021) 1 ECIPE Policy Briefs 1–10 <https://ecipe.org/wp-content/uploads/2021/02/ECI_21_PolicyBrief_01_2021_LY02.pdf> accessed 6 February 2025.
tions underline the geopolitical nature of energy and the fact that the transition from fossil fuels to renewable energy induces a shift in dependency from fossil fuels to raw materials (RMs, used to manufacture renewable technologies) actors. Here, the growing field of RM geopolitics is key.21 Similarly, the political economy of energy and climate transition examines the changes in competition between firms brough about by the energy transition.22
The literature on solar energy is often limited to its technical dimension,23 with rare links to industrial policy. However, some articles do take such a perspective, showing for instance that the EU wind industrial base is more protected from Chinese competition than the solar one.24 Some have established ways of understanding what they call ‘heliopolitics’, the international political economy of solar supply chains, between maximising supply, creating sustainable demand for PV and maximising domestic PV production.25 Others evoked the interrelationship between the German and Chinese solar industries, with the former benefiting from interaction with the latter to develop and outperform it.26
In addition, there is a more economic policy-oriented literature, notably the new economic geography theory,27 which re-legitimises the vertical/sectoral analysis of economic-industrial sectors, but also provides a basis for talking about industrial policy horizontally, with the ‘industrial policy triangle’ (trade, competition and technology/innovation).28
21 Sophia Kalantzakos, China and the Geopolitics of Rare Earths (Oxford University Press 2018); Guillaume Pitron, ‘The Geopolitics of the Rare-Metals Race’ (2022) 45(1) The Washington Quarterly 135–50; Julia Ebner, ‘Europe’s Rare Earth Dependence on China: Future Perspectives’ (2014) 07 European Institute for Asian Studies EIAS Briefing Paper 1–30 <https://www.eias.org/wp-content/uploads/2016/02/EIAS_Briefing_Paper_2014-7_Ebner.pdf> accessed 3 January 2025; Claire de Langeron, ‘Comment assurer l’approvisionnement de l’industrie européenne en minerais, minéraux industriels et métaux non ferreux?’ (2011) 59(4) Géoéconomie 53–64.
22 Douglas Arent, Channing Arndt, Mackay Miller, Finn Tarp and Owen Zinaman (eds), The Political Economy of Clean Energy Transition (Oxford University Press 2017).
23 Michael Boxwell, Solar Electricity Handbook 2021 Edition (Greenstream Publishing 2021).
24 Rainer Quitzow, Joern Huenteler and Hanna Asmussen, ‘Development Trajectories in China’s Wind and Solar Energy Industries: How Technology-related Differences Shape the Dynamics of Industry Localization and Catching Up’ (2017) 158 Journal of Cleaner Production 122–33.
25 Robert Y. Shum, ‘Heliopolitics: The International Political Economy of Solar Supply Chains’ (2019) 26 Energy Strategy Reviews 2–7.
26 Michael Dunford, Kyoung H. Lee, Weidong Liu and Godfrey Yeung, ‘Geographical Interdependence, International Trade and Economic Dynamics: The Chinese and German Solar Energy Industries’ (2012) 1(20) European Urban and Regional Studies 14–36.
27 Élie Cohen, Souveraineté industrielle. Vers un nouveau modèle productif (Odile Jacob 2022) 55–8.
28 Élie Cohen and Jean-Hervé Lorenzi, Politiques industrielles pour l’Europe (La documentation française 2000) <https://www.cae-eco.fr/staticfiles/pdf/26.pdf> accessed 6 May 2023.
1.2. Theory
To answer the research question, our approach is based on Liberal Intergovernmentalism (LI), as the main part of our analysis will use the three-step approach of this EU integration theory: 1. national solar industrial basis, 2. national preferences, 3. EU solar industry policy. However, some other complementary tools, notably the solar trilemma or the studies on the specificities of the solar industry, will be used to analyse the issue in a more precise and practical way.
In order to work on the EU solar industrial policy, the first section of this chapter presents the history of the sector to understand its developments (its growth, the evolution of its dominant actors/countries) and its specificities. This allows us to better proceed with the second section, which applies LI’s three-step approach. First, by looking at a range of data at national level (e.g. solar jobs, PV capacity), it is possible to rank EU countries according to their ‘solar interest’. Second, by delving into national preferences and policies (through government documents), one can not only get an overview of these elements, but also assess the influence of the data from the previous section on national policies. And thirdly, by discussing EU initiatives and strategies in comparison with the previous section, one can assess both the influences and the directions taken at EU level to build an EU solar industry policy (through documents from EU institutions).
2. history and CharaCteristiCs of a new But ClassiC industry
2.1. Genesis and development
To understand solar energy, its industry and policies, a historical digression is inevitable. The use of the sun as an energy source dates back to prehistoric times (heating).29 But the history that interests us is more recent and linked to that of semiconductors, going back to the 19th century, within the first industrial and energy revolution. The 1840s to 1880s were a period of discovery for solar energy: Becquerel discovered the photovoltaic effect in 1839.30 In parallel, there was a ‘grand expansion in knowledge and invention as entrepreneurs pursued many new energy technologies alternatives to wood and coal’.31 However, this first solar window of opportunity did not lead to the democratisation of solar uses due to lack of economic viability (compared to coal, oil), difficulty in attracting investment (high
29 Travis Bradford, Solar Revolution. The Economic Transformation of the Global Energy Industry (MIT Press 2006) 94.
30 Tudor Jenkins, ‘A brief History of ... Semiconductors’ (2005) 40(5) Physics Education 431–32.
31 Travis Bradford, Solar Revolution. The Economic Transformation of the Global Energy Industry (n 29) 94.
upfront costs), while the beginning of the 1st world war forced governments and businesses to turn to the most mature, available and cheapest technologies.32
After the First World War there was a revival of interest in semiconductors (radars, radios) and photocells began to be commercialised.33 The 1930s saw a revival in the development of semiconductors, under the pressure of the coming war (need for efficient radars) and thanks to innovations, ‘[t]he scene was now set for the explosion of experimental and theoretical work’ on semiconductors (with improved quality of minerals).34 If the inter-war period was characterised by limited use of semiconductors, the entry of the USA into the war (1941) created ‘an immediate need for large quantities of reliable silicon crystal diodes for use in high frequency radar systems’.35
After, ‘[t]he end of the war saw a change in emphasis of semiconductor work, with emphasis now on economic benefits of semiconductor technology’,36 driven by the consumer society and the growing use of electronic tools and electricity in American homes, and then elsewhere. The creation of the first point-contact transistor at Bell Labs in 1947 and the first silicon transistor at Teal in 195437 paved the way for the development of the first photovoltaic cell at Bell Labs in the same year:38 the second solar window of opportunity. There was great interest in these technologies from industrial researchers and the government (which funded them, particularly through NASA), ‘to support critical power systems’ for space use.39 The oil crisis of the 1970s boosted this interest, but Reagan closed this window by cutting funding for solar research and tax credits (back then, the US represented 80% of the global solar market) at a time of low fossil fuel prices.40
32 ibid 94–7.
33 Gerald L. Pearson and Walter H. Brattain, ‘History of Semiconductor Research’ (1955) 43(12) Proceedings of the IRE IEEE 1795 <https://ieeexplore.ieee.org/stamp/stamp.jsp?tp=&arnumber=4055359> accessed 3 January 2025.
34 Tudor Jenkins, ‘A Brief History of ... Semiconductors’ (n 30) 435.
35 Jack Ward, ‘A Brief History of Early Semiconductors’ (2014) Transistor Museum 2 <http://semiconductormuseum. com/MuseumStore/TransistorMuseum_Brief_History_of_Early_Semiconductors.pdf> accessed 6 May 2023.
36 Tudor Jenkins, ‘A Brief History of ... Semiconductors’ (n 30) 436.
37 ibid 438.
38 Travis Bradford, Solar Revolution. The Economic Transformation of the Global Energy Industry (n 29) 97.
39 ibid 98.
40 ibid
A third solar window of opportunity developed in parallel, with very active (financially) public policies in Japan and Germany to support the deployment of solar energy along the value chain, making these countries the new leaders in solar energy from the late 1990s onwards.41
2.2. New era and massification
The third solar window of opportunity marked the opening of an exponential increase in solar use but also triggered its decompartmentalization beyond North America, opening the fourth solar window of opportunity. This era has an Asian (Chinese) flavour as China’s dominance in downstream (deployment) and upstream (manufacturing) is unquestioned. The huge reduction in the price of PV (now the cheapest energy, with the fastest price decrease)42 is due to the enormous increase in Chinese PV production.43
At the beginning of the 21st century, Japan and Germany still dominated both the installation and production of PV technologies, and China accounted for less than 2% of the global solar panel production.44 In 2001, 7 of the world’s top 10 PV producers were Japanese (4) and German (3), with none Chinese,45 but today China accounts for more than 80% of the world’s solar panel production (35% in 2007),46 dominating every step of the value chain (from materials to refining to assembly), with 7 of the 10 top (with the first 4) solar panel producers being Chinese.47
In the 10th Five-Year Plan (2001-2005), the Chinese government recognised the importance of solar technologies as a key industry for the country’s economy, its contribution to the
41 ibid 102.
42 International Renewable Energy Agency, ‘Renewable Power Generation Costs in 2020’ (2021) IRENA 11, 17, 35 <https://www.irena.org/-/media/Files/IRENA/Agency/Publication/2021/Jun/IRENA_Power_Generation_ Costs_2020.pdf> accessed 6 May 2023.
43 Robert Y. Shum, ‘The Coming Solar Trade War: Obstacles to Decarbonization from a Political-Economy Conflict’ (2017) 30(8) The Electricity Journal 49.
44 Rainer Quitzow, Joern Huenteler and Hanna Asmussen, ‘Development Trajectories in China’s Wind and Solar Energy Industries: How Technology-related Differences Shape the Dynamics of Industry Localization and Catching Up’ (n 24) 127.
45 Travis Bradford, Solar Revolution. The Economic Transformation of the Global Energy Industry (n 29) 102.
46 Rainer Quitzow, Joern Huenteler and Hanna Asmussen, ‘Development Trajectories in China’s Wind and Solar Energy Industries: How Technology-related Differences Shape the Dynamics of Industry Localization and Catching Up’ (n 24) 127.
47 Blackridge, ‘Top 10 List of Solar PV Module Manufacturers in 2024’ (2024) <https://www.blackridgeresearch. com/blog/top-solar-pv-module-panel-manufacturers-companies-suppliers-producers> accessed 9 January 2025.
trade surplus and China’s accession to the WTO.48 The ‘Made in China 2025’ plan does not explicitly mention solar, but its title is clear.49
Table 1: ‘Supply and demand policies targeting PV manufacturing’ in different countries50
China did not invent the formula: this catch-up was similar to the policies applied by previous solar leaders (‘access to cheap capital’, ‘strong government financial support’),51 although the scale and intensity of the support provided by China was greater. China focused on the entire value chain, starting from a weak position in all areas (it imported almost all the polysilicon and equipment needed for PV production),52 although it favoured direct and supply-side measures. The two challenges were the ‘technology gap’ and the ‘marketing disadvantage’.53 To overcome this, China put in place mechanisms to transfer technology from the leading countries at the time (import of turnkey PV production equipment and then substitution, repatriation of Chinese workers who had previously worked for the leading Western companies, JVs with world leaders to develop local production lines),
48 International Energy Agency, ‘Special Report on Solar PV Global Supply Chains’ (n 5) 106.
49 People’s Republic of China State Council, ‘Notice of the State Council on the Publication of Made in China 2025 2015 No. 28’ (Ben Murphy (tr ed), Etcetera Language Group (tr), 2022) 21 Georgetown University Center for Security and Emerging Technology CSET <https://cset.georgetown.edu/wp-content/uploads/t0432_made_in_ china_2025_EN.pdf> accessed 6 May 2023.
50 Original, based on the IEA ‘Special Report on Solar PV Global Supply Chains’ (n 5) 107–114.
51 Michael Dunford, Kyoung H. Lee, Weidong Liu and Godfrey Yeung, ‘Geographical Interdependence, International Trade and Economic Dynamics: The Chinese and German Solar Energy Industries” (n 26) 12.
52 International Energy Agency, ‘Special Report on Solar PV Global Supply Chains’ (n 5) 107.
53 Michael Dunford, Kyoung H. Lee, Weidong Liu and Godfrey Yeung, ‘Geographical Interdependence, International Trade and Economic Dynamics: The Chinese and German Solar Energy Industries” (n 26) 13.
favourable financing tools (public banks, opening up to FDI), cooperation with European industry leaders to certify the quality of Chinese PV (US Department of Energy, Shell, WB, UNDP), while developing local demand.54 China has also benefited from other elements: the availability of large amounts of low-cost (skilled) labour, whereas the competitiveness of the solar industry is based on cost reduction enabled by large production capacities (focused on process innovation, not product innovation, CAPEX-intensive, like any ‘mass product’), the development of Chinese raw material capacities (extraction/refining), but also in electronics,55 low electricity costs (PV industry is energy-intensive), vertical integration ‘to secure the volumes required to achieve economies of scale’,56 and rising living standards of China (to develop local growth and demand). Finally, China benefited from the strong demand in other countries (EU, Germany, Japan).57
54 ibid 12–17; Rainer Quitzow, Joern Huenteler and Hanna Asmussen, ‘Development Trajectories in China’s Wind and Solar Energy Industries: How Technology-related Differences Shape the Dynamics of Industry Localization and Catching Up’ (n 24) 129.
55 Rainer Quitzow, Joern Huenteler and Hanna Asmussen, ‘Development Trajectories in China’s Wind and Solar Energy Industries: How Technology-related Differences Shape the Dynamics of Industry Localization and Catching Up’ (n 24) 124, 131.
56 Michael Dunford, Kyoung H. Lee, Weidong Liu and Godfrey Yeung, ‘Geographical Interdependence, International Trade and Economic Dynamics: The Chinese and German Solar Energy Industries’ (n 26) 13.
57 ibid 15.
Figure 1: World renewable power capacities (GW), by source, 202158
823,484
2.3. State of play and characteristics
1360,502
Today, solar energy is the world’s second largest renewable energy source in terms of capacity.
Renewables account for 40% of global electricity production (solar 3.4%),59 with electricity accounting for one fifth (and rising) of global energy consumption.60 Solar is also the renewable energy that has attracted the most money, and the gap with the others is growing: $1350 billion between 2010 and 2019 ($1025 billion for wind),61 while between 1992
58 Original, based on International Renewable Energy Agency, ‘Renewable Energy Statistics 2022’ (2022) IRENA <https://www.irena.org/-/media/Files/IRENA/Agency/Publication/2022/Jul/IRENA_Renewable_energy_statistics_2022.pdf?rev=8e3c22a36f964fa2ad8a50e0b4437870> accessed 6 May 2023.
59 International Energy Agency, ‘Global Energy Review 2021. Renewables’ (2021) <https://www.iea.org/reports/ global-energy-review-2021/renewables> accessed 6 May 2023.
60 Enerdata, ‘Share of Electricity in Total Final Energy Consumption’ (2023) <https://yearbook.enerdata.net/electricity/share-electricity-final-consumption.html> accessed 6 May 2023.
61 UNEP and BloombergNEF, ‘Global Trends in Renewable Energy Investment 2019’ (2019) Frankfurt School of Finance & Management 13 <https://wedocs.unep.org/bitstream/handle/20.500.11822/29752/GTR2019. pdf?sequence=1&isAllowed=y> accessed 23 January 2023.
and 2021, the worldwide solar energy installed capacity has multiplied by ~35,000: from 0,044GW to 855GW today (wind energy installed capacity has been “only” multiplied by ~330 times: from 2,510GW to 823GW62).
Geographically, the historical “triad” that dominated the production and deployment of solar technologies is still in place, but the order has changed: the initial leader (the US) saw European solar capacity overtake it in the 2000s, but today the Chinese solar market alone is twice as the size of the EU’s. At the same time, production capacity has undergone a ‘solar pivot’ towards Asia. Overall, China accounts for almost 80% of global silicon production, over 95% of wafers, over 85% of cells and over 75% of modules.63 This is illustrated by the dispersion of PV companies worldwide: out of seven stages, China has the most companies in five, with only North America and Europe dominating, respectively, solar services and installation companies (less prone to offshoring). The number of companies worldwide producing and manufacturing silicon confirms this trend, which is significant given that 95% of solar panels (but also other key technologies such as semiconductors for electronics, used everywhere) are based on silicon.64
62 Data set from Lester R. Brown, World on the Edge: How to Prevent Environmental and Economic Collapse (W.W. Norton & Company 2010) – ‘World Cumulative Installed Wind Power Capacity and Annual Addition, 1980-2009’ <https://wayback.archive-it.org/22906/20240420080625/https://www.earth-policy.org/datacenter/ pdf/book_wote_ch9_wind_all.pdf> in Earth Policy Institute Data Center, ‘Climate, Energy, and Transportation’ (2024) <https://wayback.archive-it.org/22906/20240418015052/https://www.earth-policy.org/data_center/C23> accessed 4 January 2025.
63 International Energy Agency, ‘Special Report on Solar PV Global Supply Chains’ (n 5) 18.
64 ibid 13.
Table 2: Evolution and distribution of solar energy capacities (GW), 1992 to 202165
In terms of R&D, China is still lagging behind, although it is well placed in terms of patents for ‘Climate Change Mitigation Technologies related to energy generation, transmission, or distribution (including solar)’, in the third place behind Japan and the EU.66 Moreover, of the world’s top 15 most prolific universities and research institutes in the solar field, 4 are
65 Original, based on: International Renewable Energy Agency, ‘Renewable Energy Statistics 2022’ IRENA (n 58); International Renewable Energy Agency, ‘Renewable Energy Statistics 2018’ (2018) IRENA <https://www.irena. org/-/media/Files/IRENA/Agency/Publication/2018/Jul/IRENA_Renewable_Energy_Statistics_2018.pdf?rev=f24cf961625c47bdb81c0c3796615265>; International Renewable Energy Agency, ‘“Renewable Energy Capacity Statistics 2015 (2015) IRENA <https://www.irena.org/-/media/Files/IRENA/Agency/Publication/2015/IRENA_ RE_Capacity_Statistics_2015.pdf?rev=31b8998cf00241dd96c125ef2328346b>; International Energy Agency, ‘Photovoltaic Power Systems in Selected IEA Member Countries’ (1995) IEA <https://iea-pvps.org/wp-content/ uploads/2020/01/tr_1993.pdf>. All accessed 6 May 2023.
66 Organization for Economic Cooperation and Development, ‘Patents by Technology: Patents in Environmentrelated Technologies” (2023) OECD <https://stats.oecd.org/index.aspx?queryid=29068> accessed 6 May 2023.
in the EU, 8 are in Asia (5 Korean) and 3 are in the US.67 In terms of solar specialisation in innovation centres, Europe ranks second to last among the five strongest players studied for PV (ahead of the US, but behind China, Japan, Korea) and first for solar thermal (followed by the US, China, Korea and Japan).68
All these trajectories reveal the specificities of the sector.
Firstly, the development of solar energy cannot be understood without mentioning the role of public policies. While the first discoveries were made by individual inventors, the most important innovations that followed and the first commercialisation of solar technologies were made possible by industrial research processes (publicly funded), public support or public orders (war, conquest of space), before being extended to the rest of society through various instruments (subsidies, FITs, tax credits, investments or financing at preferential rates).
Secondly, the evolution of the industry confirms that comparative advantages are ‘socially constructed’ and ‘dynamic’:69 direct and targeted supply-side measures seem to be the most powerful tools.
The actors that develop these comparative advantages are those most able to benefit from the largest possible economies of scale, proving that ‘big is (still) beautiful’, in contrast to the idea that the energy transition means decentralisation and small-scale production.
Similarly, the evolution of the sector illustrates how prone it is to agglomeration-concentration effects, and the importance of looking at the whole value chain, not just the final stage (demand). Indeed, spill-over effects are very strong and are geographical as well as vertical and horizontal (firms in the same sector, upstream and downstream, seek to connect in the same place to maximise efficiency, learning and interaction), but also flow to the rest of the economy and to other sectors.
67 European Patent Office and International Energy Agency, ‘Patents and the Energy Transition: Global Trends in Clean Energy Technology Innovation, April 2021’ (2021) EPO and IEA 46 <https://iea.blob.core.windows.net/ assets/b327e6b8-9e5e-451d-b6f4-cbba6b1d90d8/Patents_and_the_energy_transition.pdf> accessed 23 January 2023.
68 ibid 50.
69 Élie Cohen and Jean-Hervé Lorenzi, Politiques industrielles pour l’Europe (n 28) 305.
Figure 2: Solar manufacturers and companies by type of activity, 202270
The PV industry is a textbook example of a mass-production sector.71
In addition, there are other reasons that can legitimise the value chain approach. Firstly, the benefits (financial, learning effects), but also the jobs, come from the activities along the whole chain, not only from the installation of solar panels (whose share of the value
70 Original, based on Solar Energy Directory, ‘Categories’ (2023) <https://web.archive.org/web/20220421213833/ https:/dir.list.solar/listing/categories> accessed 6 February 2025.
71 Rainer Quitzow, Joern Huenteler and Hanna Asmussen, ‘Development Trajectories in China’s Wind and Solar Energy Industries: How Technology-related Differences Shape the Dynamics of Industry Localization and Catching Up’ (n 24) 124.
added of the solar chain is 20%, ¼ of which comes from the input of materials, another ¼ from the manufacture of panels and the equipment needed for it, and 30% from monitoring/control, balance of systems (cable, iron, grid) and engineering and construction).72
Beyond the spillover effects, this approach can also be rational, based on political and strategic understandings: to secure the supply of PV, leading to greater strategic autonomy and energy security, in a period of economic-technological tensions, the use of energy as a weapon and delays. This, of course, contributes to the achievement of energy transition objectives.
4: Companies producing and manufacturing silicon, 202373
All this in a world where (high, extremely volatile) energy costs can have a negative impact on the overall competitiveness of companies, with financial, employment and know-how implications, as well as social and political consequences.
72 European Commission, ‘Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions – EU Solar Energy Strategy’ (n 12) 18.
73 Original, based on Europages, ‘Manufacturer Producer – Silicon Metal’ (2023) Europages <https://www.europages. co.uk/companies/manufacturer%20producer/silicon%20metal.html> accessed 6 May 2023.
Figure
Lastly, the existence of a domestic market does not necessarily guarantee the development of national capacities, even if ‘[i]n general, producers of these photovoltaic modules are [naturally] located in the major markets in which they sell their products’, with a slight time lag (as China now dominates the sector, both in terms of deployment and production).74
675
724
system,792
831
74 Travis Bradford, Solar Revolution. The Economic Transformation of the Global Energy Industry (n 29) 104.
75 Original, based on European Patent Office and International Energy Agency, ‘Patents and the Energy Transition: Global Trends in Clean Energy Technology Innovation, April 2021’ (n 67) 37.
Figure 5: Patents in solar technologies75
3. eu solar industry landsCapes and poliCies
3.1. National situations
Within the EU, Germany accounts for more than a third of installed solar capacity, followed by other large ‘solar’ countries with high capacity (light blue in Table 3), others with moderate capacity (yellow), and others with low capacity (pink) (same colour code for similar tables). This tends to follow the size of the country and its economy. The figures for solar energy production are relatively the same, with the only notable, and logical, differences being a larger share for sunnier countries (southern countries), and a smaller share for ‘darker’ countries (northern ones).76
Table 3: Solar landscape in EU member states (capacities in MW, solar potential ranking is worldwide, PV capacity/habitant in watts)77
76 International Renewable Energy Agency, ‘Renewable Energy Statistics 2022’ (n 58) 43–45.
77 Original, based on ibid; International Energy Agency, ‘Europe’ (2023) IEA <https://www.iea.org/regions/europe>; World Bank, ‘Global Photovoltaic Power Potential by Country’ (2020) 29–31 <https://documents1.worldbank. org/curated/en/466331592817725242/pdf/Global-Photovoltaic-Power-Potential-by-Country.pdf>; EurObserv’ER, ‘Photovoltaic Barometer’ (2022) 6 <https://www.eurobserv-er.org/pdf/photovoltaic-barometer-2022/>. All accessed 6 May 2023.
si 20. 376 18. 2,85% 11. 200th 17. 174 es 3. 15952 8. 7,87% 3. 89th 11. 276,5
se 13. 1610 23. 0,90% 24. 225th 20. 154,6 eu 161856 above 5,5%
ColoUr CodiNg:
colour indicates strong (tier 1:1 to 9), moderate (tier 2: 10 to 18), or small (tier 3: 19 to 27) data.
If we look at PV capacity per capita, the ranking changes significantly: the Netherlands is the country with the most solar energy per capita, followed by countries with high, moderate and low capacity per capita. In addition, the share of solar energy in national electricity production (which itself accounts for ~23% of EU energy consumption) is also interesting, since in some countries with low-moderate solar capacity, solar energy has a significant place in the electricity mix (Malta), although often when a country has high-moderate solar capacity, solar energy has a high-medium share in national electricity production (Germany). In terms of ‘solar potential’, the best endowed countries (light blue) are very often those in the south of Europe, while the least endowed countries (light pink) are in the north (moderately endowed countries in yellow). A country with high/moderate solar potential often has a high/moderate solar capacity (e.g. Italy) and vice versa (e.g. Finland).
Figure 6: Solar jobs in EU member states, 2023 (%= share of solar employment in national employment)78
ColoUr CodiNg:
colour indicates strong (tier 1:1 to 9), moderate (tier 2: 10 to 18), or small (tier 3: 19 to 27) data.
In terms of the sector’s weight in national employment, the figures are similar to those for capacity. Countries such as Germany or Spain are far ahead, with Poland employing almost as many solar workers as Germany, the undisputed leader of the sector in Europe for decades.
78 Original, based on International Renewable Energy Agency, ‘Renewable Energy Employment by Country’ (2022) IRENA <https://www.irena.org/Data/View-data-by-topic/Benefits/Renewable-Energy-Employment-by-Country> accessed 6 May 2023.
Table 4: EU Member States solar industrial basis79
ColoUr CodiNg: colour indicates strong (tier 1:1 to 9), moderate (tier 2: 10 to 18), or small (tier 3: 19 to 27) data.
79 Original, based on Solar Energy Directory, ‘Categories’ (n 70); Europages, ‘Manufacturer Producer – Silicon Metal’ (n 73).
In relative terms, however, the order is more surprising in terms of the share of solar jobs in national employment, with Estonia coming out on top, although the countries with low solar capacity are also those with the proportionally lowest solar employment, and vice versa.
As far as industrial and mineral capacities are concerned, even if the EU solar industrial base is weak compared to other world powers, the EU is not without capacities. However, these capacities are concentrated in five Member States, which are present in all dimensions of the solar value chain: France, Germany, Italy, the Netherlands and Spain. Other countries have capacity in several areas (e.g. Austria) or only in one (e.g. Bulgaria), while the others only have solar power installation companies. Again, Germany is the heart of Europe’s solar industrial base, from the production of basic materials and metals (not just silicon) to companies specialising in solar energy services and applications (excluding installations). Italy is the second most important EU country, followed by Spain, France and the Netherlands. These five countries account for more than 95% of EU solar companies (1079 out of 1130, excluding installers), 78% of installed PV capacity and 59% of additional capacity planned for 2030 (source: see Figure 5).
In terms of solar innovation and technology, France is in a dominant position, hosting 3 of the world’s 15 most prolific universities and public research organisations, including the world’s first, the Alternative Energies and Atomic Energy Commission (CEA), and Germany is home to the world’s third public research organisation.80 However, among the main applicants of these solar technologies, there are only three European companies (all German) in the world’s top 15 (Robert Bosch and Siemens are 6th and 7th respectively).81 Moreover, within the European continent, the country most specialised in PV technologies is Spain, just ahead of Switzerland, Germany, the Netherlands, Italy, France, the UK, Austria, Denmark and Sweden.82
Regarding trade, the EU has a huge and growing deficit in the PV sector, with imports amounting to €11.2 bn and exports to almost €2 bn in 2021, with China accounting for almost 90% of EU imports of solar panels.83 Without precise data from Member States, it can be assumed that the countries with the most solar capacity are those that have made
80 European Patent Office and International Energy Agency, ‘Patents and the Energy Transition: Global Trends in Clean Energy Technology Innovation, April 2021’ (n 67) 46.
81 ibid 50.
82ibid 61.
83 Eurostat, ‘International Trade in Products Related to Green Energy’ <https://ec.europa.eu/eurostat/statistics-explained/index.php?title=International_trade_in_products_related_to_green_energy> accessed 6 January 2025.
the most use of (Chinese) imports. However, for a key element such as silicon, while China accounts for more than ¾ of world production, the EU gets a large third of its consumption from Norway, a small third from France, and the rest is scattered across countries (Brazil, Bosnia-Herzegovina, Spain, China (only 2%), South Africa, etc.).84 It should be noted that silicon for solar applications is only a minor part of the total silicon used by European industry, accounting for 6% of the EU’s silicon metal (behind chemical applications and aluminium alloys, which account for 54 and 38% of the EU’s total silicon consumption respectively).85 Even more telling is the fact that the EU actually exports some PV polysilicon to China and imports back Chinese finished products (PVs), as it does not have enough manufacturing capacity to transform this material into ingots, then wafers, then cells and finally PVs.86
3.2. National preferences
There are also clear differences in national strategies and. On the basis of the elements presented, it is possible to establish a ‘ranking’ of the interests of the EU Member States with regard to solar energy. This confirms the first hypothesis of the LI, to a certain extent and without an absolute causal link. There is a link between a country’s level of interest in solar and its industry and its actions in this field. For example, Member States with strong (or moderate or weak) interest in solar are, in 60% of cases, those with strong (moderate or weak) future solar targets, and there is no situation where a Member State with strong interest in solar has weak targets, and vice versa Similarly, in 16 of the 27 situations, for example, a country with a strong solar interest has developed the most measures (and vice versa for weak or moderate interests), and there is only one situation where a Member State has acted in a limited way in favour of its solar interest: the Netherlands has introduced only 3 measures for the sector. It should be remembered that the IEA database87 may not list all documents and measures, its figures show trends. In the same vein, of the four Member States with a specific solar energy policy, three have a very strong interest in solar energy and one a moderate interest. For raw materials strategies (indirectly related to solar energy), of the 14 Member States with a strategy, 7 have a strong interest in solar energy, 4 have a moderate interest and 3 have a weak interest.
84 European Commission Directorate-General for Internal Market, Industry, Entrepreneurship and SMEs, Milan Grohol and Constanze Veeh, Study on the Critical Raw Materials for the EU 2023: Final Report (Publications Office of the European Union 2023) 112–113 <https://op.europa.eu/en/publication-detail/-/publication/5731 8397-fdd4-11ed-a05c-01aa75ed71a1> accessed 6 January 2025.
85 ibid 74.
86 Simone Tagliapietra, Ben McWilliams, Cecilia Trasi and Ugnė Keliauskaitė, ‘European Clean Tech Trackers’ (2024) Bruegel <https://www.bruegel.org/dataset/european-clean-tech-tracker> accessed 29 March 2024.
87 International Energy Agency, ‘Policies Database’ (2023) IEA <https://www.iea.org/policies> accessed 6 May 2023.
We can then look more closely at the preferences of national governments, even if we are limited by the small number of dedicated strategies (especially for solar). The first document dedicated to solar came from the Netherlands. It mentions that national capacity ‘covers virtually the entire solar technology chain’ and that this should be strengthened,88 and in parallel the Netherlands wishes to further develop ‘EU capacity in critical parts of the mineral value chain, including through sustainable mining and refining capacity in the EU’.89 The second strategy published was that of Germany. While recognising the links with RMs and the whole value chain (also translating an integrated approach), it argues that one should ‘secure supply chains and incentivis[e] competitive European production: With the aim of rebuilding the production of PV modules, inverters and other components in Germany and Europe’, to further ‘secure know-how, sovereignty and competitiveness’, enable ‘a faster energy transition’, create high-quality added value and jobs in the EU.90 Belgium does not have a national solar strategy, but Flanders, for example, has a Solar Plan, mainly aiming at the installation of PV 91 The only other Member State with a (public) position close to that of Germany and the Netherlands is therefore France, which, in the framework of its France 2030 plan, aims to ‘reduce the degree of national dependence on non-European suppliers, while developing future industries that guarantee the creation of value in France and Europe’, to ‘relocate or reduce dependence on strategic inputs (such as RMs, and downstream stages)’, to contribute to the energy transition and to the ‘emergence of a large-scale French PV industry’.92 However, France does not have a specific strategy. In addition, national mineral strategies generally refer to the need to develop national and European raw materials capacities along the value chain, without directly mentioning solar energy RMs.
88 Government of the Netherlands, ‘Next-Generation Solar Power’ (2020) 8 <https://www.rvo.nl/sites/default/ files/2020/08/NL-Solar-Guide-2020.pdf> accessed 7 January 2025.
89 Government of the Netherlands, ‘Non-paper on the Action Plan on Critical Raw Materials and the Critical Raw Materials Act’ (2023) 1 <https://www.rijksoverheid.nl/documenten/publicaties/2023/02/02/nl-non-paper-on-theaction-plan-on-critical-raw-materials-and-the-critical-raw-materials-act> accessed 7 January 2025.
90 Germany Bundesministeriums für Wirtschaft und Klimaschutz [Federal Ministry for Economic Affairs and Climate Action], ‘Photovoltaik-Strategie des BMWK’ [Photovoltaic Strategy of the Federal Ministry for Economic Affairs and Environmental Action] (2023) 3, 31 <https://www.bmwk.de/Redaktion/DE/Meldung/2023/20230505photovoltaik-strategie.html> accessed 6 May 2023. See also Federal Ministry for Economic Affairs and Climate Action, ‘Federal Minister Habeck: “We Need to Speed Up the Expansion of Solar Energy”. Second PV Summit in the Economic Affairs Ministry: Presentation of PV Strategy’ (2023) BMWK Press Release <https://www.bmwk. de/Redaktion/EN/Pressemitteilungen/2023/05/20230505-federal-minister-habeck-we-need-to-speed-up-theexpansion-of-solar-energy.html> accessed 6 January 2025.
91 Government of Belgium, ‘Plan national énergie-climat 2021-2030’ (2019) <https://www.plannationalenergieclimat. be/pnec-version-finale.pdf> 87.
92 Government of the French Republic, ‘France 2030: un an d’actions pour mieux vivre, mieux produire et mieux comprendre’ (2020) 11, 28 <https://www.gouvernement.fr/upload/media/content/0001/04/42d6c9f970c7345d5b02086c8525db012644d976.pdf> accessed 7 January 2025.
Finally, in terms of coalition building, joint statements between Member States on this issue are very rare. A first exception is the joint Franco-German document, which supports the development of European primary and secondary RMs capacities (with numerical targets for 2030), stocks for strategic sectors, joint purchases, additional means for the development of EU capacities (from extraction to downstream, through Important Projects of Common European Interest (IPCEIs), inclusion of RMs in the taxonomy (sovereign fund, EIB), RMs diplomacy and harmonisation of sustainable mining practices, without anything on solar.93
Table 5: EU Member States solar interest’ ranking, objectives and dedicated policies*
ee 13. 14.11 20. 1000-1500 20. +586 / 1086 9. +142 / 262% x V (2017)
fi 24. 20.77
= (as if) (2022) V (2011) de 3. 7.66
gr 7. 9.22
+20% V (2023) V (2010)
+240% x V (2012) hu 12. 13.44
ie 23. 19.44 15. 2500-5500
x x
+2364 / 5364
+1738 / 3944% x = (C.E. rms) (2017) it 2. 7.33
lt 20. 17.44
+1276
+502% x = (C.E. rms) (2021)
93 Governments of France and Germany, ‘Franco-German Non-Paper on a Critical Raw Materials Act’ (2022) <https://aeur.eu/f/3cx> accessed 14 March 2023.
lu
= (C.E. rms) (2021) mt
rms) (2021)
(2022)
(2017)
(2018)
(2018)
ColoUr CodiNg:
Figure 7: EU Member States measures to support solar energy (X= first year of measures)
ColoUr CodiNg:
However, the ‘German-Spanish Solar Initiative’, led by the German-Spanish Chamber of Commerce, focuses on the industrial dimension of PV, mentioning the need to ‘create production capacities to secure a long-term supply of PV modules for Europe’ and limit the trade deficit.94 This should contribute to the EU’s strategic autonomy and reduce its dependencies, create jobs, bring energy security, energy price stability and enable a European ‘industrial lead’ from ‘raw material extraction to production and recycling’, benefiting from the single market, economies of scale and European technical capabilities.95
3.3. EU actions
In the field of solar energy, the Commission has historically been less active than the Member States. Moreover, the recent Solar Energy Strategy (SES) is the first real EU initiative dedicated to solar energy, although it has been mentioned in old energy/climate policy documents. 96 At that time, the mineral and industrial dimensions of solar energy were missing.
In its SES, the Commission unveils four initiatives for the large-scale deployment of solar panels: European Solar Rooftops Initiative, shortening and simplifying authorisation procedures, availability of skilled labour and the European Solar PV Industry Alliance (ESIA).97
In addition, and very interestingly, the mineral industry dimension is recognised in a dedicated section on ‘Supply Chain Resilience’.98 The approach here is interesting, as it discusses not only the RMs used to produce the various components of a solar panel, but also all the materials used for ‘the manufacturing and installation of all PV modules’ (glass, aluminium, steel, copper)’.99 The weakness of European capacity in all areas of the value chain is widely recognised, and negative spill-over effects are invoked: ‘[i]f the scarcity of EU based manufacturing is not remedied, it is poised to reduce the EU’s competitiveness in research and innovation, an area in which proximity to manufacturing clusters is often necessary’.100 To avoid such spillovers, the Critical Raw Materials Act (CRMA) focuses on
94 German-Spanish Chamber of Commerce, ‘German-Spanish Solar Initiative’ (2022) 1–2 <https://www.ahk.es/ es/german-spanish-solar-initiative> accessed 3 February 2025.
95 ibid 2.
96 See for instance European Commission, ‘Communication from the Commission. “Energy for the Future: Renewable Sources of Energy”. White Paper for a Community Strategy and Action Plan’ (1997) 26.11.1997 COM(97) 599 final <https://europa.eu/documents/comm/white_papers/pdf/com97_599_en.pdf> accessed 26 March 2023.
97 European Commission, ‘Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions – EU Solar Energy Strategy’ (n 12) 1–2.
98 ibid 17.
99 ibid
100ibid 18.
developing EU capacities along the entire value chain: it aims for EU’s capacities to reach at least 10% of the annual consumption of 17 strategic raw materials by 2030, 40% for processing and 25% for recycling, adding that it will also be necessary to ensure that, by 2030, no more than 65% of the Union’s annual consumption of each strategic raw material at any relevant stage is sourced from a single third country.101 The SES also mentions trade measures (further liberalisation, dedicated FTA chapters), coupled with the ‘[s]trengthening [of] the sustainable and responsible domestic sourcing’ and work on a better conversion of ‘innovative technological advantages into large scale production and [building] economies of scale’ in almost identical wording to that used for RM infrastructure.102
Table 6: Composition of EBA and ESIA103
ColoUr CodiNg: colour indicates strong (tier 1:1 to 9), moderate (tier 2: 10 to 18), or small (tier 3: 19 to 27) data.
101Council of the European Union, ‘An EU critical raw materials act for the future of EU supply chains’ (2024) <https://www.consilium.europa.eu/en/infographics/critical-raw-materials/> accessed 29 March 2024.
102ibid; European Commission, ‘Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions – EU Solar Energy Strategy’ (n 12) 17, 19.
103Original, based on European Battery Alliance, ‘Network’ (2023) EBA <https://www.eba250.com/about-eba250/ network/>; European Solar PV Industry Alliance, ‘Meet Our Members’ (2022) ESIA <https://solaralliance.eu/ meet-our-members/>. Both accessed 20 March 2023.
Note: overlaps for the EBA (one enterprise can be present at different stages of the manufacturing process).
This should be supported by the ESIA, whose name has an industrial flavour and which is definitely the most important initiative for the EU solar industrial base. It aims to ‘reach 30 GW of committed European manufacturing capacity by 2025 [to cover ~2/3 of EU deployment need to reach REPowerUE targets], across all the value chain segments’, but also to ‘add 60 bn Euros of new GDP per year in Europe and the creation of more than 400,000 new jobs’.104 The model is the European Battery Alliance (EBA). It has an integrated approach with its efforts ‘centred on building a sustainable and vertically-integrated battery value chain in Europe, to ensure a secure supply of green, safe and high-performing batteries, while also gaining a significant share of the global battery market’. It has led to two dedicated IPCEIs and plans that ‘[t]he EU is set to meet 69% and 89% of its increasing demand for batteries by 2025 and 2030 respectively’,105 despite worrying announcements in the EU sector (bankruptcy of Northvolt, the EU battery champion).106 Moreover, the composition of the ESIA follows that of the EBA: economic (industrial) interests are very present, dominated by the member states with the strongest solar interest. So far, however, this alliance has not given rise to major funding programmes such as the IPCEIs.
104European Solar PV Industry Alliance, ‘High Level Launch Conference of the European Solar PV Industry Alliance. Joint Statement’ (2022) ESIA 1 <https://ec.europa.eu/docsroom/documents/52474/attachments/1/translations/ en/renditions/native> accessed 26 March 2023.
105European Commission, ‘Questions and Answers: The European Battery Alliance: Progress Made and the Way Forward’ (2022) <https://ec.europa.eu/commission/presscorner/detail/en/qanda_22_1257> accessed 26 March 2023.
106Dietrich Knauth, Marie Mannes and Terje Solsvik, ‘Sweden’s Northvolt files for bankruptcy, in blow to Europe’s EV ambitions’ Reuters (22 November 2024) <https://www.reuters.com/technology/northvolt-files-chapter-11bankruptcy-us-2024-11-21/> accessed 10 January 2025.
More recently, a genuine and deep bridge between these upstream and downstream activities has been strongly recognised and promoted by the Net Zero Industry Act (NZIA). Indeed, the EU SES and the CRMA must be seen in the context of the provisions of the NZIA proposal, which sets a generally ambitious objective: ‘by 2030, manufacturing capacity in the Union of the strategic net-zero technologies (...) approaches or reaches a benchmark of at least 40% of the Union’s annual deployment needs (...) to achieve the Union’s 2030 climate and energy targets’.107 This is a very ambitious target given the current situation and the future growth of this energy source. However, according to the ESIA objectives, the EU’s solar PV production capacity could represent 2/3 of annual installation needs over the next decade (30 of the 45GW of EU solar panel capacity installations/year).
However, in the final version of the NZIA, the list of strategic net-zero technologies (including solar) has been removed to give Member States more room for manoeuvre, and references to targets by technology have also been removed, although the 40% benchmark has been retained.108 Furthermore, unlike the IRA, but like the CRMA, the NZIA does not support European PV production, but merely sets time limits on the length of the PV permitting process.
The NZIA, with no measures to support European supply, imposes obligations on the demand side (renewable project developers) for public contracts and public tenders for renewable energy projects by requiring non-price criteria (sustainability, resilience, supposedly supporting EU producers with some forms of local content bonuses) to be taken into account when awarding projects (between 15% and 30%, the ceiling defined by EU competition rules). And there’s nothing on the STEP (Strategic Technology for Europe Platform) side, which is supposed to be a European sovereignty fund, because its amount has been cut from 10 to 1.5 billion euros, channelled solely to the military sector, and it is
107European Commission, ‘Proposal for a Regulation of the European Parliament and of the Council on establishing a framework of measures for strengthening Europe’s net-zero technology products manufacturing ecosystem (Net Zero Industry Act)’ (n 15) Art.1§2.a).
108Council of the European Union, ‘Net-Zero Industry Act: Council and Parliament Strike a Deal to Boost EU’s Green Industry’ (2024) Council of the EU Press Release 6 February 2024 modified 16 February 2024 <https:// www.consilium.europa.eu/en/press/press-releases/2024/02/06/net-zero-industry-act-council-and-parliament-strikea-deal-to-boost-eu-s-green-industry/> accessed 29 March 2024. For the final version, see European Parliament ‘Regulation (EU) 2024/1735 of the European Parliament and of the Council of 13 June 2024 on establishing a framework of measures for strengthening Europe’s net-zero technology manufacturing ecosystem and amending Regulation (EU) 2018/1724’ (2024) OJ L 2024/1735 28.6.2024 <https://eur-lex.europa.eu/legal-content/EN/ TXT/PDF/?uri=OJ:L_202401735> accessed 8 January 2025.
only going to award a seal of approval to some clean-tech projects so that, in theory, they can more easily raise funds on the market.109
Finally, again within the December 2023 text of the Green Deal Industrial Plan, the reform of the electricity market design aims to ensure less volatile and extreme electricity prices by encouraging long-term contracts and financing new low-carbon electricity generation capacity, notably through Contracts for Differences.110 While this could contribute to more stable prices for PV manufacturers with electricity intensive activities, this reform does not evolve the marginal pricing system, but only, and softly, incentivises actors to seek price stability through long-term contracts and PPAs.
4. ConClusion
First, the LI approach allows to shed new light on solar policy and industry developments, particularly in Europe. Its assumptions are validated rather than invalidated, even if the degree of causality of national situations on national preferences and of national preferences on EU policy orientations is not absolute and that other events (COVID, Russia’s invasion of Ukraine, US-China policies) and actors (companies) have undoubtedly contributed to European dynamics.
Moreover, the European SES and other related texts (NZIA, CRMA) reflect a recent paradigm shift towards integrated thinking that takes into account the entire value chain and seeks to develop EU capacities along these chains, reflecting a new relationship between the EU and industrial policy, which is no longer perceived as a ‘poor man’s business’.111 The paradox of EU industrial policy, according to which ‘industrial policy is wasteful and ineffective, except when it is deployed by the Chinese [or American] government’,112 might be challenged.
109Council of the European Union, ‘Strategic Technologies for Europe Platform: provisional agreement to boost investments in critical technologies’ (2024) Council of the EU Press Release 7 February 2024 modified 15 February 2024 <https://www.consilium.europa.eu/en/press/press-releases/2024/02/07/strategic-technologies-for-europe-platform-provisional-agreement-to-boost-investments-in-critical-technologies/> accessed 29 March 2024.
110Council of the European Union, ‘Reform of electricity market design: Council and Parliament reach deal’ (2023) Council of the EU Press Release 14 December 2023 modified 3 January 2024 <https://www.consilium.europa. eu/en/press/press-releases/2023/12/14/reform-of-electricity-market-design-council-and-parliament-reach-deal/> accessed 29 March 2024.
111Murat A. Yülek, How Nations Succeed: Manufacturing, Trade, Industrial Policy, and Economic Development (Palgrave Macmillan/Springer Nature Singapore 2018) 114ff.
112Robert Y. Shum, ‘The Coming Solar Trade War: Obstacles to Decarbonization from a Political-Economy Conflict’ (n 43) 50.
On the contrary, these policies are increasingly perceived positively, as being of a strategic, security, geopolitical and geo-economic nature, contributing strongly to the objectives of a double-fair transition and economic development. This is logical in a world where the EU, in a ‘triangular trade’ perspective, used to be an exporter of finished products (capturing their added value and technology), but is now an importer of certain technologies such as PV.
In terms of the solar trilemma, the Commission has rebalanced its position: previously focused on maximising supply and creating strong domestic demand, the Commission has added consideration of domestic production.113 Member States are also increasingly moving in this direction. This is a general trend in the EU, which is undoubtedly positive, because if the goal is not and cannot be 100% self-sufficiency, there is a wide range of possibilities between that extreme and the current extreme situation.
However, a number of questions and doubts must be raised. First, one of the big questions remains about the financing of these projects: there is no new money and no money being redirected to support EU supply, apart from piecemeal announcements by the EIB,114 while the IRA has triggered a historic surge115 in US investment in clean tech manufacturing, including solar.116 This has even led to the relocation of European PV factories from Europe to the US.117 The EU and the Member States are dithering over a subsidy war that has already started, that they cannot stop, that they did not trigger and that they will suffer the consequences of anyway, while ignoring the spill-over benefits of investing in a technology like PV.
113Robert Y. Shum, ‘Heliopolitics: The International Political Economy of Solar Supply Chains’ (n 25) 3.
114European Investment Bank, ‘Italy: Europe’s Biggest Solar Gigafactory 3Sun Secures €560 Million Financing from EIB and Pool of Italian Banks led by UniCredit and Backed by SACE’ (2024) EIB Newsroom Release 24 January 2024 <https://www.eib.org/en/press/all/2024-020-europe-s-biggest-solar-gigafactory-3sun-secures-eur560-millionfinancing-from-eib-and-pool-of-italian-banks-led-by-unicredit-and-backed-by-sace#:~:text=GDP%20and%20 jobs-,Italy%3A%20Europe%27s%20biggest%20solar%20gigafactory%203Sun%20secures%20%E2%82%AC560%20 million,UniCredit%20and%20backed%20by%20SACE&text=The%20gigafactory%20will%20produce%20 3GW,biggest%20solar%20panel%20production%20facility> accessed 29 March 2024.
115Goldman Sachs, ‘The US Inflation Reduction Act Is Driving Clean-Energy Investment One Year In’ (2023) Goldman Sachs Asset Management <https://www.top1000funds.com/2023/10/the-us-inflation-reduction-actis-driving-clean-energy-investment-one-year-in/> accessed 8 January 2025.
116Garrett Hering, ‘IRA at 1: US Solar Manufacturing Rises from Rubble’ (2023) S&P Global <https://www. spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/ira-at-1-us-solar-manufacturing-risesfrom-rubble-76710176> accessed 29 March 2024.
117Lionel Laurent, ‘The American Dream Is an Easy Sell for German Factories’ Bloomberg (29 March 2024) <https:// www.bloomberg.com/opinion/articles/2024-03-29/european-manufacturing-needs-novel-approach-vs-biden-s-ira> accessed 30 March 2024.
Similarly, the EU remains divided over the introduction of trade barriers to Chinese PV, which could increase the cost of the transition, while the US has introduced and intensified such measures since 2018,118 which has ‘helped’ (to date) to divert some of the global flow of Chinese PV to the EU, driving down prices and undermining the competitiveness of the EU PV sector.
Furthermore, in the past there has been a slight gap between Member States’ commitments on solar deployment targets and the EU’ targets, but this gap is definitely closing, as figures now indicate that PV deployment could even exceed the targets.119
The EU has undoubtedly recognised the value of having a PV industry on its soil, but the instruments to make this a tangible reality are currently very weak, as evidenced by, inter alia, the pleas for help from European solar manufacturers,120 and the achievement of the EU’s various industrial objectives seems highly unlikely.
Ultimately, the success of this strategy can be questioned, even if, due to the characteristics of the sector, China’s dominant position in the sector ‘may also be more vulnerable than the competitive advantage that European and American firms still enjoy [for how long?] in the wind power industry’.121
118The White House, ‘FACT SHEET: President Biden Takes Action to Protect American Workers and Businesses from China’s Unfair Trade Practices’ (2024) Statements and Releases 14 May 2024 <https://www.whitehouse. gov/briefing-room/statements-releases/2024/05/14/fact-sheet-president-biden-takes-action-to-protect-americanworkers-and-businesses-from-chinas-unfair-trade-practices/> accessed 8 January 2025.
119Victor Jack, ‘EU Blindsided by “Spectacular” Solar Rollout’ Politico (Brussels 12 August 2023) <https://www. politico.eu/article/solar-power-global-emissions-climate-crisis-eu-blindsided-by-spectacular-solar-rollout/> accessed 29 March 2024.
120Jonathan Packroff, ‘Solar Industry Calls for “Emergency Measures” as Manufacturers Prepare to Leave Europe’ Euractiv (5 February 2024) <https://www.euractiv.com/section/economy-jobs/news/solar-industry-calls-for-emergency-measures-as-manufacturers-prepare-to-leave-europe/> accessed 29 March 2024.
121Rainer Quitzow, Joern Huenteler and Hanna Asmussen, ‘Development Trajectories in China’s Wind and Solar Energy Industries: How Technology-related Differences Shape the Dynamics of Industry Localization and Catching Up’ (n 24) 131.
* Source(s) for Table 5: ‘EU Member States solar interest’ ranking, objectives and dedicated policies’ Original (author’s calculation), based on (2030 objectives) European Commission, ‘National Energy and Climate Plans (NECPs)’ (2023) <https://energy.ec.europa.eu/topics/energy-strategy/national-energy-and-climate-plans-necps_en>; National Energy and Climate plan; (solar policies) Government of the Netherlands, ‘Next-Generation Solar Power’ (n 89); Bundesministeriums für Wirtschaft und Klimaschutz, “Photovoltaik-Strategie des BMWK’ (n 91); Belgium, ‘Plan national énergie-climat 2021-2030’ (n 92); Government of the French Republic, ‘France 2030: un an d’actions pour mieux vivre, mieux produire et mieux comprendre’ (n 93); (raw materials policies) Austria, ‘Masterplan Raw Materials 2030’ (2021) <https:// www.bmf.gv.at/en/topics/mining/mineral-resources-policy/masterplan.html>; Radio Bulgaria, ‘National mining industry strategy endorsed’ (2015) <https://bnr.bg/en/post/100592934/national-mining-industry-strategy-endorsed?forceFullVersion=1&page_1_4=7>; Cyprus, ‘Strategy for the Sustainable Quarrying and Mining Development’ (2008) <http://www. moa.gov.cy/moa/mines/minesSrv.nsf/All/9B8103ADF19F09BFC22574B2003AE734?OpenDocument>; Czech Republic, ‘Raw Materials Policy of the Czech Republic’ (2017) <https://umwd.dolnyslask.pl/fileadmin/user_upload/EWT/JULIA/... baza_wiedzy/PRV/2_CZ__N/CZ_Raw_materials_of_CR._Breef_history__experience_during_the_process_of_modernization_and_current_image.pdf>; Estonia, ‘Mineral Policy of Estonia’ (2022) <https://www.egt.ee/media/421/download>; Finland, ‘Finland’s Minerals Strategy’ (2011) <http://projects.gtk.fi/export/sites/projects/minerals_strategy/documents/ FinlandsMineralsStrategy_2.pdf>; France, ‘Décret n° 2011-100 du 24 janvier 2011 portant création du comité pour les métaux stratégiques (COMES)’ (2011) <https://www.legifrance.gouv.fr/loda/id/JORFTEXT000023474859/>; Germany, ‘The German Government’s Raw Materials Strategy’ (2010) <https://foes.de/pdf/rohstoffstrategie%20bundesregierung%20 englisch.pdf>; the Netherlands, ‘Policy Document on Raw Materials’ (2015) <https://ec.europa.eu/docsroom/documents/10004/attachments/1/translations/en/renditions/pdf>; Poland, ‘National Raw Materials Policy’ (2022) <https://www. gov.pl/attachment/0e1bf500-521a-4fe9-b911-0f35d72a39cf>; Liliana Roman and Mircea Georgescu, ‘Implementation of the Romanian Mining Strategy 2017-2035, with Special Regard to Pit Coal: Failure or Abandonment?’ (2022) MATEC Web of Conferences 21, no. 354 1–10 <https://www.matec-conferences.org/articles/matecconf/pdf/2022/01/matecconf_sesam2022_00021.pdf> accessed 31 January 2025; Spain, ‘Hoja de ruta para la gestión sostenible de las materias primas minerales’ (2022) <https://www.miteco.gob.es/es/ministerio/planes-estrategias/materias-primas-minerales/hr-materias-primas-minerales_23-8-22_web_tcm30-544770.pdf>; Sweden, ‘Sweden’s Minerals Strategy for Sustainable Use of Sweden’s Mineral Resources that Creates Growth Throughout the Country’ (2013 updated 2015) <https://www.government.se/ contentassets/78bb6c6324bf43158d7c153ebf2a4611/swedens-minerals-strategy.-for-sustainable-use-of-swedens-mineral-resources-that-creates-growth-throughout-the-country-complete-version#:~:text=The%20Swedish%20minerals%20 strategy%20takes,demand%20for%20metals%20and%20minerals>; (circular economy strategies) Belgium, ‘Ensemble, faisons tourner l’économie en développant l’économie circulaire en Belgique (2016) <https://www.health.belgium.be/ sites/default/files/uploads/fields/fpshealth_theme_file/econ-circ-fr-light.pdf>; Denmark, ‘Strategy for Circular Economy. More Value and Better Environment through Design, Consumption, and Recycling’ (2018) <https://circulareconomy. europa.eu/platform/sites/default/files/eng_mfvm_cirkulaer_oekonomi_as5_uk_final_web.pdf>; Ireland: Lisa O’Donoghue, Chinnam Rama Krishna, Eva Ujaczki and John Mulcahy, ‘Circular Economy Opportunities – Raw Materials Ireland Project’ (2017) EPA Research <https://www.epa.ie/publications/research/circular-economy/Research_Report_388.pdf>; Lithuania, ‘Roadmap for Lithuania’s Industrial Transition to a Circular Economy: The First Vision of Lithuanian Industry Based on the Principles of Co-creation and Partnership’ (2021) <https://mita.lrv.lt/uploads/mita/documents/files/Roadmap_final. pdf>; Luxembourg, ‘Circular Economy Strategy Luxembourg’ (2021) <https://gouvernement.lu/dam-assets/documents/ actualites/2021/02-fevrier/08-strategie-economie-circulaire/Strategy-circular-economy-Luxembourg-022021.pdf>; Malta (2021) <https://cemalta.gov.mt/wp-content/uploads/2021/09/email-version-fin..pdf>; Portugal, ‘Leading the Transition [Action Plan for Circular Economy in Portugal: 2017-2020] (2017) <https://circulareconomy.europa.eu/platform/sites/ default/files/strategy_-_portuguese_action_plan_paec_en_version_3.pdf>; Slovakia, ‘Circular Economy and the Slovak Republic’ (2018) <https://www.minzp.sk/files/2-sekcia/circular-economy-a4.pdf>; Slovenia, ‘Roadmap Towards the Circular Economy in Slovenia’ (2018) <https://circulareconomy.europa.eu/platform/sites/default/files/roadmap_towards_the_circular_economy_in_slovenia.pdf>. All accessed 6 May 2023.
part ii
t h E EU AN d it S N E ighbo U rhood
C hapter 4
new
energy partnerships, old colonial ties: Why European energy deals are not new for the southern neighbourhood.
by PAblo PAStor vidAl
paBlo pastor Vidal
i n the academic year 2022/2023, Pablo Pastor vidal was a student in the Advanced m aster of Arts in European interdisciplinary Studies at the College of Europe in Natolin and is a graduate in l aw and Political Science from the Universidad Carlos iii de m adrid. h e has been a writer for the o bservatory on EU- m ENA relations of the European Student t hink tank and a member of the m editerranean youth Council. h e focuses on EU- m ENA relations and m editerranean cooperation in good governance and human rights.
1. introduCtion
On 18 May 2022, following the Russian invasion of Ukraine, the European Commission presented the REPowerEU Plan (also called ‘Joint European Action for more affordable, secure and sustainable energy’), with the aim to ‘rapidly reduce dependence on Russian fossil fuels and fast forward the green transition’.1 The Plan set very ambitious goals of efficiency, transition to clean energy, geographical diversification, smart investment, and preparedness for future energy shocks. This strategy brings together the three elements of the famous ‘energy trilemma’: affordability, security and sustainability.2 Until then, Europe had prioritised energy security by relying on traditional fossil fuels while sacrificing some of the clean energy goals set out in the European Green Deal (EGD),3 and the EU was dependent on Russian gas until February 2022, with almost 45% of Europe’s natural gas coming from Russia in 2021, a situation that was exacerbated in Germany and Eastern European countries, whose energy sources mostly came from Russia.4
REPowerEU objectives claim that they can only be achieved ‘through a transformation of the EU’s relationship with countries in its neighbourhood’.5 The measures include diversification of energy sources, energy saving measures and the acceleration of clean energy. Diversification of sources means relying on joint purchases of gas, liquefied natural gas (LNG) and hydrogen. However, gas is still the most useful energy source as it is one of the most flexible to use. For example, the Commission believed ‘that new liquid natural gas (LNG) terminals could be made in such a way that they could receive renewable molecules (…) a double utility to potential energy partners: fossil gas purchases delivered through LNG terminals in the short-term, followed by renewable gas deliveries
1 European Commission Directorate-General for Neighbourhood and Enlargement Negotiations, ‘REPowerEU: A plan to rapidly reduce dependence on Russian fossil fuels and fast forward the green transition’ (2022) <https:// neighbourhood-enlargement.ec.europa.eu/news/repowereu-plan-rapidly-reduce-dependence-russian-fossil-fuels-and-fast-forward-green-transition-2022-05-18_en> accessed 10 January 2025.
2 Ernesto Bonafé, ‘Revisiting the Energy Trilemma in the European Union’ (2022) 3(1) Global Energy Law and Sustainability 18.
3 Pascoe Sabido and Chloé Mikolajczak, ‘EU Hydrogen Targets—A Neo-Colonial Resource Grab’ Social Europe (24 May 2022) <https://www.socialeurope.eu/eu-hydrogen-import-targets-a-neo-colonial-resource-grab> accessed 7 May 2023.
4 International Energy Agency, ‘How Europe Can Cut Natural Gas Imports from Russia Significantly within a Year – News’ (2022) IEA Press Release 3 March 2022 <https://www.iea.org/news/how-europe-can-cut-naturalgas-imports-from-russia-significantly-within-a-year> accessed 4 May 2023.
5 Susi Dennison, ‘Diplomatic Power: The EU’s Ambitious New Energy Strategy’ (2022) European Council on Foreign Relations ECFR Commentary <https://ecfr.eu/article/diplomatic-power-the-eus-ambitious-new-energy-strategy/> accessed 4 May 2023.
in the long term’.6 The Commission also expressed its desire to boost the transition to renewable energy, with the expectation that this type of energy will account for 45% of Europe’s energy mix by 2030.7
This context is not new in the history of Europe, where colonial history was based on the extraction of valuable resources that could be brought back to Europe. A case in point are the energy partnerships in Africa, where the EU has set itself the goal of becoming ‘the most important renewable energy partner’ and where the EU is also investing to alleviate energy poverty.8
The Southern Neighbourhood is an EU policy that brings together in a single framework very heterogeneous countries of what is usually called the ‘MENA region’ (Middle East and North Africa), but only those countries bordering the Mediterranean that have traditionally been controlled or colonised by Europe. In this sense, the Mediterranean has always been a space of ‘structural fragmentation’, (re)created by Europe, with an asymmetrical relationship of definition.9 The reality is that the Union for the Mediterranean was almost a personal French-led project that had never been discussed among the heads of state of the European countries,10 nor among the heads of state of Arab countries. In fact, the very concept of ‘interdependence’ recalls the 1956 phrase by the French Prime Minister Edgar Fouré’s: L’indépendance dans l’interdépendance, ‘a strategy promoted by successive French governments to maintain control and domination of the new “independent” African countries’.11
Currently, the Southern Neighbourhood is defined as a region ‘facing governance, socio-economic, climate, environmental and security challenges’, according to Europe’s New Agenda for the Mediterranean published shortly after the outbreak of the COVID pandemic. In the
6 James Kneebone and Ilaria Conti, ‘A First Look at REPowerEU: The European Commission’s Plan for Energy Independence from Russia’ (2022) EUI Florence School of Regulation <https://fsr.eui.eu/first-look-at-repowereueu-commission-plan-for-energy-independence-from-russia/> accessed 4 May 2023.
7 Stefan Ellerbeck, ‘Can Europe’s Rush for Renewables Solve Its Energy Crisis?’ (2023) World Economic Forum <https://www.weforum.org/agenda/2023/02/eu-renewables-energy-crisis/> accessed 4 May 2023.
8 Kira Taylor, ‘Timmermans: Africa Likely to Be EU’s Most Important Renewable Energy Partner’ Euractiv (6 February 2023) <https://www.euractiv.com/section/energy-environment/news/timmermans-africa-likely-to-be-eus-most-important-renewable-energy-partner/> accessed 10 May 2023.
9 Thomas Demmelhuber, ‘The Euro-Mediterranean Space as an Imagined (Geo-)Political, Economic and Cultural Entity’ (2006) Zentrum für Europäische Integrationsforschung (ZEI) Discussion Paper <https://bonndoc.ulb.unibonn.de/xmlui/handle/20.500.11811/10072> accessed 13 May 2023.
10 Richard Gillespie, ‘A “Union for the Mediterranean” … or for the EU?: Profile’ (2008) 13(2) Mediterranean Politics 277–86.
11 Hamza Hamouchene, ‘Desertec: What Went Wrong?’ (2020) EcoMENA <https://www.ecomena.org/desertec/> accessed 8 May 2023.
field of energy and climate, the EU has stated that ‘the Mediterranean region is home to some of the world’s best solar and wind resources, presenting unparalleled opportunities for clean energy cooperation, with hydrogen production as a new strategic priority’.12
Given the links that can be traced between postcolonialism and energy relations, my contribution updates the current state of research bridging the two issues, with the following research question: How is the REPowerEU Communication based on postcolonial structures? In the next section, I will describe the logics of the EGD and the REPowerEU Communication strategies and analyse whether postcolonial theory is able to explain the surge of a new European energy diplomacy regarding the green transition.
Based on these premises, this article is structured as follows. The stage is set by understanding the link between postcolonialism and energy relations. The concept of ‘green colonialism’ will be used to explain how the colonial foundations of European domination and resource grabbing are still present in energy sector projects. These elements will then form the basis of an analysis of the EU’s REPowerEU strategy and its subsequent partnerships with the countries of the southern Mediterranean. To date, the literature on the EU’s energy transition has focused on the technical and cost hurdles of transitioning to various renewable solutions, but little attention has been paid to the geopolitics and implications in terms of power relations and representational narratives of the beneficiaries of the energy transition from an international relations perspective.13 Therefore, this article contributes to the literature on the EU’s external relations through energy diplomacy and extends the legacy of postcolonialism as a framework for analysing the EU’s external relations.
2. BaCkground: post-Colonialism in eu energy diplomaCy
However, these narratives conceal problems and imbalances in the EU’s strategy, one of which is what is increasingly referred to in academic work as ‘postcolonial energy relations’ as a framework for studying energy relations and geopolitics. Why should we study the ‘postcolonial’ element in energy relations? I think there are three important reasons. First, it is underemphasised in the mainstream academic literature and in the growing number
12 European Commission and High Representative of the Union for Foreign Affairs and Security Policy, ‘Joint Communication to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions – Renewed Partnership with the Southern Neighbourhood: A New Agenda for the Mediterranean’ (2021) 9.2.2021 JOIN(2021) 2 final <https://neighbourhood-enlargement.ec.europa.eu/ system/files/2021-02/joint_communication_renewed_partnership_southern_neighbourhood_en.pdf>.
13 Another advantage of using a postcolonial approach to the study of EU energy relations is the fact that while the concept of ‘just transition’ is widely present and used within the EU, it is absent from the study of the populations of the EU’s ‘neighbourhood’ and their representation as beneficiaries/losers of the energy transition.
of publications on REPowerEU, which have only talked about one side of the equation: the concept of Europe as a normative power trying to influence the region,14 or the process of ‘externalisation’ of norms.15 These frameworks are useful in laying the groundwork for a more critical discussion of how energy governance is constructed within the EU, but they are not sufficient to explain the receptiveness of these responses in the partner countries that the EU seeks to engage.
Second, the marketing of REPowerEU in the Mediterranean hides the fact that since the launch of the Union for the Mediterranean (UfM) in 2008, energy coordination has largely been a failed project, and yet energy is still claimed to be one of the most promising avenues for cooperation in the Mediterranean amidst the great challenges of a common partnership.16 This situation calls for an explanation based on the relations between the EU and its ‘southern neighbourhood’, which are constructed concepts that give continuity to post-colonial relations.
Energy postcolonialism is exercised through energy diplomacy, which can be defined as ‘the use of foreign policy [means] to secure access to energy supplies abroad’.17 The origins of European energy diplomacy can be traced back to the OPEC oil embargo of 1973-74. However, Europe’s dependence on fossil fuels began much earlier: at the time of its creation, which coincided chronologically with the creation of OPEC in 1957. A report published in 1955 and commissioned by the OEEC (Organization for European Economic Cooperation, the forerunner of the OECD) had already revealed Europe’s dependence on oil and coal.18
14 Anna Herranz-Surrallés, ‘Energy Cooperation: The Leading Light of the Revised European Neighbourhood Policy? Drivers and Limits of the EU’s Functionalist Extension’ in Dimitris Bouris and Tobias Schumacher (eds), The Revised European Neighbourhood Policy: Continuity and Change in EU Foreign Policy (Palgrave Macmillan UK 2017) 241–61 <https://doi.org/10.1057/978-1-137-47182-6_12> accessed 9 April 2024.
15 Erwan Lannon, ‘The Externalization of EU Policies in the Renewed Partnership with the Southern Neighbourhood: The Potential Impact of the New Mediterranean Agenda’ (2021) European Institute of the Mediterranean IEMed <https://www.iemed.org/publication/the-externalization-of-eu-policies-in-the-renewed-partnership-with-the-southern-neighbourhood-the-potential-impact-of-the-new-mediterranean-agenda/?lang=es> accessed 10 January 2025.
16 Dimitris Stevis and Romain Felli, ‘Planetary Just Transition? How Inclusive and How Just?’ (2020) 6 Earth System Governance 100065. There are also many other perspectives that can be included in the analysis, such as feminist, anti-racist, indigenous, etc. that I was not able to explicitly mention in the article. See e.g. Benjamin K. Sovacool et al., ‘Pluralizing Energy Justice: Incorporating Feminist, Anti-Racist, Indigenous, and Postcolonial Perspectives’ (2023) 97 Energy Research & Social Science 102996.
17 Andreas Goldthau, ‘Energy Diplomacy in Trade and Investment of Oil and Gas’ in Andreas Goldthau and Jan Martin Witte (eds), Global Energy Governance. The New Rules of the Game (Global Public Policy Institute and Brookings Institution Press 2010) 25–47, 28.
18 Alain Beltran and Yves Bouvier, ‘The European Communities and OPEC: From Entangled International Organizations to Liberalism (1960s–1980s)’ in Dag Harald Claes and Giuliano Garavini (eds), Handbook of OPEC and the Global Energy Order. Past, Present and Future Challenges (Routledge 2020) 141–52.
These fears were later confirmed by the Suez Canal crisis of 1956, when the Egyptian state, then ruled by Nasser, decided to nationalise the infrastructure, against which the armies of Israel, France and Britain (who held important colonial resources and interests) mobilised in the Sinai War. From that crisis onwards, the US gained much more power and presence in the Middle East, to the detriment of Europe. During the Six-Day War in 1967, the Arab states had imposed a brief embargo on up to 80% of Western European oil imports, but the US soon came to the rescue of its European allies. However, despite the alarming findings of the OECD’s Oil Committee in 1970 that Europe would not be able to maintain its supplies in the event of a future oil embargo, the crisis mechanisms were not activated.19
When OPEC imposed the embargo in 1973, it was by all accounts a ‘shock’ that Western governments had not expected, especially at a time of deep divisions in trade policy between the US and Europe. The immediate reaction of the European Communities at the time was characterised by ‘a scramble to secure oil supplies along separate, national lines’ and an avoidance of confrontation with Arab suppliers, which ‘corresponded to the EC’s own self-perception as a civilian power’.20 One of the consequences of this was the creation of a Western alliance alongside the OECD (which later became the G7) that would push OPEC aside and forge market-based solutions to international trade shocks. At the G7 meeting in Tokyo in 1979, which focused on energy, the leaders of the alliance put on the table the development of alternative energy sources as a response to the oil crisis. Most of the OPEC embargoes were a direct response to the policies of Western countries regarding the Arab-Israeli war, which had largely supported Israeli expansionism. They were successful on two fronts: they disrupted European economies, but they also made the EU rethink its position, leading to one of the first recognitions of Palestinian rights in the Venice Declaration of June 1980.21
EU energy diplomacy as a coherent policy in Brussels is certainly a new concept, as HerranzSurrallés argues, because for most of the time it has remained ‘one of the areas that has been most resistant to European integration, particularly when it comes to security of supply’ as
19 Henning Türk, ‘The Oil Crisis of 1973 as a Challenge to Multilateral Energy Cooperation among Western Industrialized Countries’ (2014) 39(4) Historical Social Research / Historische Sozialforschung 209–30.
20 Federico Romero, ‘How OPEC Made the G7: Western Coordination in the Wake of the “Oil Shock”’ in Dag Harald Claes and Giuliano Garavini (eds), Handbook of OPEC and the Global Energy Order. Past, Present and Future Challenges (Routledge 2020) 111–20.
21 The text of the Declaration can be found on the following website: <https://eeas.europa.eu/archives/docs/mepp/ docs/venice_declaration_1980_en.pdf> accessed 10 January 2025.
well as a liberal model focused on private companies rather than state command.22 However, the EU’s energy diplomacy, even if conceived as an entirely new strategy, can also be analysed in the light of post-colonial relations, as I will argue in this article.
3. theoretiCal underpinnings and methodology
This period of confrontation was an ideal place for the growth of postcolonial theory. In the 1970s, Edward Said coined the term ‘Orientalism’ to refer to the images and mythologies that the West (Europe) had of the Middle East and the Orient as an exotic place yet to be discovered,23 but also with all its negative consequences such as chaos, war, barbarism and terrorism. In the 1980s, Aníbal Quijano introduced the concept of the patrón colonial de poder (colonial matrix of power) or ‘coloniality’, which ‘names the underlying logic of the foundation and unfolding of Western civilization from the Renaissance to today’.24 Coloniality, with its theological origins, creates a system for the (re)production of knowledge embedded in the Enlightenment and the idea of the human as a rational agent. This also involves a hierarchy: European/Western culture and forms of knowledge are always more legitimate, more ‘seductive’ than other cultures, such as the free market, democracy, freedom, progress, and even ‘scientific’ knowledge is produced according to these rules and epistemologies.25
But how do these concepts from early postcolonial scholars relate to energy studies? First of all, the field of energy studies is not neutral: for example, Western frameworks and concepts are taken as benchmarks for providing energy security or for deciding at what pace the world should move towards clean energy. In economic terms, postcolonialism has studied the division of labour that takes place under the language of ‘development’: for Samir Amin, the function assigned to the region is to be ‘a major supplier of oil’ for the Gulf states, a source of cheap labour for the rest, and a technological hub for Israel. In short, never to become ‘developed’, but to remain ‘developing’.26
22 Anna Herranz-Surrallés, ‘An Emerging EU Energy Diplomacy? Discursive Shifts, Enduring Practices’ (2016) 23(9) Journal of European Public Policy 1386–1405, 1386.
23 Edward W. Said, Orientalism (1st Vintage Books ed, Vintage Books 1979).
24 Walter D. Mignolo, ‘Introduction. The Darker Side of Western Modernity’ in id, The Darker Side of Western Modernity. Global Futures, Decolonial Options (Duke University Press 2011) 1–24 (quotation p. 2). See also Aníbal Quijano, ‘Coloniality and Modernity/Rationality’ (2007) 21(2–3) Cultural Studies 168–78.
25 Walter D. Mignolo, ‘Introduction. The Darker Side of Western Modernity’ (n 24).
26 Samir Amin, ‘Chapter 6. The Drift of the National Popular Project Towards “Re-Compradorising”’ in id, Reawakening of the Arab World: Challenge and Change in the Aftermath of the Arab Spring (NYU Press 2016) 168–228.
Furthermore, the energy transition can also be seen as a particular framework for promoting a particular kind of development, one that favours only the global North of the European Union as part of it. Vergara-Camus argues that, within this framework, the parameter for a successful transition would be almost exclusively the development of ‘green or clean’ energy, fuelling consumerist lifestyles and ‘creating conditions for powerful players to take advantage (…) at the expenses of local ecosystems and marginalised social groups’. 27 In the process, new methods of capitalist accumulation are being developed, in which the former fossil fuel companies change their image and present themselves as a ‘unique selling point’ for renewable energy, based on their previous experience in the energy sector.28 These companies maintain extractive industries that prioritise profitability rather than sustainability.
In order to understand postcolonialism in energy relations and to properly answer our research question, we should operationalise the meaning of ‘postcolonialism’. In this sense, Keukeleire and Lecocq have proposed an approach to operationalise the ‘decentring agenda’, which is built around the following categories: spatial, temporal, normative, polity, linguistic and disciplinary.29 Not all of them will be covered in this brief analysis, but given that postcolonialism is an abstract concept, these categories provide a closer reference to examine the meaning of postcolonialism in EU energy governance.
Green colonialism refers to the fact that ‘we are facing the same system but with a different source of energy: from fossil fuels to green energy while the same global energy-intensive production and consumption patterns’ are present.30 For example, Kwame Nkrumah, the first Prime Minister of Ghana, coined the concept of neo-patrimonialism to expose the ‘development’ discourse in North Africa and how foreign interference in the internal affairs of African countries by foreign elements was legitimised as a moral endeavour for ‘progress’. 31 Frantz Fanon, one of the most important voices in anti-colonial thought, argued that the elites who grew up in countries independent of colonial states reproduced the same
27 Leandro Vergara-Camus, ‘The Energy Transition and the Global South’ in Henry Veltmeyer and Paul Bowles (eds), The Essential Guide to Critical Development Studies (Routledge 2021) 319–26 <https://www.taylorfrancis. com/books/9781003037187/chapters/10.4324/9781003037187-45> accessed 9 May 2023.
28 ibid 321.
29 Stephan Keukeleire and Sharon Lecocq, ‘Operationalising the Decentring Agenda: Analysing European Foreign Policy in a Non-European and Post-Western World’ (2018) 53(2) Cooperation and Conflict 277–95, 279.
30 Hamza Hamouchene, ‘Dismantling Green Colonialism’ Zeitschrift Luxemburg (4 October 2022) <https:// zeitschrift-luxemburg.de/artikel/dismantling-green-colonialism-towards-a-just-transition-in-north-africa> accessed 8 May 2023.
31 Kwame Nkrumah, Neo-Colonialism: The Last Stage of Imperialism (Panaf 2004).
inequalities and injustices in the way the colonisers governed. For Fanon, anti-colonialism can be linked to the struggle against the extraction of local resources.32
For Simone Claar, one of the main features of the European Green Deal (EGD) is the narrative about the importance of the ‘green economy’ and climate transition; the EGD perpetuates the dependence of the South on the North, in the sense that ‘most larger infrastructure projects in renewable energy in Africa (…) are only feasible through funding from the EU or other donors’.33 Furthermore, the analysis of the EGD shows that the EU relies on institutional transfer to the Global South,34 i.e. it pretends to impose ‘green’ standards on other states. This is what has been referred to as the EU being a ‘norm diffuser’.35
Extractivism refers to ‘activities that overexploit natural resources destined particularly for export to world markets’.36 European energy policy is closely linked to the logic of extractivism in several ways: despite the promotion of renewable energies, it is at odds with sustainability. Firstly, despite the climate crisis, the extraction of oil and gas has not stopped, but is part of the short-term plans of the European institutions to secure the European economy. This is also because extractive industries require large amounts of cheap and reliable energy. Second, renewable energy projects mirror extractive industries in their use of large amounts of land or their reliance on fossil fuel technologies in other parts of the cycle. For example, solar energy initiatives have taken the form of large photovoltaic parks that require many hectares of land. There is a ‘prevalence of rentier strategies of wealth accumulation’, meaning that companies that want to use the land in Global South countries pay royalties or lease public land to the state, reinforcing the economic structures of these states. Thirdly, renewable energy, which promises to solve the problem of the climate crisis, ‘relies on extractive industries, especially mining, for very crucial components of the devices used to produce electricity’. In fact, mining has become more widespread and is one of the
32 Frantz Fanon, ‘The Trials and Tribulations of National Consciousness’ (2017) 66 New Agenda: South African Journal of Social and Economic Policy 36–40.
33 Simone Claar, ‘Green Colonialism in the European Green Deal: Continuities of Dependency and the Relationship of Forces between Europe and Africa’ (2022) 7(2) Culture, Practice & Europeanization 262–74, 265.
34 Throughout this article, I consider the ‘Southern neighbourhood’ to be part of the countries of the Global South or the ‘Third World’. Although the term is disputed, it serves as a conceptual basis for understanding power relations, not only in the energy sector. See for example Nour Dados and Raewyn Connell, ‘The Global South’ (2012) 11(1) Contexts 12–13.
35 Assem Dandashly and Gergana Noutcheva, ‘Conceptualizing Norm Diffusion and Norm Contestation in the European Neighbourhood: Introduction to the Special Issue’ (2022) 29(3) Democratization 415–32.
36 Hamza Hamouchene, ‘The Political Ecology of Extractivism in North Africa’ in Henry Veltmeyer and Paul Bowles (eds), The Essential Guide to Critical Development Studies (Routledge 2021) 327–34, 327 <https://www. taylorfrancis.com/books/9781003037187/chapters/10.4324/9781003037187-46> accessed 6 May 2023.
main concerns in securing the energy transition, but to date, mining extraction (as well as other technologies) has contributed very little to the development of the Global South.37
4. analysis: are the logiCs of repowereu ‘postColonial’?
The REPowerEU Plan has a strong external component, with a consequent reshaping of the world market, as it pursues for two seemingly contradictory objectives: the short-term securing of additional volumes of natural gas and long-term decarbonisation targets. The explicit aim is to make Europe independent of Russian fossil fuels before 2030. But this carries the risk of creating new dependencies on unstable or problematic partners, or, more importantly, of fostering ‘old colonial relations’, dispossessing the Global South of its resources and creating an unjust climate transition.
4.1. Which new alternatives?
Many opportunities have arisen in this context, but the EU’s indigenous renewable energy sources do not appear to be sufficient to meet its energy needs, at least in the short term.38
The EU’s policy in the wake of Russia’s invasion of Ukraine is therefore to some extent a return to the role of fossil fuels (including natural gas) as a short-term transitional solution. Moreover, the EU Energy Platform’s international strategy looks to the countries of the neighbourhood as potential suppliers. These include Algeria, Azerbaijan, Egypt and Israel, as well as some African countries such as Nigeria, Senegal and Angola.39 Hydrogen is a pillar of these relations and was one of the main topics of discussion during the EU-African Union (AU) summit in February 2022. Germany has already signed individual agreements with Morocco and South Africa on the use of hydrogen. However, only ‘grey’ hydrogen, a less sustainable type, is currently being produced, while green hydrogen will only be imported once key investments have been made.40
Green hydrogen has been praised for its potential to reduce carbon emissions. However, it is very expensive to produce, which is why REPowerEU includes a goal to ‘facilitate the import of up to 10 million tonnes of renewable hydrogen’, with three major corridors,
37 Vergara-Camus (n 27) 321–23.
38 Fateh Belaïd, Aisha Al-Sarihi and Raed Al-Mestneer, ‘Balancing Climate Mitigation and Energy Security Goals amid Converging Global Energy Crises: The Role of Green Investments’ (2023) 205 Renewable Energy 534–42.
39 European Commission Directorate General for Communication, REPowerEU: Energy Savings and Energy Efficiency (Publications Office of the European Union 2022) <https://data.europa.eu/doi/10.2775/494246> accessed 4 May 2023.
40 Giulia Sofia Sarno and Lorenzo Colantoni, ‘A Changing Energy Diplomacy: The External Dimension of the REPowerEU Plan’ (2023) Instituto Affari Internazionali IAI 34 <https://www.iai.it/sites/default/files/9788893682855. pdf> accessed 11 January 2025.
including one through the Mediterranean.41 In this context, the CEO of Hydrogen Europe has said that investing in green hydrogen in Africa is not a form of colonialism, as ‘Europe cannot decarbonise without African support’, and that hydrogen will ‘finally make Africa and Europe partners while propelling the African continent to the avant-garde of a new industrial age’.42 Although these statements cannot be generalised, Africa, in this narrative, has inexhaustible resources that can allow the continent to satisfy its own needs as well as those of Europe, a kind of energy El Dorado for the 21st century. Many other CEOs calling for an ‘African-European axis’ have also been welcomed with open arms by authoritarian leaders in North Africa,43 an element that adds to the problematic case of merging democracy and energy diplomacy. Certainly, European business leaders see development through an optimistic lens, but this is based on a reluctance to understand the networks of power and domination.
In the case of North African countries, there are traditional gas suppliers (Algeria, Libya and Egypt). Algeria, for example, is considered the third largest gas supplier to the EU, after Russia (before 2022) and Norway, and has three cross-border gas pipelines connecting its fields to Europe: the Trans-Mediterranean gas pipeline (Algeria-Tunisia-Italy), the Gas Maghreb (now closed due to the political conflict with Morocco over the Western Sahara), and the Medgaz (Algeria-Spain). Until very recently, however, only the first of these three pipelines was relevant, as Spain sided with Morocco in the regional conflict between the two North African countries, meaning that business and trade between Algeria and Spain have been at a standstill since June 2022 (despite recent signs of thawing: in November 2024, Algeria reached the position of Spain first gas supplier).44 This situation has also been problematic for the EU, which needs Algeria to become a more important energy partner.45
41 European Commission, ‘REPowerEU: A plan to rapidly reduce dependence on Russian fossil fuels and fast forward the green transition’ (n 1) 7.
42 Jorgo Chatzimarkakis, ‘View: Why Europe Cannot Decarbonise without African Hydrogen’ Euronews (29 April 2022 updated 3 May 2022) <https://www.euronews.com/green/2022/04/29/why-europe-investing-in-africanhydrogen-is-not-a-form-of-colonialism> accessed 8 May 2023.
43 The concept comes from the words of the CEO of the Italian multinational ENI, Claudio Descalzi. See Ariel Cohen, ‘African Energy May Save Europe’ Forbes (23 January 2023) <https://www.forbes.com/sites/arielcohen/2023/01/23/african-energy-may-save-europe/> accessed 11 April 2024.
44 Latifa Ferial Naili, ‘Algeria Tops Spain’s Gas Supply, Exceeding 37.9% of Energy Needs in 2024’ AL24 News (25 November 2024) <https://al24news.com/en/algeria-tops-spains-gas-supply-exceeding-37-9-of-energy-needsin-2024/> accessed 25 January 2025.
45 Jack Dutton, ‘Why Is Trade between Algeria and Spain Still at a Standstill?’ Al-Monitor (16 April 2023) <https:// www.al-monitor.com/originals/2023/04/why-trade-between-algeria-and-spain-still-standstill> accessed 4 May 2023. See also e.g. Raúl Redondo, ‘Algeria Orders a Total Commercial Unblocking with Spain’ Atalayar (27 November 2024) <https://www.atalayar.com/en/articulo/economy-and-business/algeria-orders-total-commercial-unblockin g-with-spain/20241107123948207402.html> accessed 11 January 2025.
In the case of Libya, expectations are less ambitious, as the country is still in the throes of a civil war with disastrous consequences and gas exports are unstable, with most of the gas going to Italy. However, although Egypt is not connected to Europe by gas pipelines, it has the potential to boost LNG exports, which it has been sending to Turkey and China. Israel also emerged as another partner that could play a very important role in the look for new supplies, although the current situation in the Middle East makes the prospects less clear.46 The figure could reach 50 bcm in the medium term if all the potential from the countries of the southern and eastern neighbourhood is added up.
In all this rush to replace Russia as a gas supplier, REPowerEU ignores the main objective of the European Green Deal, which discouraged investment in fossil fuel-based energy infrastructure in third countries. It has been pointed out that the export of ‘green hydrogen to fulfil the EU’s needs without considering those of its Southern Neighbourhood partners seems like a repetition of the mistakes the EU made during the 2000s’.47
So far, it has been clear that the EU has the potential and the interest to find new alternatives to Russian gas. However, these alternatives are not easy to find. Firstly, most of them do not seem to work in the short term due to production constraints. For example, ‘given current high gas prices relative to biomethane production costs, the target for biomethane production does seem potentially achievable’.48 In the case of hydrogen, only the ‘green’ type is clean, and the only way to develop green hydrogen is to reduce the investment costs in renewable energy and electrolysers, which are the basis for green hydrogen. The main problem would be the small-scale production of electrolysers, whose production would have to be multiplied by three to reduce their cost by the same amount. According to Dr Emanuele Taibi, although green hydrogen is needed for industry, shipping and aviation, the more pressing issues are energy efficiency, electricity and accelerated growth
46 Observatoire Méditerranéen de l’Energie, ‘How Much Can the Mediterranean Region Substitute Russian Gas Supplies to the EU?’ (2022) OME <https://energiaoltre.it/wp-content/uploads/2022/07/EU-gas-crisis-OME_ june2022-Final.pdf> accessed 11 January 2025.
47 Reinhilde Bouckaert, ‘From the Green Deal to REPowerEU: What about the EU’s Southern Fossil Gas Suppliers?’ (2023) Foundation for European Progressive Studies Policy Brief February 2023 <https://feps-europe.eu/wp-content/uploads/2023/02/From-the-Green-Deal-to-REPower-EU.pdf> accessed 11 January 2025.
48 Martin Lambert, ‘RePowerEU: Can Renewable Gas Help Reduce Russian Gas Imports by 2030?’ (2022) The Oxford Institute for Energy Studies OIES <https://www.oxfordenergy.org/wpcms/wp-content/uploads/2022/07/ RePowerEU-Can-Renewable-Gas-help-reduce-Russian-gas-imports-by-2030.pdf> accessed 11 January 2025.
in renewable energy production.49 As a result, long-term investments in fossil fuels are once again becoming the norm.
Secondly, it means changing Russian dependencies for other new dependencies, as a rapid increase in renewable hydrogen would mean an over-dependence on supply of materials from China.50 Politically, it means supporting autocratic regimes against the EU’s discourse of defending democracy, human rights and good governance. For example, countries such as Algeria, Egypt and Israel have been condemned by many activists for their human rights abuses, yet the EU continues to have stable relations with them, especially in the field of energy. This has long-term consequences for the EU’s credibility with democratic civil society,51 but it also highlights the colonial and dependency relations that still exist between the EU and the elites of these countries.
4.2. The southern neighbourhood as a source of future energy REPowerEU is just one of a series of agreements and partnerships that the EU has been building to secure energy resources. In North Africa, the EU has been negotiating Deep and Comprehensive Free Trade Areas (DCFTAs) with Morocco, Tunisia and Egypt under the European Neighbourhood Policy (ENP) to enhance the partnerships. It has been pointed out that since the revision of the ENP in 2015, the EU has accepted the fact that instead of promoting rules, regulations and norms, which is not an effective mechanism for ‘partner countries that are not eligible for accession’, more à la carte policy agreements need to be made, shifting the basis to international standards of good governance.52 In other words, the EU is now seeking support for liberalisation policies in North Africa, presented as a win-win situation.
49 Abhinav Chugh, Interview with Dr Emanuele Taibi, Head of the Power Sector Transformation Strategies, International Renewable Energy Agency (IRENA) ‘What Is Green Hydrogen? An Expert Explains Its Benefits | World Economic Forum’ (21 December 2021) <https://www.weforum.org/agenda/2021/12/what-is-green-hydrogen-expert-explains-benefits/> accessed 17 March 2023.
50 ibid
51 Andrea Teti, Gennaro Gervasio and Pamela Abbott, ‘Perceptions of the EU. Activists and Public Opinion in the Middle East’ in Dimitris Bouris, Daniela Huber and Michelle Pace (eds), Routledge Handbook of EU–Middle East Relations (Routledge 2021) 217–30 <https://www.taylorfrancis.com/books/9780429317873/chapters/10.4324/9780429317873-24> accessed 5 May 2023.
52 Bernard Hockman, ‘Deep and Comprehensive Free Trade Agreements’ (2016) Robert Schuman Centre for Advanced Studies RSCAS 2016/29 EUI Working Papers <https://cadmus.eui.eu/bitstream/handle/1814/41405/ RSCAS_2016_29.pdf?sequence=1&isAllowed=y> accessed 13 January 2025.
However, the situation of mutual benefit is not accurate because African elites have willingly embraced trade and aid ‘in order to lubricate their own domestic patronage networks’.53 Authors such as Nicolaïdis have pointed to the logic of ‘amnesia’, with free trade agreements declaring that the colonial period is something ‘to be left behind’ and should be out of discussion.54 Sekou Touré argued that the European Economic Community (EEC) would maintain the subordinate position of African countries by classifying them as suppliers of raw materials and energy.55
The Maghreb, in particular, has a very specific relationship with the EU, since Morocco, Algeria and Tunisia were included in the Treaty of Rome with their automatic status of economic association with the EEC.56 An example of an important energy player for the EU with old colonial ties is Algeria. Algeria declared its independence from France in 1962, but for five years the Algerian territory was de facto part of the EEC. Since the early 2000s, the Algerian economy has become almost entirely dependent on the profitable business of exporting hydrocarbons, with a notable concentration of investment in state-owned industries.57 All in all, relations with Algeria have been marked by mistrust and protectionism on the Algerian side against the EU’s attempts to create more liberalisation; yet EU policymakers stress the need to ‘convince’ the Algerians of what is good for them.58
However, Morocco has had a much more fluid dialogue with the EU and has traditionally been portrayed as a ‘good student’. In 2008, Morocco was granted ‘advanced status’ and since then the political dialogue has intensified and Morocco has become more integrated into the elements of the internal market. Although the country currently lacks significant
53 Mark Langan and Sophia Price, ‘Imperialisms Past and Present in EU Economic Relations with North Africa: Assessing the Deep and Comprehensive Free Trade Agreements’ (2020) 22(6) Interventions 703–21, 708.
54 Kalypso Nicolaïdis, ‘Southern Barbarians?: A Post-Colonial Critique of EUniversalism’ in Kalypso Nicolaïdis, Berny Sèbe and Gabrielle Maas (eds), Echoes of Empire: Memory, Identity and Colonial Legacies (I.B. Tauris 2009) 283–304 <http://www.bloomsburycollections.com/book/echoes-of-empire-memory-identity-and-colonial-legacies> accessed 14 May 2023.
55 Sékou Touré, ‘Africa’s Future and the World’ (1962) 41(1) Foreign Affairs 141–51.
56 Tobias Schumacher, ‘Reflections on Borders, Boundaries and the Limits of EUrope’ (2019) 9(1) Global Discourse 153–55.
57 Vicente Alves, ‘EU-Algeria Trade Relations: Is EU-Led Liberalisation Reinforcing Economic Stagnation?’ (2022) European Student Think Tank <https://esthinktank.com/2022/03/07/in-context-eu-algeria-bilateral-relations-an-overview/> accessed 14 May 2023.
58 Andrew Farrand, ‘Renewed Energies: How the EU Can Persuade Algeria to Join in the Green Transition’ (2023) European Council on Foreign Relations ECFR Commentary <https://ecfr.eu/article/renewed-energies-how-theeu-can-persuade-algeria-to-join-in-the-green-transition/> accessed 28 October 2024.
energy resources and has to import most of its energy needs, Morocco is portrayed as having great potential for renewable energy.59 On the one hand, this has made Morocco the largest beneficiary of EU aid in the Mediterranean, but it has also created an asymmetry in Morocco’s bargaining power.60
The idea of green colonialism in Morocco is exemplified by the DESERTEC project, which aimed to create a massive solar project.61 Despite its initial failure, the idea gained traction when the Union for the Mediterranean (UfM) launched the Mediterranean Solar Plan in 2008 with the aim of developing renewable energy capacity. The project did not take into account the need to cool the panels with water, which exacerbated the current water shortage in the region.62 The Moroccan monarchy conceived this and other parts of a renewable energy plan not only as an economic development initiative, but also as an export-oriented policy in line with EU policies on energy security, competitiveness and environmental sustainability. This is also the case of the Green Partnership signed in 2022, which ‘aims to advance the external dimension of the European Green Deal through action on the ground’.63 Renewable production in the EU was already high and it was difficult to argue that the EU needed the additional renewable capacity,64 and yet these projects had institutional support under the umbrella.
59 US Department of Commerce International Trade Administration, ‘Morocco Country Commercial Guide. Energy’ (2024) <https://trade.gov/country-commercial-guides/morocco-energy> accessed 13 January 2025.
60 Angelos Katsaris, ‘Europeanization through Policy Networks in the Southern Neighbourhood: Advancing Renewable Energy Rules in Morocco and Algeria’ (2016) 54(3) JCMS: Journal of Common Market Studies 656–73.
61 DESERTEC was a failed project, but it showed the ‘European misperceptions of the risks involving the MSP are based on subjective representations of the MENA region’, such as terrorism or political instability. Many risk assessment reports misrepresent and misunderstand the elements used to assess projects in the region. As a result, ‘they undermine the necessary governmental support, but they also increase the capital costs of the whole project’. This is called institutional Orientalism. See Luiz Enrique Vieira de Souza et al., ‘Postcolonial Theories Meet Energy Studies: “Institutional Orientalism” as a Barrier for Renewable Electricity Trade in the Mediterranean Region’ (2018) 40 Energy Research & Social Science 91–100.
62 Alexander Stumm, ‘Neo-Colonial Continuities in the Mediterranean Infrastructure Projects of Atlantropa and Desertec’ (2020) 7 Ardeth 127–40, 137.
63 European Commission Directorate-General for Neighbourhood and Enlargement Negotiations, ‘The EU and Morocco Launch the First Green Partnership on Energy, Climate and the Environment Ahead of COP 27’ (2022) EC DG-NEAR <https://neighbourhood-enlargement.ec.europa.eu/news/eu-and-morocco-launch-first-greenpartnership-energy-climate-and-environment-ahead-cop-27-2022-10-18_en> accessed 8 May 2023.
64 Selwa Calderbank, ‘Desertec Abandons Sahara Solar Power Export Dream’ Euractiv (31 May 2013 updated 9 August 2013) <https://www.euractiv.com/section/trade-society/news/desertec-abandons-sahara-solar-power-export-dream/> accessed 8 May 2023.
The cases of Algeria and Morocco illustrate the EU’s energy security ambitions.65 However, it is re-stablishing what I call ‘old colonial relations’: the EU’s dependence on a set of primary resources that are extracted at minimal cost and in return provide little benefit to the local population. This model of relations is maintained as a profitable status quo for the elites in the southern neighbourhood, and this is why the problem of authoritarianism has been completely erased from REPowerEU in favour of the energy security approach. Placing this within the operationalisation of the decentring agenda, we can see how a number of postcolonial elements emerge, and what other alternatives can be sought (see Table 1).
Table 1. The decentring agenda in the Southern Neighbourhood
decentring provincializing engagement
Spatial
the destiny of the production is extractivist (i.e. the exploitation of the energy in the EU).
temporal rEPowerEU takes the European goal of net-zero emissions by 2030.
Normative
Polity
EU norms externalisation.
EU-centric and state-centric conceptions of the energy transition.
linguistic reliance on English and french as the main communication channels; lack of transparency in the project cycle.
disciplinary
the projects only prioritise efficiency and the interests of governments and industry.
the destiny is multiple and not unilateral, the EU just stands as another potential beneficiary.
the Strategy would consider this temporal objective with regards to other countries and how this may affect the EU.
EU norms are placed on equal terms as local norms.
the impact of renewable projects on local communities (e.g. Amazigh) and whether from the perspective of their interests, this constitutes a ‘just transition’.
dissemination of projects in Arabic and other local regional languages so that local people can also get involved or voice their concerns.
the rEPowerEU projects become a way of collaboration in the green transition, both internationally and locally; they reject extractivism.
Source: the author’s own elaboration, using Keukeleire’s and Lecocq’s typology (n 29).
65 Alberto Rizzi and Arturo Varvelli, ‘Opening the Global Gateway: Why the EU Should Invest More in the Southern Neighbourhood’ (2023) European Council on Foreign Relations ECFR Policy Brief <https://ecfr.eu/ wp-content/uploads/2023/03/Opening-the-Global-Gateway-Why-the-EU-should-invest-more-in-the-southernneighbourhood.pdf> accessed 13 January 2025.
5. ConClusions and disCussion: deColonising energy relations with the ‘southern neighBourhood’ and Beyond
This article has argued that European energy policy, and more specifically, the REPowerEU strategy, is based on a post-colonial perspective of European energy relations. I have argued that REPowerEU promotes a dependency that mimics colonial relations, and I have offered an operationalisation based on Keukeleire and Lecocq’s ‘decentring agenda’. In response to the energy crisis, the EU has looked to some of the countries of the Southern neighbourhood as solutions to the problem of energy security, some of which are very rich in resources but are reluctant to sign clear partnerships with the EU (such as Algeria), some of which are consolidating EU aid as a major push for the construction of mega-projects to unlock energy potential (Morocco), and some of which are trying to build partnerships to become major EU suppliers in the near future.
However, much has been left unsaid about two points that I believe are very important to discuss in future studies on critical perspectives in energy relations. The first is the discussion of the situation of specific countries, their colonial ties, dependencies and projects under construction, as well as the impact on their local communities. This applies not only to EU partnerships, but also to other international actors such as China, which is promoting its own model. China is creating many economic partnerships, but they are characterised by less transparency and standards and conditionality than the European model, which makes them more acceptable to corrupt or authoritarian elites in some African countries. Moreover, the Chinese model does not rely on conditionality, the explicit inclusion in partnerships of the rule of law, good governance and even democratisation.66
Certainly, North African states are partly to blame for the precarious situation of their populations, but the model so far has helped them to create embedded interests with the EU that jeopardise development. In the case of solar energy, it has been argued that the centralisation of solar plants ‘makes them an ideal source of income for corrupt and authoritarian regimes in the region’.67 In Algeria, energy sources have been used as a means of buying the support of the population and deterring people from revolting. It is not uncommon for some relevant and grassroots stakeholders to be sidelined by authoritarian
66 Assem Dandashly and Gergana Noutcheva, ‘Conceptualizing Norm Diffusion and Norm Contestation in the European Neighbourhood’ (n 35).
67 Hamza Hamouchene, ‘Desertec: What Went Wrong?’ (n 11).
leaders, but there is not enough research and documentation on how this happens and how to denounce it.68
The underlying question is how to unlock the potential of these resources without falling into extractivism. According to Hamouchene, there is nothing wrong with the idea of providing the planet with sustainable energy to fight global warming. But some questions should be asked: who uses it, how it is implemented, for what agenda and in what context Similarly, current initiatives such as REPowerEU function as a response to the issues of climate change and the illegitimate Russian invasion of Ukraine, but the contradictions of the global system that led to the crisis are still in place: climate change is not ‘a shared problem with no political or socio-economic context. This perspective hides the historical responsibilities of the industrialized West, the problems of the capitalist energy model, and the different vulnerabilities between countries of the North and the South’.69 What is needed instead is a community-centred approach, where projects are rooted in local communities and take into account the needs of the population.
How can this be done? Some solutions have already been presented, and they show that the upcoming discussions are necessary for the future of global energy, not only seen through a European lens. For example, ‘nearshoring’,70 is one way to create labour conditions in Africa that could reduce migration trends, but investment should be directed towards improving the living conditions of the communities around the project. Another idea is to speak not of an ‘energy transition’, but of a plurality of energy transitions that would adapt to the needs and will of the population, without making other social groups bear the burden. We would then speak of ‘energy democracy’ and ‘energy sovereignty’, to ‘elaborate a vision of a world where people have access to and control over the resources, they need to lead dignified lives and have a political role in making decisions about how those resources are used, and by whom’.71
68 Mark Furness and Annabelle Houdret, ‘The EU Global Gateway and North Africa: Practical and Moral Challenges’ (2023) Stiftung Wissenschaft und Politik SWP Blog Joint Features 31 <https://www.swp-berlin.org/publikation/ mta-joint-futures-31-eu-global-gateway-and-north-africa> accessed 11 April 2024.
69 Hamza Hamouchene, ‘Desertec: What Went Wrong?’ (n 11).
70 Michael Tanchum, ‘Africa-to-Europe Value Chains: How Nearshoring Can Mitigate Europe’s Migration Crisis and Aid Energy Transition’ (2024) International Centre for Migration Policy Development ICMPD Blog <https:// www.icmpd.org/blog/2024/africa-to-europe-value-chains-how-nearshoring-can-mitigate-europe-s-migration-crisis-and-aid-energy-transition> accessed 11 April 2024.
71 Hamza Hamouchene, ‘The Energy Transition in North Africa. Neocolonialism Again!’ (2024) Transnational Institute TNI <https://www.tni.org/en/article/the-energy-transition-in-north-africa> accessed 11 April 2024.
The bottom line is to understand the context of energy policy and to challenge the current model in order to create a better European and global future. Often the only voices leading the energy transition are those who have the power to dictate investments in the Global South. What about the everyday ‘struggles’, the wellbeing of citizens living in energy poverty?72 Much is also said about the ‘just transition’, but only for European consumers: what about a ‘planetary just transition’?73
In conclusion, the EU narrative embedded in the REPowerEU strategy does not consider the impact of the postcolonial framework on the energy transition, with all its different elements, such as authoritarian leadership in North African countries and the expansion of the capitalist economic model and does not question its pace or consequences. A postcolonial approach to energy diplomacy and geopolitics adds a new layer of analysis regarding the colonial structures that allow the state to ‘centralise authority over energy production and resource distribution, thereby reinforcing colonial power relations’.74
72 Bipashyee Ghosh et al., ‘Decolonising Transitions in the Global South: Towards More Epistemic Diversity in Transitions Research’ (2021) 41 Environmental Innovation and Societal Transitions 106–109.
73 Dimitris Stevis and Romain Felli, ‘Planetary Just Transition? How Inclusive and How Just?’ (2020) 6 Earth System Governance 100065. There are also many other perspectives that can be included in the analysis, such as feminist, anti-racist, indigenous, etc. that I was not able to explicitly mention in the article. See e.g. Benjamin K. Sovacool et al., ‘Pluralizing Energy Justice: Incorporating Feminist, Anti-Racist, Indigenous, and Postcolonial Perspectives’ (2023) 97 Energy Research & Social Science 102996.
74 Leonora Haag, ‘Environmental Colonialism in the Maghreb? Harnessing Green Energy on Indigenous Peoples’ Land’ (2022) Swedish Institute of International Affairs Brief 10/2022 <https://www.ui.se/globalassets/ui.se-eng/ publications/ui-publications/2022/ui-brief-no.-10-2022.pdf> accessed 13 January 2025.
C hapter 5
EU energy governance in the Eastern neighbourhood: Balancing energy security and decarbonisation goals amid potential EU integration
by NiColA mEllErE
Nicola mellere is a Specialist in the Sustainability and Energy transition office at orlEN, where he focuses on the orlEN group’s decarbonisation strategy and climate transition plan. he holds a master’s degree in East European and Eurasian Studies from the University of bologna and a bachelor’s degree in Slavic Philology from the University of venice. in 2021, he graduated from the College of Europe in Natolin, specialising in the European Neighbourhood Policy (ENP).
his main interests include European climate policies, decarbonisation and transition strategies for the oil and gas sector, energy transition, and energy security in Central and Eastern Europe.
1. introduCtion
By transforming the EU economy as a whole and redefining policy priorities at the global level, the European Green Deal (EGD) will profoundly change the external relations of the EU and its Member States, including relations with the EU’s proximate and wider neighbourhood. The external dimension of the European Green Deal is essential for many reasons.
Firstly, everyone recognises that if our goal is to mitigate anthropocentric climate change as much as possible, the EU alone cannot make the difference, given that Europe is responsible for less than 10% of global greenhouse gas emissions.
Second, the EU Member States, which are not rich in natural resources, are major energy importers.1 Relations with countries that export large quantities of oil and gas to the EU will change over the next 30 years.
Third, while the transition to a green economy is likely to end the EU’s dependence on imported fossil fuels, this does not mean that the EU will not have other dependencies. For a successful transition, the EU will need to import various products and raw materials from outside.
Finally, the transition to a green and sustainable economy is also a strategy to keep the European economy competitive. However, the costs of implementing this strategy are massive. The risk of protectionist barriers, higher tariffs and ultimately a less competitive economy should not be underestimated.
Given the importance of the external dimension of the EGD, a functioning EU Climate Diplomacy will be fundamental in spreading the green agenda around the world. Indeed, with the EGD, the EU has changed the paradigm of its external action in the energy field. From pushing for ambitious targets and ensuring their implementation within the Union, Brussels now wants to be the rule-setter, or at least to influence global climate policy as much as possible by being at the forefront of shaping it. The focus is no longer on agreeing with other partners on what to do, but on influencing the rest of the world by externalising the progress made internally. Climate Diplomacy will therefore be of fundamental importance, partly replacing old-fashioned Energy Diplomacy, which focused on spreading the adoption of market rules in the energy sector and supporting projects that would enhance energy security.
1 Mark Leonard, Jean Pisani-Ferry, Jeremy Shapiro, Simone Tagliapietra and Guntram Wolff, ‘The Geopolitics of the European Green Deal’ (2021) 04 Bruegel Policy Contribution 04/2021 <https://www.bruegel.org/sites/ default/files/wp_attachments/PC-04-GrenDeal-2021-1.pdf> accessed 12 May 2024.
From the perspective of the European Union, the global context is very diverse. Indeed, we can talk about the EU’s neighbourhood, the wider neighbourhood, the EU’s competitive powers, the EU’s allies and others. It is no secret that some states have a much closer relationship with the EU than others. Among them are certainly the states belonging to the European Neighbourhood Policy (ENP), which have institutionalised relations with Brussels and have the potential to become member states. For almost all the southern and eastern Neighbourhood states, energy issues play a central role in their relations with the European Union. Many of them are indeed net energy exporters, but there are also states that play an important transit role and states where energy can be a decisive political factor for economic, social and foreign policy reasons. In recent decades, energy has more than once been the subject of disputes involving the EU’s neighbours. Most recently, EU has experienced one of its biggest energy crises following Russia’s full-scale invasion of Ukraine. As a result, the EU’s energy dependence on Russia has been drastically reduced and, as demonstrated by REPowerEU, the EU aims to promote energy transition in order to definitively reduce dependence on Russian fossil fuels.
Against this background, a question arises: Can the EU Green Deal promote European integration in the EU’s Eastern Neighbourhood while addressing its broader external implications?
1.1. Methodology
The research objectives will be pursued through a comparative analysis of EU Climate and Energy Diplomacies. A combination of comparative, statistical and descriptive analyses will be used to examine the main features of the energy sector structures in Moldova, Ukraine and Belarus, primarily using data from the International Energy Agency. A content analysis will outline the EU’s actions under the European Green Deal (EGD), while a discourse analysis will explore the perceptions of the EU’s Eastern neighbours regarding the EU’s climate policy instruments, with a particular focus on the potential impact of the Carbon Border Adjustment Mechanism (CBAM). The final conclusions will be drawn from the literature review, comparative insights and data analysis.
The theoretical framework of this chapter is rooted in Barry Buzan’s and Ole Wæver’s Regional Security Complex Theory (RSCT).2 According to RSCT, security issues are best understood in terms of regional rather than global dynamics. It posits that states within a given region are bound together by common security concerns that shape their behaviour and interactions. These security complexes are influenced by geographical proximity, histor-
2 Barry Buzan and Ole Wæver, Regions and Powers. The Structure of International Security (Cambridge University Press 2003).
ical relationships and common threats, leading to patterns of cooperation or rivalry. RSCT emphasises that regional security dynamics often outweigh global factors in determining the security policies of states within the complex. This interdependence is particularly pronounced in the EU’s Eastern Neighbourhood, with the energy sector being one of the most directly affected by these regional dynamics.
1.2. The structure of the chapter
The chapter is divided into four main sections. The first section, The EU’s Energy and Climate Diplomacy, examines the evolution of the EU’s external actions in energy and climate. It begins with a comparative analysis of energy and climate diplomacy, highlighting their coexistence and interdependence, followed by an overview of recent developments shaping this dual agenda. The second section, The EU’s Eastern Neighbourhood Energy Challenges, looks at the specific energy-related problems faced by Belarus, Ukraine and Moldova, including their dependence on carbon-intensive energy sources, limited diversification and vulnerability to geopolitical pressures. The third section focuses on the CBAM in the EU’s Eastern Neighbourhood, analysing the impact of the EU’s Carbon Border Adjustment Mechanism on these countries and its potential to widen the divide between pro-EU and non-pro-EU states. Finally, the conclusion summarises the findings, reflects on the interplay between energy security and decarbonisation goals, and provides policy recommendations to reconcile these priorities in the context of the EU’s Eastern Neighbourhood.
1.3. Literature review
In the rapidly evolving landscape of energy and climate diplomacy, and in the particularly dynamic situation beyond the EU’s eastern border, understanding the existing body of research is essential to answering the question of whether the European Green Deal will change relations between the European Union and its eastern neighbours (Belarus, Ukraine and Moldova).
Sebastian Oberthür and Marc Pallemaerts3 highlight the links between the EU’s energy and climate diplomacy, arguing that the EU’s leadership in international climate negotiations is closely linked to its efforts to promote renewable energy and energy efficiency at home. This integrated approach underlines the EU’s commitment to promoting both energy security and climate resilience on the global stage. In particular, Oberthur and Pallemaers rightly point out that while ‘EU climate diplomacy and law were lagging behind international policy development until the early 2000s, they have moved ahead of the international
3 Sebastian Oberthür and Marc Pallemaerts (eds), The New Climate Policies of the European Union: Internal Legislation and Climate Diplomacy (Brussels University Press 2010).
framework since then’.4 Already back in 2010, the authors pointed out that, despite some shortcomings, recent EU climate policies ensure that ‘the EU remains at the forefront of the development and implementation of concrete climate policies’.5 From today’s perspective, it can be argued that this assumption has become much stronger with the EGD.
Lisanne Groen and Sebastian Oberthür6 discuss how the EU’s climate and energy diplomacy strategies can be mutually reinforcing, with climate objectives driving energy policy reforms and energy security considerations shaping climate diplomacy priorities. To this end, the authors mention how the opportunities of the ‘new climate economy’ have become much more apparent with the falling prices of renewable energy and other technological advances, which in turn had a positive impact on the negotiations for the Paris Agreement. They affirm: ‘renewable energy had become the dominant technology for new power installations and China had become the largest market for renewable energy (…) All in all, climate protection interests had thus been strengthened among all major players prior to Paris’.7
Bernice Lee and Diarmuid Torney8 highlight the tensions inherent in reconciling energy security imperatives with climate change mitigation goals. The EU is under pressure to ensure reliable and affordable energy supplies while reducing greenhouse gas emissions and transitioning to a low-carbon economy. These competing priorities often require difficult trade-offs and policy compromises, complicating the EU’s diplomatic efforts to address both energy and climate concerns simultaneously. Despite these challenges, there are also opportunities for synergies and mutually beneficial outcomes through integrated diplomatic approaches.
Katja Biedenkopf and Franziska Petri9 emphasise the importance of coherence in the EU’s external action, arguing that the EU’s effectiveness in energy and climate diplomacy depends
4 Sebastian Oberthür and Marc Pallemaerts, ‘The EU’s Internal and External Climate Policies: An Historical Overview’ in Sebastian Oberthür and Marc Pallemaerts (eds), The New Climate Policies of the European Union: Internal Legislation and Climate Diplomacy (n 3) 28.
5 ibid 54–55.
6 Sebastian Oberthür and Lisanne Groen, ‘Explaining Goal Achievement in International Negotiations: The EU and the Paris Agreement on Climate Change’ (2018) 25(5) Journal of European Public Policy 708–27 <https://doi.org/10.1080/13501763.2017.1291708> accessed 15 January 2025.
7 ibid 717.
8 Bernice Lee and Diarmuid Torney ‘Leading on Climate and Resources’ in Giovanni Grevi and Daniel Keohane (eds), Challenges for European Foreign Policy in 2013: Renewing the EU’s Role in the World (Fride 2013) 31–38.
9 Katja Biedenkopf and Franziska Petri, ‘The European External Action Service and EU Climate Diplomacy: Coordinator and Supporter in Brussels and Beyond’ (2021) 26(1) European Foreign Affairs Review 71–86 <https://doi.org/10.54648/eerr2021007> accessed 15 January 2025.
on its ability to align its domestic policies with its international commitments, and to respond appropriately and coherently if the multilateral agreement on climate change is threatened.10 In this specific context, they affirm that Donald Tusk’s motto ‘United we stand, divided we fall’ can therefore serve not only the international community in solving climate change, but also the EU’s internal dynamic to maintain momentum and climate ambition.11
Margarita Balmaceda’s12 research provides insights into the dynamics of EU energy and climate diplomacy vis-à-vis post-Soviet states. Her work underscores the importance of energy relations with these states for the EU’s broader diplomatic strategy, highlighting the complexities of engaging with diverse actors and navigating geopolitical rivalries in the region. Balmaceda’s analysis deepens our understanding of the EU’s diplomatic challenges and opportunities in promoting sustainable energy transitions and addressing climate change in the post-Soviet space. Her work is therefore crucial to understanding how energy politics has played a social role in the EU’s eastern proximate neighbourhood and has been used by Russia and pro-Russian leaders to weaken the prospects of European integration in the region. In this specific context, Anna Herranz-Surrallés13 helps us understand how the energy policies of the EU, Russia and the countries in between have facilitated the EU’s shift towards a more muscular and pragmatic energy policy in recent years.
2. the eu energy and Climate diplomaCy
2.1. A comparison between Energy and Climate Diplomacy Energy Diplomacy and Climate Diplomacy are two different forms of diplomacy. However, they are closely related because the primary energy resource that is still being consumed, fossil fuels, is extremely relevant to both. Energy diplomacy focuses on securing the necessary amount of fossil fuel energy, while Climate diplomacy focuses on how to reduce the negative impacts of fossil fuels and reduce their consumption.
10 Katja Biedenkopf and Franziska Petri, ‘“United We Stand, Divided We Fall”. The Effects of US Contestation on EU Foreign Climate Policy Ambition’ (2020) 6(4–5) Global Affairs 381–97 <https://doi.org/10.1080/233404 60.2021.1885988> accessed 15 January 2025.
11 ibid 394.
12 Margarita M. Balmaceda, The Politics of Energy Dependency: Ukraine, Belarus, and Lithuania between Domestic Oligarchs and Russian Pressure (University of Toronto Press 2013).
13 Anna Herranz-Surrallés, ‘An Emerging EU Energy Diplomacy? Discursive Shifts, Enduring Practices’ (2016) 23(9) Journal of European Public Policy 1386–1405 <https://doi.org/10.1080/13501763.2015.1083044> accessed 15 January 2025; Anna Herranz-Surrallés, ‘European External Energy Policy: Governance, Diplomacy and Sustainability’ in Knud Erik Jørgensen, Åasne Kalland Aarstad, Edith Drieskens, Katie Laatikainen and Ben Tonra (eds), The SAGE Handbook of European Foreign Policy (Sage 2015) 913–27.
The EU has always been involved in energy and climate policies and has formulated its own Energy Diplomacy and Climate Diplomacy, which have coexisted for more than 10 years. This coexistence is not a contradiction per se, but it has been characterised by many challenging issues.
Energy Diplomacy arises from the need to secure the supply of energy resources. It can therefore be affirmed that the primary motivation behind Energy Diplomacy is the concern for energy security. At the same time, the Climate Diplomacy is driven by climate change and the ambition to raise global awareness of the risks associated with the anthropocentric rise in temperature. Thus, in terms of international governance, one of the ideal goals of a well-functioning EU Energy Diplomacy is to spread its liberal energy paradigm around the world. On the other hand, the EU’s Climate Diplomacy has focused primarily on raising global awareness of climate issues. As with the market liberalisation ideas that the EU has tried to export beyond its borders, the EU is now trying to export its ambitious climate agenda by taking the lead in setting very ambitious targets for achieving carbon neutrality.
Access to resources is present in both Diplomacies but the resources are different: Energy Diplomacy focuses on fossil fuels, while Climate Diplomacy focuses on raw materials and technologies. Climate Diplomacy therefore focuses on making these resources available to all those willing to invest in the energy transition and the greening of the economies. The availability of natural energy resources is also a key issue in Energy Diplomacy, but it also includes the essential role of security of supply, which has not yet been developed in Climate Diplomacy. Indeed, Energy Diplomacy is intended to increase the level of energy security by ensuring stable and affordable supplies, guaranteed by access to multiple suppliers (companies and supplying states), the possibility of using different routes and the greatest possible interchangeability of different resources.
While one of the main concerns of Energy Diplomacy is security of supply, it can be argued that there is another main security concern for Climate Diplomacy, namely deep energy security. According to Karlsson-Vinkhuyzen and Jollands, the concept of energy security is about ensuring that: ‘all human beings, including future generations, are entitled to benefit from modern energy services and at the same time be protected from their negative side-effects’.14 The idea of deep energy security is therefore much more inclusive and linked to general human security, whose goals are universal. By advancing our deep energy
14 Sylvia I. Karlsson-Vinkhuyzen and Nigel Jollands, ‘Human Security and Energy Security: A Sustainable Energy System as a Public Good’ in Hugh Dyer and Maria Julia Trombetta (eds), International Handbook of Energy Security (Edward Elgar 2013) 507–25, 513.
security, we improve our environmental, economic, health, food, political, community and personal security. In other words, deep energy security is about protecting and enhancing our human security from the negative consequences of energy consumption.
Geopolitical competition is embedded in pure Energy Diplomacy. Energy-rich countries that export large quantities of fossil fuels are usually seen as having a relative geopolitical advantage, firstly because of guaranteed export revenues, and secondly because fossil fuels, as a scarce and not ubiquitous resource, are strategically important and can be used to gain competitive advantage in other sectors, such as the military. The Energy Diplomacy of exporting countries focuses on finding the most favourable price balance for the exported resources and on establishing solid and advantageous relations with trading partners, thus creating a positive interdependence. The Energy Diplomacy of importing countries includes geopolitical concerns about avoiding troublesome energy dependencies and maximising bargaining power in energy trade with suppliers.
In geopolitical terms, Climate Diplomacy is very different:
1. Climate Diplomacy as a concept has so far been developed by traditionally energy-poor countries. The shift away from fossil fuels has been presented as a good thing from a geopolitical point of view because of the desirable reduction in demand for fossil fuels.
2. Climate Diplomacy is geopolitically relevant because, by persuading the world to set ambitious targets for limiting emissions, we ensure a leading global role for the most ambitious and active subject in this regard.
3. The energy transition entails some geopolitical risks arising from the inevitable change in the relationship between fossil fuel exporting and importing countries. Therefore, a geopolitical objective of Climate Diplomacy is to prevent any negative consequences that might result from the transformation of long-standing economic and political relationships with fossil fuel producers.
4. Given the growing awareness of limited access to raw materials and technologies, Climate Diplomacy will continue to be at least partly geopolitical, and security of supply may continue to play a role.
2.2. Coexistence of Energy and Climate Diplomacy
In terms of economic policy, it can be argued that both Energy and Climate Diplomacies are interventionist. In the case of the EU, the development of classic hard Energy Diplomacy in the second half of the 2000s was perceived by many as a consequence of the EU’s partial failure to solve energy supply and energy security problems by simply promoting and trying to spread its liberal ideals. In particular, the EU’s direct intervention in supporting the construction of new gas infrastructure could be seen as a countermeasure to the over-dependence on a single supplier (Russia) that had not been resolved, but even exacerbated, by the free market approach previously promoted by the European institutions. Climate Diplomacy is strongly interventionist in the financing of energy infrastructure, as the economic rationale of a project is no longer something that predominates in the net-zero pathway. In the case of Energy Diplomacy, the economic rationale of a project has been replaced by security of supply motivations. In the case of Climate Diplomacy, the rationale for a project is primarily related to its environmental sustainability and its contribution to mitigating climate change.
All in all, there are issues where Climate and Energy diplomacy can coexist, and others where the two concepts clash inexorably. The EU’s ambition to promote its liberal paradigm, transpose its ‘acquis Communautaire’, and impose its regulations to protect the integral market does not contradict the Climate Diplomacy objective of raising global awareness of climate change and the ambitious goal of countering the harmful effects of rising temperatures. When not directly funding infrastructure, the EU can promote its regulatory power to address both the market and the climate. Similarly, the security of supply concerns of Energy Diplomacy can be seen as part of the deep energy security that Climate Diplomacy should protect and enhance. As the energy transition will not be rapid, securing the supply of all energy resources is not per se incompatible with promoting environmentally friendly policies, although it is important to ensure that any investment has a climate rationale.
In areas where the main object of diplomacy is strictly related to the exploitation of energy resources, Energy and Climate Diplomacies cannot coexist. In the field of energy resources, it is impossible to reconcile the contemporary existence of an energy diplomacy committed to securing access to fossil fuels and the presence of a climate diplomacy committed to phasing out fossil fuels. A supposed compromise could be the identification of some ‘transit fossil fuels’, a role that natural gas can play.
These two forms of Diplomacy cannot coexist when it comes to the direct financing of projects, since Climate Diplomacy is clearly designed to discourage investment in fossil fuels and encourage spending on green energy. In terms of geopolitics, the clash between
Energy and Climate Diplomacy is even clearer: Climate Diplomacy is indeed conducted by states seeking to become net-zero, and their views inevitably clash with the interests of fossil fuel producing countries seeking to continue their exports. To a certain extent, we are already witnessing a clash between the Climate Diplomacy of low-carbon countries and the Energy Diplomacy of fossil fuel exporting countries.
The fact that the Council of the EU has already addressed the Energy Diplomacy and the Climate Diplomacy together is significant. Given the various aspects in which these two Diplomacies overlap, it would be unrealistic and counterproductive to think that Energy and Climate Diplomacies can coexist separately in the long term. This does not mean, however, that Climate Diplomacy will completely sideline Energy Diplomacy. Convergence between the two Diplomacies is key to formulating a clearer idea of the overall external dimension of the EU’s energy-climate policy, including the Eastern Neighbourhood.
Until 2023, the Council dealt with Energy and Climate Diplomacies together,15 while from 2024 onwards ‘Green Diplomacy’ replaces the former combination of energy and climate.16 This is a clear sign that the EU recognises that energy and mitigation of climate change have to be tackled together, despite possible clashes that will ultimately have to be resolved.
The EU’s Eastern Neighbourhood, and in particular the region comprising the three countries between Russia and Central Europe, is an area where energy has always been highly politicised and securitised, perhaps more so than anywhere else in the world.
15 Council of the European Union, ‘Council Conclusions on Climate and Energy Diplomacy – Bolstering EU climate and energy diplomacy in a critical decade’ (9 March 2023) 7248/23 <https://www.consilium.europa.eu/ media/62942/st07248-en23.pdf> accessed 16 January 2025.
16 Council of the European Union, ‘Council Conclusions on Green Diplomacy. EU diplomacy promoting the just and inclusive green transition and supporting the implementation of global commitments’ (18 March 2024) 7865/24 <https://www.consilium.europa.eu/media/70777/st07865-en24.pdf> accessed 16 January 2025.
3. the eu’s eastern neighBourhood energy Challenges
3.1. Belarus
Total energy supply by source:17
Electricity generation energy mix:18
18 ibid NAtUrAl gAS oil
17 International Energy Agency, ‘Belarus’ <https://www.iea.org/countries/Belarus> accessed 7 May 2023.
The entire Belarusian economy is heavily state-controlled, and the energy sector is no exception. Despite the scarce availability of energy resources in the Belarusian subsoil, energy is highly relevant to the country’s economy and determines its foreign policy. According to the government, Belarus only 16% of Belarus’ energy is self-sufficient, and the remaining part is imported.19 All imported natural gas comes from Russia, as does all imported crude oil. Belarus is a significant importer of oil, as it has a large refining capacity that allows Minsk to sell refined petroleum products abroad.
In Belarus, energy is not only a necessary resource for the economy, but also an important political issue and instrument. As pointed out by Margarita Balmaceda, ‘Lukashenka’s deft use of energy policy through redistributive mechanisms (…) has been key to his longevity in power’.20 In a country where the state-controlled economy did not give citizens any real prospects of accumulating wealth, they were compensated with a high level of welfare, including a large amount of available and affordable energy (heating, electricity, petrol).
Belarus is an energy-poor country where energy directly accounts for almost 1/3 of the country’s exports and 10% of GDP. This characteristic is part of the Soviet legacy, as Belarus was fundamental to the Soviet infrastructure network needed to export energy to Western Europe. The two westernmost Soviet refineries in Navapolatsk and Mazyr’, which were located in the Belarusian SSR, are the key infrastructure enabling the regime’s rent-seeking activities in the energy sector. Crude oil has been the subject of controversy between Moscow and Minsk on more than one occasion, and the Lukashenko regime has made several attempts to diversify suppliers. In all these cases, the diversification did not last and Belarus continued to be supplied exclusively by Russia.
Natural gas is the most important resource in the Belarusian energy mix, accounting for 67% of the country’s total primary energy supply. Gas consumption has been growing steadily over the last three decades. Prior to the commissioning of the Astravets Nuclear Power Plant (NPP), the overwhelming share of electricity was produced by natural gas (97%).21 Belarus’s decision to generate almost all of its electricity from natural gas was driven by its confidence in maintaining good relations with Russia and, in return for its loyalty, in
19 National Statistical Committee of the Republic of Belarus, ‘Total Primary Energy Supply in Belarus in 2018’ (2019) <https://www.belstat.gov.by/upload-belstat/upload-belstat-pdf/oficial_statistika/TEB_2018_with_infographic.pdf> accessed 6 May 2021.
20 Margarita M. Balmaceda ‘Energy Policy in Belarus: Authoritarian Resilience, Social Contracts, and Patronage in a Post-Soviet Environment’ (2014) 55(5) Eurasian Geography and Economics 514–36, 515 <https://doi.org/10.1080/15387216.2015.1028083>.
21 International Energy Agency, ‘Belarus’ (n 17).
receiving cheap natural gas and oil for decades to come. In addition, Belarus lost de facto control over the national gas sector by selling the main Belarusian gas company ‘Beltransgaz’ to Gazprom, which renamed the company ‘Gazprom Transgaz Belarus’.
The lack of diversification of energy suppliers and resources was addressed in 2005 with the formulation of the state ‘Concept of Energy Security of the Republic of Belarus’.22 Among the measures to improve national energy security, this document included the construction of a nuclear power plant (NPP), which has been in operation since June 2021.23
The NPP was also controversial internally. In addition to safety issues, the energy security rationale for the project has become politically questionable. While Minsk rightly points out that the Astravets NPP will make the biggest contribution to energy diversification by reducing the share of natural gas in electricity production, the decision to build the NPP in close cooperation with Russia contradicts the first reason why Belarus took this decision, which was to reduce energy dependence on Russia. Technologically and financially, the NPP is a purely Russian project implemented in Belarus, strengthening the ties between Minsk and Moscow rather than reducing Belarus’ energy dependence. All in all, the realisation of the NPP is a failure of Belarus’ energy diversification policy.
In summary, the main challenges to Belarus’ energy security are related to poor diversification of resources and suppliers. In the context of the energy trilemma, Belarus does not score well in terms of environmental sustainability: the country’s economy is still based on carbon-intensive industries, there is little development of renewable energy resources, and the main advances in energy efficiency were made in the 1990s and 2000s, with little progress made since then.24 In terms of accessibility and access to energy, Belarus does not face major problems. Belarus seems to be in a better situation due to its higher urbanisation rate compared to Ukraine and Moldova and the different structure of the state economy.
22 Aliaksandr Novikau, ‘Conceptualizing and Achieving Energy Security: The Case of Belarus’ (2019) 26 Energy Strategy Reviews 100408 <https://doi.org/10.1016/j.esr.2019.100408>.
23 Energy Charter Secretariat, ‘In-Depth Review of the Energy Efficiency Policy of the Republic of Belarus’ (2013) ECS 46–53 <https://www.energycharter.org/fileadmin/DocumentsMedia/IDEER/IDEER-Belarus_2013_en.pdf> accessed 16 January 2025.
24 International Energy Agency, ‘Belarus’ (n 17).
3.2. Ukraine
26 ibid NAtUrAl gAS
25 International Energy Agency, ‘Ukraine Energy Profile’ <https://www.iea.org/countries/ukraine> accessed 12 May 2024.
Looking at Ukraine’s energy mix, Ukraine does not seem to suffer from dependence on a single energy resource, as is the case for Belarus and Moldova. Moreover, thanks to the presence of nuclear energy and significant coal and natural gas reserves, Ukraine is by far more energy independent than Belarus and Moldova. It is no coincidence that, according to the World Energy Council’s Energy Trilemma Index, Ukraine’s energy security is rated A.27
Unlike Belarus and Moldova, Ukraine does not use gas for electricity generation, but mainly for domestic heating and industrial purposes. In addition to nuclear energy, coal is the main fuel used for electricity generation. The role of nuclear energy in Ukraine’s energy mix and electricity generation has become increasingly important in the recent years. Ukraine still has 15 operating reactors in 4 different power plants (including the temporarily occupied Zaporizhian NPP). Until recently, Ukraine was no less dependent on Russia for nuclear energy than it was for natural gas. Ukraine used to base its nuclear sector on cooperation with Russia for technology (new reactors and maintenance), nuclear fuel supply and nuclear waste management. Since Russia’s takeover of the Donbass region and annexation of Crimea in 2014, Ukraine has diversified its nuclear energy partners through new nuclear fuel suppliers and the construction of its own spent fuel facility in the Chernobyl Exclusion Zone.
Ukraine has 1.1 trillion cubic metres of proven natural gas reserves.28 Ukraine is the third richest European country in terms of gas reserves after Russia and Norway. With an annual consumption of around 30 bcm, Ukraine could easily become self-sufficient in natural gas and even a net exporter. Moreover, domestic gas consumption could be reduced by improving energy efficiency. Indeed, given that half of gas demand is used for domestic heating, there is significant potential to reduce overall gas consumption. Prior to the full-scale Russian invasion of Ukraine, the Government planned to become gas self-sufficient in 2025.
Unlike Belarus, Ukraine has not been able to modernise the refineries built during the Soviet era. As a result, Ukraine currently has a significant refining capacity (250,000 barrels per day) but a very low throughput of only 60,000 barrels per day, one of the lowest of any European country.29 The dramatic decline of the Ukrainian oil sector is linked to defective
27 World Energy Council, ‘World Energy Trilemma Index 2020’ (2020) WECouncil 44 <https://www.worldenergy.org/assets/downloads/World_Energy_Trilemma_Index_2020_-_REPORT.pdf?v=1602261628> accessed 16 January 2025.
28 British Petroleum, ‘BP Statistical Review of World Energy’ (2019) BP 30 <https://www.bp.com/content/dam/ bp/business-sites/en/global/corporate/pdfs/energy-economics/statistical-review/bp-stats-review-2019-full-report. pdf> accessed 16 January 2025.
29 ibid 26.
privatisation, lack of state supervision and oligarchic influence. In theory, Ukraine does not have much difficulty in diversifying its oil suppliers, thanks to the presence of the port of Odesa and the possibility of receiving Azeri oil. However, the Government has not been effective in reducing imports from Russia and Belarus. Before the Russian invasion, 85% of imports came from Belarus, but a significant proportion came from Russia.30
Similar to Belarus and other post-Soviet states, Ukraine still has problems with high carbon emissions, despite the huge reductions achieved since 1991. Efforts to improve the country’s energy efficiency are closely linked to the policy of reducing subsidies and modernising networks and buildings, particularly to reduce the huge losses occurring in the gas and electricity transmission networks. Against this backdrop, Ukraine is improving significantly in the area of environmental sustainability and was the second-best improver among the countries listed in the 2020 World Energy Council report.31 Ukraine has also shown great receptiveness to the changes taking place in the EU with the proclamation of the Green Deal. As a result, Ukraine has announced its willingness to pursue the climate goals and achieve climate neutrality by 2070.32 Concerning that point, Kyiv will have to revise its Energy Strategy 2035 by aligning it with the climate goals formulated in the Ukraine 2050 Green Energy Transition Concept.
After the full-scale Russian invasion, massive investment will be needed to rebuild Ukraine’s energy infrastructure. At best, this will provide an opportunity to address a number of issues related to high emissions intensity, energy system inefficiency and over-dependence on imports.
30 Wojciech Jakóbik, ‘Nowa broń energetyczna Putina zagraża Ukrainie. Polacy mogą pomóc’ BiznesAlert (19 April 2021) <https://biznesalert.pl/ukraina-kryzys-dostawy-paliw-lpg-diesel-wladimir-putin-bezpieczenstwo-polska-alternatywa-energetyka-ropa/> accessed 10 May 2021.
31 World Energy Council, World Energy Trilemma Index 2020 (n 27) 26.
32 Ministry of Environmental Protection and Natural Resources of Ukraine, ‘Ukraine 2050 Green Energy Transition Concept’ (2020).
3.3. Moldova
Total energy supply by source:33
Electricity generation energy mix:34
33 International Energy Agency, ‘Moldova Energy Profile’ (2020) IEA <https://www.iea.org/reports/moldova-energy-profile> accessed 7 May 2023.
34 ibid
Moldova’s energy sector is characterised by a lack of indigenous energy resources and almost total dependence on imported fossil fuels. The country’s difficult energy situation is exacerbated by the presence of self-proclaimed Transnistria, which is home to the country’s largest gas-fired power plant, which supplies around 80% of Moldova’s electricity.35 Moldova still imports all of its natural gas from Russia through a pipeline that crosses Transnistria. Chisinau is unable to force Transnistrians to pay for the gas they consume and, at the same time, is unable to diversify imports due to infrastructure underdevelopment. More than half of the Moldovan demand for natural gas, around 2 bcm/y, is consumed in Transnistria.36 Russia’s use of energy as a weapon against Moldova has been particularly visible since its full-scale invasion of Ukraine began in February 2022.
Moldova needs to rethink the role of the pipeline and look for alternative suppliers. In this context, the Iasi–Chisinau pipeline was completed in 2020, reaching the Moldovan capital, whereas before it only connected Romania to the border Moldovan town of Ungheni. In December 2022, the pipeline supplied gas from Romania to Moldova for the first-time. At the same time, the leading Moldovan gas company, Moldovagaz, is controlled by Gazprom, as the Russian company holds 50% of the shares. The Moldovan gas sector is still completely monopolised, with Moldovagaz controlling 98% of the network. VestMoldTransGaz is another fully unbundled company operating in the country, covering only 2% of total distribution and operating the Iasi-Chisinau pipeline.37
The lack of gas storage facilities, which are required by the Energy Community, also contributes to the poor energy security situation. Moreover, even before Russia’s invasion of Ukraine, Moldova’s total dependence on gas imports from Russia via Ukraine exposed it to a high risk of disruption. At the same time, Moldova suffers from unsatisfactory progress in sustainability and has significant problems with energy equity. Moldova is the worst performer among European countries in the Energy Trilemma Index, with scores of C, C and D respectively for energy security, energy equity and sustainability.38 Electricity and natural gas prices are heavily subsidised, and there is no significant the development in the renewable energy sector, which is limited to the traditional use of biomass. Infrastructural deficiencies also hamper cross-border electricity trade with Romania. Overall, infrastructural
35 Kamil Całus, ‘Moldova: An Impending Energy Crisis and its Political Implications’ (2024) Centre for Eastern Studies OSW Analyses <https://www.osw.waw.pl/en/publikacje/analyses/2024-12-13/moldova-impending-energy-crisis-and-its-political-implications> accessed 3 February 2025.
36 ibid
37 International Energy Agency, ‘Moldova Energy Profile’ (n 33).
38 World Energy Council, World Energy Trilemma Index 2020 (n 27) 44.
underdevelopment, caused inter alia by the non-transposition of the Energy Community acquis in that regard, is a relevant obstacle to the development in the energy sector. Political instability and unclear foreign policy, caught in the competition between pro-European and pro-Russian populist parties, contribute to the lack of reform in the Moldovan energy sector. Recent developments show how difficult it is for Moldova to reduce its dependence on Russian energy sources and the Russian presence in the energy sector.39
4. the CBam in the eu’s eastern neighBourhood
4.1. The Carbon Border Adjustment Mechanism (CBAM)
The Carbon Border Adjustment Mechanism (CBAM) is a key tool in the EU’s climate diplomacy, helping to prevent carbon leakage by imposing a carbon cost on imports from countries with weaker climate policies. This incentivises global partners to adopt stricter emissions rules and supports the EU’s leadership role in global climate governance. CBAM also ensures that EU industry remains competitive by creating a level playing field with non-EU producers. For the EU’s Eastern Neighbourhood, it puts pressure on countries to modernise their industries and align them with EU climate standards.
The creation of a carbon adjustment mechanism has been discussed since the introduction of the EU Emissions Trading System (ETS). However, the creation of such a mechanism has not gained momentum due to the availability of free allowances and their relatively low price, which has protected EU companies from carbon leakage. This situation has changed after the announcement of the Green Deal and the planned phase-out of free allowances in the ETS. The increased ambition to achieve climate neutrality and the updated climate targets have forced the EU to change its approach to the ETS and to rethink the EU’s external economic relations in the area of carbon-intensive industries.
The CBAM is a powerful incentive for non-EU countries to adopt stricter climate policies, promoting global decarbonisation and encouraging policy convergence towards EU standards. It strengthens the EU’s position as a global climate leader by linking trade and environment policies, setting a precedent for other regions to follow.
The Mechanism introduces unilateral measures that impose carbon costs on imports from non-EU countries without their prior agreement or participation in a global framework.
39 Kamil Całus, ‘Moldova: Reduction of Russian Influence in the Gas Sector’ (2023) Centre for Eastern Studies OSW Analyses <https://www.osw.waw.pl/en/publikacje/analyses/2023-09-14/moldova-reduction-russian-influence-gas-sector> accessed 9 April 2024.
While the EU argues that CBAM incentivises other countries to adopt stronger climate policies, it bypasses the need for multilateral negotiations or agreements, such as the Paris Agreement, where all parties voluntarily commit to emission reductions. This unilateral approach risks creating trade tensions as non-EU countries may see it as a form of climate protectionism, potentially undermining global cooperation. It could also exacerbate inequalities between countries with different capacities to transition to a low-carbon economy, as it does not provide the same level of support or incentives for developing countries to decarbonise. CBAM thus operates outside the collaborative, globally negotiated framework typically favoured in multilateral climate diplomacy.
4.2. The Carbon Adjustment Mechanism and the EU’s Eastern Neighbourhood
Carbon intensities per unit of GDP (tCO2 /2015 USD):40
How the CBAM is implemented will be a key factor in determining the EU’s future relations with its Eastern Neighbourhood. Neither Ukraine, Belarus nor Moldova have implemented an ETS and their general carbon tax framework is almost non-existent. As a result, they enjoy quite advantageous economic conditions that favour their exports, and which have also been reinforced by the Association Agreements and partial economic integration with the EU
The EU is the largest export partner for Ukraine and Moldova and the second for Belarus.41 In 2019, trade between Ukraine and the EU amounted to €43.3 billion, between Belarus and
40 International Energy Agency, ‘Countries and Regions. Countries’ <https://www.iea.org/countries> accessed 14 May 2023.
41 European Commission, ‘EU trade by country/region’ <https://ec.europa.eu/trade/policy/countries-and-regions/> accessed 17 January 2025.
UkrAiNE bElArUS moldovA PolANd gErmANy frANCE
the EU to €11 billion, and between Moldova and the EUEU to €4.7 billion.42 According to the European Commission, the EU imports mainly iron and steel, mineral products and agricultural products from Ukraine. Belarus sells timber, mineral fuels and base metals to EU Member States. Moldova’s main exports to the EU are electrical machinery and equipment, apparel and clothing, and oilseeds.43 It should also be noted that 13% of Belarus’ total exports went to Ukraine.44 Refined petroleum products, fertilisers and other heavy industry products accounted for almost all of Belarus’ trade with Ukraine. Looking at these statistics, it is already clear that the implementation of the CBAM will have an impact on regional trade in Central and Eastern Europe.
4.3. Possible Impacts of the CBAM in the EU’s Proximate Eastern Neighbourhood
The impact of CBAM will also depend on the legal framework in place in the exporting countries. In the current circumstances, characterised by:
1. Strict and intensifying Belarus-Russia cooperation,
2. Strengthening EU-Ukraine relations and an almost irreversible process of Ukraine’s integration into Western institutions,
3. Moldova, pro-European but stuck in uncertainty.
The implementation of the CBAM is likely to be a further step in distancing the Eastern Partnership from the ENP countries.
4.3.1. Belarus
Belarus could foster trade relations within the Eurasian Economic Union (EAEU), but given the geographic shape of the EAEU and Moscow’s political weight in the organisation, this option is not as easy as it seems, and more importantly, it is subject to Moscow’s approval. In addition, the negative consequences of the CBAM could result from the deepening of Ukraine’s integration into the EU, the subsequent creation of a Ukrainian ETS, and possibly the establishment of a Ukrainian carbon border mechanism to protect national industries from the ‘unfair’ competition of carbon-intensive industries from Russia, Belarus and other post-Soviet states. Belarusian exports are largely regional, i.e. they are possible
42 ibid
43 ibid
44 Observatory of Economic Complexity, ‘Belarus’ OEC <https://oec.world/en/profile/country/blr> accessed 10 May 2021.
thanks to the proximity of the countries of destination and the resulting low transport costs. It should be noted that Belarus is a landlocked country with limited opportunities for import-export diversification.
At the same time, the first ‘business as usual’ option of simply paying the CBAM and continuing to export carbon-intensive products is hardly conceivable, given the war in Ukraine and the increasing economic burden Belarus will have to bear, and the fact that with the gradual decarbonisation taking place in the EU, the demand for fossil fuels, crude oil and other petroleum products will simply decrease. Similarly, exporting the abundant electricity at Belarus’ disposal after the completion of the Astravets NPP does not seem to be a viable option, given the EU’s rejection.
4.3.2. Ukraine
Ukraine appears to be very committed to following the EU’s climate agenda. Nevertheless, the issue of CBAM has the potential to create many controversies, but also to promote integration and post-war reconstruction. According to Markus and Norell ‘CBAM could pose a potential challenge to Ukrainian recovery, as a large proportion of Ukraine’s exports will face additional costs’.45 The Ukrainian government has stated that: ‘The legal regime of the Association Agreement between Ukraine and the EU makes it impossible to apply the carbon adjustment mechanism to Ukrainian goods’.46 In relation to this, Kyiv has established a working group that will cooperate with the European Commission on the application of the CBAM to Ukraine.47 A compromise could be found in the EU strategy of ‘more for more’ and ‘less for less’, which would basically be about allowing exemptions for certain sectors of the Ukrainian economy in exchange for Kyiv’s commitment to energy and climate transition. In this field, Ukraine will have to demonstrate progress in carbon pricing, development of renewables, energy efficiency and decarbonisation of industry, the main aspects in which, according to the Energy Community, Kyiv was also lacking before the full-scale invasion started.48
45 Erik Merkus and Nils Norell, ‘CBAM and Ukraine: Special Circumstances Call for Special Measures’ (2023) Kommerskollegium – National Board of Trade Sweden <https://www.kommerskollegium.se/en/about-us/trade-policy-insights/cbam-and-ukraine-special-circumstances-call-for-special-measures/> accessed 12 May 2024.
46 Government of Ukraine, ‘Working Group to Cooperate with the European Commission on Carbon Border Adjustment to be Set Up in Ukraine’ (2021) Ministry of Economic Development, Trade and Agriculture of Ukraine <https://www.kmu.gov.ua/en/news/v-ukrayini-stvoryat-robochu-grupu-dlya-vzayemodiyi-z-yevropejskoyu-komisiyeyu-shchodo-koriguvannya-vuglecyu-na-kordoni> accessed 10 May 2021.
47 ibid
48 Energy Community Secretariat, ‘Annual Implementation Report 2020’ (2020) ECS 182–99 <https://www.energy-community.org/dam/jcr:0af3b17a-3759-4a23-a2ef-3134784e217c/EnC_IR2020.pdf> accessed 17 January 2025.
Given the current importance of climate issues and energy transition in the EU, Ukraine should be aware that it would not be possible to further European integration without a strong commitment to greening the national economy. The Green Deal offers several opportunities for Ukraine, but it will also be an important test for Ukrainian policymakers of their real will to follow the European path in all its nuances. On the other hand, the EU should be aware of the difficulties Ukraine will have in committing to such ambitious goals. In this respect, the concerns expressed by Central European Member States during the climate negotiations, in particular Poland, may be indicative. The Ukrainian government has already shown its willingness by adopting legislation on issues such as greenhouse gas emission (GHG) monitoring, environmental impact assessment, waste management and industrial pollution. More importantly, Ukraine has also published the ‘Ukrainian 2050 Energy Transition Concept’, which envisages: subsidies for decarbonisation, minimisation of fossil fuel subsidies, tax on industrial externalities and, finally, the establishment of the ETS.49
Carbon intensities of the main products imported by the EU from Ukraine
Source: Erik Merkus and Nils Norell, ‘CBAM and Ukraine: Special Circumstances Call for Special Measures’ (2023) Kommerskollegium – National Board of Trade Sweden <https://www.kommerskollegium. se/en/about-us/trade-policy-insights/cbam-and-ukraine-special-circumstances-call-for-special-measures/>.
49 Ministry of Environmental Protection and Natural Resources of Ukraine, ‘Ukraine 2050 Green Energy Transition Concept’ (n 32).
With this in mind, it will be essential to ensure the real implementation of these good and optimistic premises. The first step for the Ukrainian government is to adopt these strategies, then it is fundamental to update the remaining legislation to the green goals starting from the current Energy Strategy for Ukraine 2035. For its part, the EU should have every interest in integrating Ukraine ever more closely and ensuring that if a ‘green curtain’ is to be drawn anywhere, it should be as far away as possible.
4.3.3. Moldova
Compared to Ukraine and Belarus, Moldova is much less exposed to negative consequences from the implementation of the EU CBAM. In the case of Moldova, the CBAM could become a trigger to overcome the limitations shown in the transposition of the climate, renewable energy and environmental acquis communautaire. Moreover, the relatively low importance of carbon-intensive industries in EU-Moldova trade relations may be a competitive advantage for the latter in furthering EU integration, will increasingly depend on climate and environmental considerations. Moreover, given that most Moldova’s emissions come from electricity, heating and transport,50 there is considerable potential to reduce these emissions through the use of renewable energy sources, thereby increasing the country’s energy security, as most electricity is currently produced in the self-proclaimed Transnistria region. However, in the current political context Moldova is by far the European country most exposed to Russian energy blackmail.
5. ConClusion
In the Green Deal era, Climate Diplomacy and Energy Diplomacy will complement each other. It is becoming clear that the external dimension of the EU energy policy cannot be separated from the EU climate agenda and the subsequent energy transition. This is a significant change, given that the origins of the EU’s Energy and Climate Diplomacies are considerably different.
EU energy diplomacy emerged from the realisation that the promoted liberal acquis was not sufficient to enhance the energy security of EU member states and that a more muscular approach was needed to counter increasingly assertive supplier states. EU energy diplomacy could not emerge earlier simply because of the reluctance of EU member states to give the European Commission more responsibilities in dealing with energy partners.
50 International Energy Agency, ‘Moldova Energy Profile’ (n 33).
On the contrary, the development of Climate Diplomacy has seen the EU playing the role of global leader from the outset. Compared to Energy Diplomacy, the EU could play a much more relevant role in this regard, as it did not imply taking on a typical state role. In climate discussions and negotiations, the EU could deliver to its full potential since climate requires strong multilateralism. Today, however, we find ourselves in a situation where bilateralism and multilateralism have, in a sense, given way to ambitious internal policies that aim to make the EU the leading power in the era of fighting climate change and implementing the green energy transition.
In such a context, where the EU is assuming many traditional state powers, Energy and Climate Diplomacy are not entirely contradictory, although there are some issues where a clash is inevitable. The geopolitical priorities are clearly divergent, while the financing of projects is a critical point where there is not much room for compromise. Nevertheless, it is no longer possible to approach these two forms of Diplomacy in isolation, as demonstrated by the Council of the EU, which has already begun what will hopefully be a long-term process of convergence between Energy and Climate Diplomacy, which has recently evolved into the new ‘Green Diplomacy’. It can be affirmed that the internal implementation of climate policies, driven by EU laws and regulations, is triggering the convergence of EU energy and climate diplomacy.
Nevertheless, the new EU energy governance will face several challenges, especially where energy is still highly politicised and securitised, as is the case in the EU’s Eastern Neighbourhood. In Belarus, Ukraine and Moldova, traditional concerns about energy security still play the most important role in the energy sector, especially in the last year of conflict. To varying degrees, all three countries suffer from a lack of diversification of sources and suppliers, infrastructural limitations, high energy dependency, monopolisation and non-transparent oligarchic influences. The promotion of the EU’s climate policy in the Neighbourhood will widen the gap between those countries that are willing to strengthen relations with the EU, such as Ukraine and Moldova, and those that are already part of other regional political organisations, such as Belarus.
The EU’s concrete measures to promote the Green Deal globally, such as the CBAM, are very relevant in the context of the EU’s relations with its Eastern Partners. Prior to March 2022, most of the trade from Belarus and Ukraine to the EU consisted of carbon-intensive products and goods produced with almost no carbon pricing systems. Ukraine is seeking an exemption from the CBAM by cooperating closely with Brussels in the policy-making process. Belarus seems disinterested in tackling the issue and is likely to follow Russia in
simply not responding. Moldova is in a better position thanks to the different nature of its economy and trade with the EU As a result, Moldova will not be significantly affected by the new border tax compared to Belarus and Ukraine.
The EU’s proximate eastern neighbourhood represents the first external challenge to ambitious European climate policy. The war and the need to help Ukraine rebuild its economy provide an opportunity to extend the politically driven energy transition beyond the EU’s current borders. However, in the case of Ukraine, Moldova and Belarus, the EU cannot apply its strict policy without making distinctions that will inevitably be politically motivated. In order to meet the different needs of European integration, rapid economic development and increased energy security, multi-speed pathways to climate goals are necessary. This issue will become highly relevant if Ukraine and Moldova successfully complete to the EU accession process. Energy and climate-related issues will therefore be crucial in the EU accession process in the case of Moldova and even more so in the case of Ukraine, reflecting the EU’s current and future priority areas of interest.
part iii
t h E glob A l E ff EC t S of EU P oli C i ES
C hapter 6
The Carbon Border adjustment
Mechanism in the light of the right to development
by JAkUb bEdNArEk
JakuB B E dnar E k
Jakub b ednarek is an environmental lawyer and climate policy expert currently working in the private sector. he previously worked in the Polish Prime minister’s office and participated in the negotiation process of the EU’s ‘fit for 55’ legislative package and the ‘rEPowerEU’ plan. he was also a law clerk to deputy Chief Justice hanan melcer of the Supreme Court of israel. Jakub holds an ll m. degree from kU leuven and a master’s degree in law from the Jagiellonian University in Cracow.
1. introduCtion
In 2023, the EU largely completed the adaptation of its climate policies to meet its 2030 greenhouse gas (“GHG”) emission reduction target, i.e. reducing net GHG emissions by 55% compared to 1990 levels.1 In 2024, the European Commission began the process of setting reduction targets for 2040, with a view to enabling the Union to achieve climate neutrality by 2050. According to the initial proposal, which is subject to further debate, the emission reduction target for 2040 should be set at 90% net greenhouse gas emissions.2 In order to meet its short-term reduction targets, the EU Commission has proposed a series of legislative proposals known as ‘Fit for 55’. Among other things, this led to the adoption of the EU Carbon Border Adjustment Mechanism (CBAM), which aims to level the playing field between domestic and foreign producers.3 The mechanism will allow the Union to raise its climate ambitions and decarbonise its industry more quickly.4 However, it has proved highly controversial among the EU’s trading partners because it has significant extraterritorial effects by imposing direct carbon costs on imported products.5 The CBAM also proved controversial from the perspective of its compatibility with international trade law.6
1 European Parliament, ‘Regulation (EU) 2021/1119 of the European Parliament and of the Council of 30 June 2021 establishing the framework for achieving climate neutrality and amending Regulations (EC) No 401/2009 and (EU) 2018/1999’ (‘European Climate Law’) OJ L 243 9.7.2021 1–17 Art. 4 par. 1.
2 European Commission, Commission consultations, EU climate target for 2040 <https://ec.europa.eu/info/law/ better-regulation/have-your-say/initiatives/13793-EU-climate-target-for-2040_en> accessed 29 November 2024; European Commission, Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions, ‘Securing our future. Europe’s 2040 climate target and path to climate neutrality by 2050 building a sustainable, just and prosperous society’ COM (2024) 63 final 6.02.2024 <https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=COM%3A2024%3A63%3AFIN> accessed 29 November 2024.
3 European Parliament, ‘Regulation (EU) 2023/956 of the European Parliament and of the Council of 10 May 2023 establishing a carbon border adjustment mechanism’ OJ L 130 16.5.2023 52–104 (‘CBAM’).
4 On the shifting focus from the energy sector to industry decarbonisation, see Andrei Marcu, Juan Fernando López Hernández, Gabriele Romeo, Emilie Alberola, Anouk Faure, Chimdi Obienu, Bo Qin, Mariko O’Neill, Jean-Yves Caneill and Stefan Schleicher, ‘2023 State of the EU ETS Report’ (2023) ERCST April <https://ercst. org/2023-state-of-the-eu-ets-report/> accessed 29 November 2024.
5 See more in Indra Overland and Rahat Sabyrbekov, ‘Know Your Opponent: Which Countries Might Fight the European Carbon Border Adjustment Mechanism?’ (2022) 169 Energy Policy 113175; BRICS, ‘Joint Statement issued at the BRICS High-level Meeting on Climate Change, May 13, 2022, virtual (hosted by China)’ <http:// brics.utoronto.ca/docs/2022/220513-climate.html> accessed 29 November 2024; COP28, Brazil’s COP28_BASICAgenda proposal <https://unfccc.int/sites/default/files/resource/COP28_BASIC-Agenda%20proposal.pdf> accessed 29 November 2024.
6 World Trade Organization, Committee on Market Access – Formal meeting of 25-26 March 2024, Committee on Market Access – Formal meeting of 16-17 October 2023, State Parties’ Statement on the European Union – Carbon Border Adjustment Mechanism (Id 69) <https://tradeconcerns.wto.org/en/stcs/details?imsId=69&domainId=CMA> accessed 29 November 2024.
However, this paper analyses the CBAM from the just transition perspective and focuses on its impact on the least developed countries (‘LDCs’). The just transition is of paramount importance for the realisation of the Green Deal. In countless documents, the Commission refers to the principle of leaving no one behind. Over time, the concept of just transitions has been most commonly used by trade unions in labour relation. It dates back to the 1970s and was developed in the context of changes in the American labour market. It has therefore been used in relation to domestic distribution of burdens between different groups within society.7 In this paper, the concept of just transition is applied in relation to the unequal impacts of climate policies between states. It is also important to stress that a reductionist view of just transition is applied. EU policies are analysed from the perspective of the right to development, which could be seen as a minimum standard for evaluating (from of a just transition perspective) climate change mitigation policies that have exterritorial effects. However, the concept of just transition is generally much broader and goes far beyond considerations related to the right to development.8
This paper analyses the compatibility of the CBAM with the right to development of LDCs. The first section briefly describes the functioning of the CBAM and its scope of application. The next section outlines the EU’s obligations stemming from the right to development. The final section of the paper discusses possible ways of aligning the CBAM with the right to development.
This paper applies the dogmatic legal method to assess the legal obligation stemming from the right to development. It is complemented by an economic analysis based on published literature to assess the impact of the CBAM on LDCs.
2. the eu’s CarBon Border adJustment meChanism
The regulation on CBAM was formally adopted by the EU co-legislators in the first half of 2023, after many rounds of negotiations (i.e. trilogues) between the EU Parliament and the Council with the involvement of the Commission. A compromise was possible after all sides made significant concessions in several ‘Fit for 55’ legislative acts. This section briefly describes the basic principles underpinning the mechanism.
7 Xinxin Wang and Kevin Lo, ‘Just Transition: A Conceptual Review’ (2021) 82 Energy Research & Social Science 102291.
8 Raphael J. Heffron and Darren McCauley, ‘The Concept of Energy Justice Across the Disciplines’ (2017) 105 Energy Policy 658–67.
The primary objective of the CBAM is to prevent the risk of carbon leakage, i.e. the relocation of business to countries with less stringent climate policies. The mechanism will also lead to a reduction in global carbon emissions and support the goals of the Paris Agreement, including by creating incentives for operators in third countries to reduce emissions.9 The CBAM will allow the EU to increase its greenhouse gas reduction ambitions under the European Emission Trading System (‘EU ETS’), by replacing the free allocation system and indirect cost compensation schemes, which currently serve as instruments to reduce the risk of carbon leakage, for covered sectors.10
In general, the CBAM mirrors the EU ETS, with necessary adjustments. The mechanism will apply to goods listed in Annex I of the CBAM Regulation originating in third countries and imported into the Union.11 Currently, the mechanism covers the following sectors: cement, electricity, fertilisers, iron and steel, aluminium, and hydrogen.12 During the negotiation process the list of products covered was extended to certain downstream products in order to reduce the risk of circumvention.
Under the CBAM, goods listed in Annex I of the Regulation will only be imported by an authorised CBAM declarant. The main obligation of the declarant will be to surrender, by 31 May each year from 2027, CBAM certificates (1 CBAM certificate = 1 tonne CO2 equivalent) corresponding to the emissions embedded in the imported product.13 Embedded emissions include direct emissions released during the production of goods and indirect emissions from the production of electricity consumed during production processes (note that indirect emissions are not accounted for all CBAM goods).14 Embedded emissions in goods other than electricity will be determined on the basis of the actual values, and where it is not possible to adequately determine the emissions, as well as in the case of indirect emissions, the embedded emissions will be determined by reference to default values set out in implementing legislation.15
9 Art. 1 par. 1 CBAM (n 3); for a critical analysis of the CBAMs objectives, see Alice Pirlot, ‘Carbon Border Adjustment Measures: A Straightforward Multi-Purpose Climate Change Instrument?’ (2022) 34(1) Journal of Environmental Law 25–52.
10 ibid Art. 1 par. 2–3.
11 ibid Art. 2 par. 1.
12 ibid Annex I.
13 ibid Art. 22 par. 1.
14 ibid Art. 3 par. 22.
15 ibid Art. 7 par. 2 and 3.
Importers will be able to claim a deduction corresponding to the carbon process effectively paid in the country of origin.16 This provision aims to level the playing field by not imposing a double carbon price on products from third countries that have an ETS system or a carbon tax. In addition, the deduction mechanism is intended to incentivise countries to introduce their own carbon pricing schemes in order to avoid transfers to the EU budget. CBAM certificates will be sold on a common central platform.17 The price of the certificates will be determined by the Commission based on the average of the closing prices of EU ETS allowances on the auction platform for each calendar week.18 Certificates will not be subject to trading on the secondary market.
The CBAM also includes a number of administrative obligations that importers will have to comply with. The authorised declarant will be required to submit an annual CBAM declaration specifying: the total quantity of each type of goods imported during the previous calendar year, the total embedded emissions, and the total number of CBAM certificates to be surrendered.19 The declaration will be subject to verification by an authorised third party.20
The CBAM contains very limited exemptions. It will not apply to countries where the EU ETS is functioning or where their carbon pricing system is linked to the EU ETS. The CBAM also includes specific exemption conditions for electricity imports only, tailored to the Energy Community countries.21 The mechanism does not include any specific exemption conditions for LDCs. In the impact assessment accompanying the initial CBAM proposal, the Commission justified this step by arguing that
[w]hile preferential treatment for LDCs is an established procedure in other areas of trade policy, it raises questions in the case of a CBAM For example, blanket exemptions from a CBAM should be avoided, as setting up a mechanism that will encourage LDCs to increase their level of emission and run counter to the overarching objective of the CBAM. In addition, these exemptions would be temporary in nature, and would therefore prove counterproductive for LDCs in the long run: the carbon intensive industry would have to be dismantled, and if exempted now, adaptation costs for LDCs would be higher. To
16 Art. 9 CBAM (n 3).
17 ibid Art. 20 par. 1.
18 ibid Art. 21 par. 1.
19 ibid Art. 6.
20 ibid Art. 8.
21 ibid Art. 2.
sum up, neither the EU nor the trading partners would have an interest in fostering the growth of carbon-intensive, industries in these countries.22
Therefore, imports from LDCs will be subject to a full carbon price unless a carbon pricing system is in place in their country of origin. It should be noted that for many LDCs, setting up a carbon pricing system could be administratively challenging and a lengthy process. The mechanism also does not include a binding redistribution mechanism under which revenues could be transferred to LDCs. The CBAM recitals (legally non-binding character) state that:
In order to further support the achievement of the goals of the Paris Agreement in third countries, it is desirable that the Union continue to provide financial support through the Union budget towards climate mitigation and adaptation in LDCs, including in their efforts towards the decarbonisation and transformation of their manufacturing industries. That Union support should also contribute to facilitating the adaptation of the industries concerned to the new regulatory requirements stemming from this Regulation.23
The above passage does not create any legal obligations and should be understood merely as a political statement that could be realised in the future. Furthermore, under Art. 30 par. 2, 6 and 8, the Commission is obliged to review and report on the impact of the CBAM on imports from LDCs and on the contribution of financing under the mechanism to the decarbonisation of the manufacturing sector in these countries.
In conclusion, the CBAM has been adopted to support the EU’s climate change mitigation ambitions, while limiting the risk of carbon leakage. The mechanism will apply to imports and will mirror the EU ETS as far as possible. The CBAM does not include any preferential treatment for LDCs.
22 European Commission, ‘Commission Staff Working Document – Impact Assessment Report accompanying the document Proposal for a regulation of the European Parliament and of the Council establishing a carbon border adjustment mechanism’ (‘CBAM IA’) SWD (2021) 643 final 14.07.2021 section 5.2.1.11.
23 rec. 73 CBAM (n 3). See also rec. 71, 72 and 74 CBAM.
3. the potential impaCt of the CarBon Border adJustment meChanism on the least deVeloped Countries
This section of the paper examines the potential impact of the CBAM on the economies of LDCs. From the perspective of the subsequent legal analysis, it is particularly important to identify what outcomes could have been anticipated by the EU prior to the adoption of the instrument.
In the CBAM Impact Assessment, the Commission underlined that “LDCs currently account for a minimal share of EU-external trade in the commodities that could be covered by a CBAM”.24 It has been estimated that LDCs account for less than 0.1 % of EU’s imports of iron and steel, fertilisers, and cement.25 Exports from these countries in sectors likely impacted by CBAM are estimated as shown in the table below.
Table 1: Exports from LDCs to the EU in sectors likely impacted by CBAM
Source: CBAM IA, Annex 3 [after: DAI (2021), ‘Supplementary Analysis to the Impact Assessment on the European Commission’s Carbon Border Adjustment Mechanism, commissioned by the European Commission’s Directorate-General for International Partnerships’ (internal document)].
As Perdana and Vielle point out, it is not the share of EU imports that determines the impact of the CBAM on a country. Rather, it is the country’s exposure and vulnerability risks. Perdana and Vielle also note that ‘[a] particular concern is that some lower to middle-income, mainly African and Asian trade partners, will face the highest carbon tariffs, which will slow incentives for decarbonising’.26 The Commission acknowledges that revenue from these objectively small volumes of trade can form a significant proportion of LDCs’ GNI and be a primary source of foreign income.27 For example, Mauritania’s iron ore exports to the EU account for around 10–18% of its GDP. Another example is Sierra Leone’s iron ore exports, which contributed 15.4% to the country’s GDP in 2015.28 These figures alone suggest that the CBAM will have a potentially negative impact on the economies of LDCs.
The above considerations are further supported by analytical research in this area. Beaufils et al. analyse the impact of the CBAM by developing an analytical framework that allows for a numerical assessment of the emissions coverage of the mechanism and its impact on the EU’s trading partners at a high spatial resolution. Their research shows, inter alia, that
26 Sigit Perdana and Marc Vielle, ‘Making the EU Carbon Border Adjustment Mechanism Acceptable and Climate Friendly for Least Developed Countries’ (2022) 170 Energy Policy 113245.
27 ibid
28 ibid
North and Sub-Saharan Africa will be significantly affected by the CBAM, as exports from these countries are largely directed to the EU and poorly diversified. These economies would have limited options to ease the upstream pressure caused by the mechanism, while bearing limited responsibility for historical emissions. In general, the research concludes that low- and middle-income countries would be disproportionately exposed to the effects of the CBAM.29 Zhong and Pei’s modelling also confirms that “developing countries with dirtier production technologies and higher EU trade exposures suffer more from the EU CBAM; the higher the CBAM price, the larger the impact”.30 Given the current trends related to the EU ETS, which, as noted above, sets the price of CBAM certificates, these impacts could be significant. As the authors note, this could lead to a shift in the burden of mitigation from the EU to developing regions.31
The impact of the administrative burden of the CBAM should also not be overlooked. Representatives of LDCs have already argued that their countries do not have the capacity to meet the administrative obligations of the mechanism.32 For example, even during the transitional period of the CBAM (2023 to the end of 2025), importers have to comply with reporting requirements. In practice, it is the producer who is responsible for providing the appropriate data, including on the emissions embodied in the product. These emissions should be accounted for in accordance with the methodologies set out in the Commission’s implementing regulation.33 Entities that cannot account for their emissions accordingly will most likely not be able to export their products to the EU
In conclusion, while the exact impact of the CBAM on the economies of LDCs cannot be determined, economic modelling seems to indicate that the introduction of the instrument could have a negative impact on the economic development of these countries in
29 Timothé Beaufils, Hauke Ward, Michael Jakob and Leonie Wenz, ‘Assessing Different European Carbon Border Adjustment Mechanism Implementations and Their Impact on Trade Partners’ (2023) 4 Communications Earth & Environment.
30 Jiarui Zhong and Jiansuo Pei, ‘Beggar Thy Neighbor? On the Competitiveness and Welfare Impacts of the EU’s Proposed Carbon Border Adjustment Mechanism’ (2022) 162 Energy Policy 112802.
31 ibid; in relation to the possible effects of the CBAM, see also United Nations Conference on Trade and Development, ‘A European Union Carbon Border Adjustment Mechanism: Implications for Developing Countries’ (2021) UNCTAD <https://unctad.org/system/files/official-document/osginf2021d2_en.pdf> accessed 10 December 2024.
32 Emily Benson, Joseph Majkut, William A. Reinsch and Federico Steinberg, ‘Analyzing the European Union’s Carbon Border Adjustment Mechanism’ (2023) CSIS Briefs <https://csis-website-prod.s3.amazonaws.com/ s3fs-public/2023-02/230217_Analyzing_EU_CBAM.pdf?VersionId=lFMwWnLo1VQ8xbBUx7lwn6RVNj8. Ck_t> accessed 10 December 2024.
33 European Commission, ‘Commission Implementing Regulation (EU) 2023/1773 of 17 August 2023 laying down the rules for the application of Regulation (EU) 2023/956 of the European Parliament and of the Council as regards reporting obligations for the purposes of the carbon border adjustment mechanism during the transitional period’ OJ L 228 15.9.2023 94–195.
the short and medium term. At the same time, LDCs bear little historical responsibility for climate change and, even today, they do not emit significant amounts of greenhouse gases (compared to, for example, the G20 countries).
4. legal oBligations stemming from the right to deVelopment
This part of the paper briefly examines the EU’s legal obligations stemming from the right to development. In general, it will be argued that, at the very least, the right to development requires that EU policies with extraterritorial effects do not significantly undermine the right to development of LDCs.
The status of the right to development is an ambiguous issue in international law. The right to development is mentioned explicitly only in one binding international treaty, namely in Art. 22 of the African Charter on Human and Peoples’ Rights, which states:
1. All peoples shall have the right to their economic, social and cultural development with due regard to their freedom and identity and in the equal enjoyment of the common heritage of mankind.
2. States shall have the duty, individually or collectively to ensure the exercise of the right to development.
Work is ongoing at the UN level to develop a binding instrument that recognises the scope of, and precise obligations stemming from the right to development. It is currently taking place in the framework of the Working Group on the Right to Development, whose mandate was renewed by the General Assembly resolution of 18 December 2019.34 The Chair-Rapporteur of the Working Group is, inter alia, leading discussions on the draft convention on the right to development.35 The basic objective of this draft convention is to promote and ensure the full enjoyment of the right to development by individuals and societies, and to guarantee its effective operationalisation at the national and international levels.36 Under the draft convention, States Parties will be obliged to refrain from any action that impairs
34 United Nations, ‘Resolution adopted by the General Assembly on 18 December 2019 – The right to development’ (2019) A/RES/74/152 <https://documents.un.org/doc/undoc/gen/n19/427/71/pdf/n1942771.pdf>.
35 United Nations, ‘Revised draft convention on the right to development of 6 April 2022’ (2022) A/HRC/WG.2/23/2 (‘Draft Convention’) <https://docs.un.org/en/A/HRC/WG.2/23/2>.
36 ibid Art. 1.
the enjoyment and exercise of the right to development.37 However, the draft convention is still under consideration and does not yet have any substantial legal significance.38 Currently, the main instrument recognising the right to development is the UN Declaration on the Right to Development.39 However, it is only a soft law document, which means that it is not strictly a source of law and does not create any direct obligations.40 The Declaration received wide support in the General Assembly and can be seen as an expression of aspirations of the international community.
Nevertheless, scholars argue that the right to development can be understood as customary international law. It has been recognised by states in a number of soft law documents, such as the Rio Declaration on Environment and Development or the Cairo Declaration of the International Conference on Population and Development, indicating its general acceptance by the international community.41 The importance of the right to development is also explicitly recognised in climate change law. The preamble to the Paris Agreement states that
[a]cknowledging that climate change is a common concern of humankind, Parties should, when taking action to address climate change, respect, promote and consider their respective obligations on (…) the right to development (…).42
This points to its significance in the context of shaping climate change policies and sharing the burden of mitigating climate change.43
37 ibid Art 10.
38 See United Nations, ‘Report of the Working Group on the Right to Development on its twenty-third session (Geneva, 16–20 May 2022)’ (2022) A/HRC/51/39 <https://docs.un.org/en/A/HRC/51/39>.
39 United Nations, ‘Declaration on the Right to Development adopted by General Assembly resolution 41/128 of 4 December 1986’ (1986) A/RES/41/128 <https://www.ohchr.org/en/instruments-mechanisms/instruments/ declaration-right-development>.
40 Karin Arts and Atabongawung Tamo, ‘The Right to Development in International Law: New Momentum Thirty Years Down the Line?’ (2016) 63 Neth Int Law Rev 221–49.
41 Roman Girma Teshome, ‘The Draft Convention on the Right to Development: A New Dawn to the Recognition of the Right to Development as a Human Right?’ (2022) 22(2) Human Rights Law Review ngac001.
42 Paris Agreement (adopted 12 December 2015, entered into force 4 November 2016) UN Doc FCCC/CP/2015/10/ Add.1 (‘Paris Agreement’).
43 For a general discussion on the normative significance of the referral to human rights in the preamble of the Paris Agreement, see Alan Boyle, ‘Climate Change, the Paris Agreement and Human Rights’ (2018) 67(4) International & Comparative Law Quarterly 759–77; Benoit Mayer, ‘Human Rights in the Paris Agreement’ (2016) 6 Climate Law 109–17; Sebastien Duyck, ‘The Paris Climate Agreement and the Protection of Human Rights in a Changing Climate’ (2015) 26 Yearbook of International Environmental Law 3–45; Rajamani Lavanya, ‘Integrating Human Rights in the Paris Climate Architecture: Contest, Context, and Consequence’ (2019) 9(3) Climate Law 180–201.
An extensive discussion of the status of the right to development is beyond the scope of this paper, but the author of this paper agrees in principle with legal scholars who argue for its status as an international customary norm.
It is also necessary to consider what obligations arise from the customary right to development. In practical terms, this is another ambiguous issue. Developed countries will be reluctant to acknowledge that they have specific obligations to facilitate the economic development of the global South. On the other hand, developing countries will often use the language of human rights to make their case for more substantial international assistance. This is a right that cannot be realised overnight, not least because of resource constraints. At a very general level, Sengupta observes that:
One of the benefits of using a human rights approach to development is that it focuses attention on those who lag behind others in enjoying their rights, and requires that positive action be taken on their behalf. In the human rights literature, this is often dealt with in terms of favouring the poorest or the most vulnerable groups of the society.44
In the international context, this can be interpreted as requiring special attention to LDCs and their development needs. However, it remains unclear what concrete obligations arise from this fact. It can be argued that, at the very least, by analogy with more firmly established economic, social and cultural rights, states have an obligation not to interfere, for example by adopting legislation that would have a significant negative impact on the economic development of LDCs. In the case at hand, also having due regard to the principle of common but differentiated responsibilities and the preamble of the Paris Agreement referring to the right to development, it can be argued that mitigation policies cannot have a significant negative impact on the economic development of the poorest countries.
In the EU context, further guidance can be found in the Union’s primary law, which also appears to impose obligations to ensure the realisation of the right to development, albeit not framed in the language of human rights. Under Art. 208 of the Treaty on the Functioning of the European Union:45
44 Arjun Sengupta, ‘Realizing the Right to Development’ (2002) 31(3) Development and Change 553–78.
45 The Treaty on the Functioning of the European Union [Consolidated Version] (‘TFEU’) OJ C 326 26.10.2012 47–390 <https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:12012E/TXT>.
1. Union policy in the field of development cooperation shall be conducted within the framework of the principles and objectives of the Union’s external action. The Union’s development cooperation policy and that of the Member States complement and reinforce each other.
Union development cooperation policy shall have as its primary objective the reduction and, in the long term, the eradication of poverty. The Union shall take account of the objectives of development cooperation in the policies that it implements which are likely to affect developing countries.
2. The Union and the Member States shall comply with the commitments and take account of the objectives they have approved in the context of the United Nations and other competent international organisations.
These provisions are especially important for two reasons. The EU should give due consideration to development objectives in policies it implements. This means that its climate policy should not contradict development objectives. Furthermore, the EU should respect commitments approved on the EU level. This would seem to include the United Nations Declaration on the Right to Development, adopted by the General Assembly in Resolution 41/128. It was supported by all EU Member States except Denmark, Finland, Germany and Sweden, which abstained. As noted above, the Declaration is not a source of law per se, but it could potentially be argued that it has normative significance through the wording of Art. 208 par. 2 TFEU The TFEU, which states that “[t]he Union and the Member States shall comply with the commitments and take account of the objectives they have approved in the context of the United Nations (…)” seems to include soft law instruments adopted within the UN framework. It thus brings the UN Declaration on the Right to Development into the orbit of EU law.
In conclusion, the right to development is a legal norm that constrains the actions of states. In the context of this paper, it is important that it can be argued that states, as well as international organisations such as the EU, have an obligation to ensure that their climate mitigation policies do not impede the ability of other nations to develop economically and progressively eradicate poverty.
5. disCussion - aligning the CarBon Border adJustment meChanism with the right to deVelopment
5.1. Does the CBAM violate the rights to development?
The CBAM, as adopted by the co-legislators does not contain any mechanisms or exemptions for LDCs and generally applies equally to all imports without any differentiation based on origin. At the same time, as described in section 2 of this paper, economic modelling and the Commission’s own assessment show that the adoption of the instrument is likely to have a negative impact on the economic development of LDCs.
As stated in the Declaration on the Right to Development, development is a comprehensive economic, social, cultural and political process, which aims at the constant improvement of the well-being of the entire population and of all individuals on the basis of their active, free and meaningful participation in development and in the fair distribution of benefits resulting therefrom.46
One of the key principles that can be drawn from this passage is the principle of no backsliding, according to which people are entitled to continuous improvement in their enjoyment of the right to development. In general, no backsliding is justified and states should constantly strive for progressive realisation of the right. As noted above, one of the core elements of this right is economic development. Based on the above research, the enactment of the CBAM could not only limit the possibility of further economic growth of LDCs but also reduce their current GDP levels. It should be noted that climate change itself also has a negative impact on economic development.47 However, limiting global GHG emissions cannot serve as a justification for expected setbacks in economic development linked to mitigation policies, especially in the case of LDCs. In this case, too, the principle of common but differentiated responsibilities (CBDR) can serve as an important interpretive context. This is one of the main principles of international climate law according to which states share a common responsibility for the environment, but their obligations are shaped by different circumstances. For example, not all states have contributed equally to environmental degradation and not all have the capacity to take the same preventive
46 Preamble to the Declaration on the Right to Development adopted by the General Assembly Resolution 41/128 of 4 December 1986 A/RES/41/128 (n 39).
47 Core Writing Team, Hoesung Lee and José Romero (eds), ‘Summary for Policymakers’ in Climate Change 2023: Synthesis Report. Contribution of Working Groups I, II and III to the Sixth Assessment Report of the Intergovernmental Panel on Climate Change (Geneva, Switzerland IPCC 2023) 1–34.
action.48 Limiting climate change is one way in which governments can realise the right to development, but extensive burdens in this regard should not be placed on states least responsible for historical GHG emissions. Moreover, it should be noted that the CBAM could also be challenged from the perspective of the CBDR principle. However, the analysis of this issue is beyond the scope of this paper and has already been discussed in literature.49
A strong argument can therefore be made that by adopting the CBAM in its current form, the EU is in breach of its international obligations under the right to development. What is not easy to quantify, however, is the negative impact of the CBAM on the economic development of LDCs.
Even if one does not agree with the binding nature of the right to development, which, as noted above, is a contentious issue in legal scholarship, it remains difficult to justify from a policy perspective the EU’s decision not to include exemptions or other specific rules for LDCs in the CBAM. This would be in line with the Union’s development policy and would have a positive impact on the EU’s credibility as a reliable partner for LDCs. On the one hand, it could be assumed that the Commission wanted to avoid possible accusations of inconsistency with WTO law, notwithstanding the fact that international trade law allows for favourable treatment of developing countries.50 This approach seems overcautious from the perspective of WTO rules. It is beyond the scope of this paper to make a detailed
48 See more in Philippe Sands and Jacqueline Peel, Principles of International Environmental Law (4th edn, Cambridge University Press 2018).
49 See Ilaria Espa, Joseph Francois and Harro van Asselt, ‘The EU Proposal for a Carbon Border Adjustment Mechanism (CBAM): An Analysis under WTO and Climate Change Law’ (2022) WP6 WTI <https://www. wti.org/media/filer_public/ee/61/ee6171fd-a68d-4829-875e-d9b0c32298b5/wti_working_paper_06_2022.pdf> accessed 12 December 2024; Ivan Ozai, ‘Designing an Equitable Border Carbon Adjustment Mechanism’ (2022) 70 Canadian Tax Journal / Revue Fiscale Canadienne 1–33; Natalie L. Dobson, ‘(Re)framing Responsibility? Assessing the Division of Burdens Under the EU Carbon Border Adjustment Mechanism’ (2022) 18(2) Utrecht Law Review 162–79; Jakub Bednarek, ‘Is the EU Realising an Externally Just Green Transition? An Analysis of the Carbon Border Adjustment Mechanism from the Perspective of the Common but Differentiated Responsibilities Principle’ in Alicja Sikora and Inga Kawka (eds), The European Green Deal and the Impact of Climate Change on the EU Regulatory Framework. Searching for Coherence (Presses Universitaires Saint-Louis Bruxelles 2024) 311–23.
50 In relation to the relevance of WTO aligned CBAM, see statements from EU Commission representatives: European Commission, ‘Remarks by Executive Vice-President Timmermans and Commissioner Gentiloni at the press conference on the Carbon Border Adjustment Mechanism and Energy Taxation’ (2021) <https://ec.europa. eu/commission/presscorner/detail/en/speech_21_3724> accessed 12 December 2024; European Commission, ‘European Green Deal: Agreement reached on the Carbon Border Adjustment Mechanism (CBAM)’ (2022) Press Release <https://ec.europa.eu/commission/presscorner/detail/en/ip_22_7719> accessed 12 December 2024; European Commission, ‘Remarks by Commissioner Hoekstra at the event “The EU’s Carbon-Border Adjustment Mechanism for Climate Policy, and Implications for Chinese Companies” hosted by the EU-China Partnership Facility (ECPF)’ (2023) <https://ec.europa.eu/commission/presscorner/detail/en/speech_23_5814> accessed 12 December 2024.
argument in this respect, but WTO rules, in particular the Enabling Clause of 1979, could provide a basis for differential treatment between LDCs and other countries.51
5.2. Aligning the CBAM with the right to development
Having established that the CBAM is not consistent with the right to development, this section explores ways in which the mechanism could be adjusted to bring it into line with the EU’s legal responsibilities towards LDCs. One of the objectives of any policy changes is to maintain the legal integrity of the mechanism and to minimise the risk of circumvention. At the same time, such solutions should be capable of facilitating green growth in developing countries.
One way forward is to provide a general exemption for LDCs. This proposal is supported by Brandi and Lowe.52 Lowe argues that an exemption would not undermine the EU’s efforts to prevent carbon leakage and that developing countries would still have incentives to decarbonise.53 Both authors emphasise the need to accompany the exemptions with safeguards to prevent circumvention. Unfortunately, this solution is less plausible from a political perspective and was not seriously considered during the negotiation process. One of the main arguments against it is that it increases the risk of circumvention, in the short term through re-export via LDCs and in the long term through the relocation of GHG-intensive factories to LDCs.
Instead of a general exemption, a longer transition period could be foreseen for imports from LDCs. During the initial transitional phase of the CBAM, importers will only be subject to administrative obligations. A fully-fledged CBAM will be applied from 2026. However, the CBAM price paid by importers will be adjusted to reflect the free allocation of allowances under the EU ETS. Free allocations in the EU ETS will not be phased out until 2034. Thus, in the first years of the operation of the mechanism, importers will pay a price for a fraction of the carbon emissions embedded in their products. In this regard, different rules could apply to imports from LDCs, e.g. they could be subject to a full carbon
51 Ingo Venzke and Geraldo Vidigal, ‘Are Trade Measures to Tackle the Climate Crisis the End of Differentiated Responsibilities? The Case of the EU Carbon Border Adjustment Mechanism (CBAM)’ (2020) 51 Netherlands Yearbook of International Law; Goran Dominioni, ‘Carbon Pricing for International Shipping, Equity, and WTO Law’ (2024) 33 RECIEL 19–30.
52 Clara Brandi, ‘Priorities for a Development-Friendly EU Carbon Border Adjustment Mechanism (CBAM)’ (2021) 20 DIE/GDI <https://www.die-gdi.de/publikationen/briefing-paper/> accessed 12 December 2024; Sam Lowe, ‘The EU’s Carbon Border Adjustment Mechanism: How to Make It Work for Developing Countries’ (2021) April CER <https://www.cer.eu/sites/default/files/pbrief_cbam_sl_21.4.21.pdf> accessed 12 December 2024.
53 ibid
price from 2040 instead of 2034. Until then, they would only surrender CBAM certificates covering a fraction of the carbon embedded in their products.
In parallel, a maximum carbon price, not linked to the EU ETS, could be imposed on products imported from LDCs. An IMF staff paper discussing the plausibility of a global minimum carbon price suggested that an appropriate carbon price for low-income countries could be around USD 25 per tonne of CO 2 This rate could constitute a carbon cap for these imported products.54 It should be noted that the impact of carbon prices at a given level will be felt differently across economies. A price of USD 25 would not provide sufficient incentives for decarbonisation in the EU, while it might be sufficient for developing countries.
Probably the least controversial solution would be to redistribute CBAM revenues through a system that would allow financial transfers to LDCs’ national budgets or directly to individual entities in those countries. At present, LDCs, which already have limited options to finance their green transition, will be indirectly deprived of resources through the CBAM. This raises equity concerns, especially given that developed countries are still falling short of their climate finance pledges. In setting up a redistribution mechanism, Beaufils et al. stress the necessity to establish a joint governance structure between the EU and third countries in order to allow for a fair, transparent and effective distribution of revenues.55 Moreover, this mechanism should be binding character and enshrined in the CBAM Regulation. This would also require the earmarking of revenues generated by the CBAM and the setting of a clear percentage to be transferred to LDCs.
In conclusion, there are a number of ways in which the CBAM could be amended to mitigate the negative economic impact on LDCs. At the same time, none of the proposed changes is a stand-alone measure. Only a combination of changes could align the mechanism with the legal obligations arising from the right to development.
54 Jean Chateau, Florence Jaumotte and Gregor Schwerhoff, ‘Economic and Environmental Benefits from International Cooperation on Climate Policies’ (2022) DP007 IMF <https://www.imf.org/en/Publications/ Departmental-Papers-Policy-Papers/Issues/2022/03/16/Economic-and-Environmental-Benefits-from-InternationalCooperation-on-Climate-Policies-511562> accessed 12 December 2024.
55 Beaufils et al. (n 29).
6. ConCluding remarks
The CBAM is a crucial instrument that, together with the EU ETS, will facilitate the decarbonisation of heavy industry while protecting the EU against carbon leakage. Without these measures, it will be extremely difficult to achieve the goals of the Paris Agreement and minimise the negative impacts of climate change. However, as argued throughout this paper, the EU cannot ignore the legitimate concerns of LDCs in this process, especially when these concerns are rooted in binding international law.
Economic modelling and the Commission’s own analysis show that the adoption of the CBAM in its current form will have a negative impact on the welfare of LDCs dependent on exports to the EU. At the same time, the right to development imposes constraints on the policies adopted by the EU. The EU’s climate mitigation policies should not hinder economic growth in the poorest countries. It can be argued that by adopting the CBAM, the EU is in breach of its international commitments.
Under the CBAM the EU Commission will submit a report to the European Parliament and the Council before the end of the CBAM transitional period, including its impact on goods imported from developing countries of particular interest to LDCs.56 Accordingly, the EU Commission should submit a follow-up report before 1 January 2028.57 These reporting obligations will allow the EU to assess the operation of the CBAM in practice and to propose legislative changes to address any shortcomings of the mechanism.
From the perspective of this paper, it is important that the EU does not delay the necessary changes for too long. If they are delayed too long, the CBAM could cause irreparable damage to. For example, if EU importers stop sourcing CBAM goods from LDCs, it could take years to rebuild lost business relationships.
If the EU wants to remain a credible partner for LDCs, it should pursue an externally just green transition. There are many options allowing to adapt the CBAM to meet the legitimate needs of LDCs. Short-term interests, such as repaying the NextGenerationEU from CBAM revenues, should not take precedence over long-term strategic goals. Achieving the objective of the Paris Agreement requires action by the entire international community. LDCs will not be able to accomplish a green transition without the support of developed countries.
56 Art. 30 par. 2 CBAM (n 3).
57 ibid Art. 30 par. 6.
C hapter 7
The role of European climate and energy diplomacy in promoting international cooperation on climate change. normative Power
Europe in action.
by JAroSłAw PiEtrAS
JarosŁaw Pi ET ra S
dr Jaroslaw Pietras is currently visiting Professor at the College of Europe, bruges, and Senior research Associate at the wilfried martens Centre for European Studies in brussels. he obtained his Phd in Economics in 1986 from the faculty of Economics at the University of warsaw, where he had been teaching since 1980. from 1990 to 2006 he worked for the Polish government as Secretary of State in ministry of finance, Secretary of State for Europe, and head of the office of the Committee for European integration. from 2008 to 2020 he was director general (covering Climate Change, Environment, transport, telecom, Energy, Education, Culture, Audio-visual, youth, and Sport) in the general Secretariat of the Council of the European Union.
1. introduCtion
As a major international actor, the EU promotes its own interests and those of its member states and pursues objectives in the international arena through diplomatic, economic and even modest military means. EU foreign policy covers a wide range of issues, including trade, development, climate and environment, human rights, conflict prevention and resolution, and crisis management. The EU’s foreign policy faces challenges due to the diverse interests and priorities of its member states and the complex nature of EU decision-making. On some issues, the EU has made progress in developing a more coordinated and effective approach and has become a major actor on the world stage.
The EU’s foreign policy should be understood as the set of strategies, policies and measures used to interact with other partners and international organisations and to promote its national interests and objectives in the international arena. Diplomacy, on the other hand, is the practice of conducting negotiations, communications and other interactions with foreign partners in order to promote the objectives of such strategies and policies. Paul Sharp has pointed out that diplomacy is a ‘reflection of the state’.1 As the EU is a much more complex structure than a single state, this means that the formulation of diplomatic objectives and their implementation are more complex and face the challenge of accurately reflecting the diverse values, policies and complexities of the EU’s governance structures and the identification of policy objectives.2
The most comprehensive areas of EU foreign policy with most encompassing approach are those where it reflects widely shared values within the EU and its member states. Climate and environment are among the few areas where there is relative agreement among EU members. In these areas, EU foreign policy uses all available instruments to pursue European objectives. It provides substantial financial support to developing countries for environmental protection and sustainable development projects, including initiatives focused on biodiversity conservation, water resource management, and climate change mitigation and adaptation. The EU also aims to promote sustainable trade and production practices globally, including through its trade agreements. The EU seeks to ensure that its trading partners adhere to high environmental standards and commits to reducing the
1 Paul Sharp, Diplomatic Theory of International Relations (Cambridge University Press 2009) <https://doi.org/10.1017/ CBO9780511805196>.
2 EU foreign policy faces a ‘capability–expectation gap’ defined as the inability to deliver and meet the expectations of external partners and even internal foreign policy actors due to a lack of appropriate capabilities, means or even instruments. See Christopher Hill, ‘The Capability-Expectation Gap, or Conceptualizing Europe’s International Role’ (1993) 31(3) Journal of Common Market Studies 305–28.
environmental impact of trade. For example, the EU supports the use of trade rules to combat illegal logging and wildlife trafficking.
This chapter examines the issue of coherence between the EU’s internal objectives and its external relations, arguing that such alignment forms the basis for successful outreach to, and impact on other countries. It argues that Europe’s ability to influence other nations can only be achieved when its foreign policy draws on successful European experiences or strengths. For example, the EU’s leadership in international climate negotiations is rooted in its successful implementation of climate policies at home. In contrast, in the energy sector – which is closely linked to climate policy – the EU has struggled to present a compelling narrative, weakening its diplomatic effectiveness in this area.
The chapter also examines the relationship between global values, norms and commons as foundations of foreign policy and the economic interests that are traditionally assumed to guide diplomacy. It highlights the risk that, contrary to the EU’s intentions, external partners may perceive its normative justifications for foreign policy as driven primarily by economic interests. Measures such as the Carbon Border Adjustment Mechanism and the proposal for a Climate Club illustrate this risk.
As a result, this chapter argues for maintaining normative consistency across the EU’s internal policies and its foreign policy and diplomacy. By doing so, the EU can strengthen its credibility and leadership on the global stage, while balancing its normative commitments with its economic objectives.
2. normatiVe power europe
There are many studies that point to the importance and effectiveness of the soft power that the EU uses in its international relations. In a global rule-based system, such soft power, based on clear and well recognised norms, standards and approaches, allows the EU to achieve its objectives through the widespread application of policies based on persuasion, adherence to rules, strong reference to universal values and widely supported norms that are fully shared within the EU. This is called Normative Power Europe (NPE), a concept developed by Ian Manners, a Danish political scientist,3 in the early 2000s and widely used in analyses of the EU’s ability to exert international influence.
3 Ian Manners, ‘Normative Power Europe: A Contradiction in Terms?’ (2002) 40(2) Journal of Common Market Studies 235–58.
According to Manners, Normative Power Europe is characterised by the EU’s use of soft power to promote its norms and values, such as democracy, human rights, and the rule of law, in its interactions with other countries and regions. This soft power approach is seen as distinct from the traditional use of hard power, such as military force or economic coercion, to achieve political goals. The EU’s normative power is believed to derive from several factors, including its commitment to multilateralism, its willingness to engage in dialogue and cooperation with other countries, and its internal policies and practices that reflect its core values. Critics of the concept argue that the EU’s normative power is limited by its own internal divisions and inconsistencies, as well as by the changing global balance of power and the rise of competing normative frameworks, such as those promoted by China and Russia. Nevertheless, the concept of NPE has become an important framework for understanding the EU’s role in global politics and its potential to shape the international order.
The unprovoked Russian aggression against Ukraine has certainly had an impact on the understanding of the role of NPE The conflict has highlighted the limits of the EU’s soft power approach and its ability to influence events beyond its immediate neighbourhood. The EU’s response to the crisis in Ukraine has been slower and less effective, as the EU has been hesitant to choose a political response, while at the same time being willing to uphold its own values and principles in the face of Russian aggression. The EU has been slow to adopt a more decisive approach, including reliance on economic sanctions, which, while an important tool of diplomacy, have so far failed to stop the conflict or bring about a lasting settlement. Moreover, the war in Ukraine has highlighted the challenges the EU faces in projecting its norms and values beyond its borders. Despite its commitment to democracy and human rights, the EU has struggled to promote these values in Russia, a country where they are seen as incompatible with the political and economic system. While the war in Ukraine has raised questions about the EU’s ability to promote its values and norms, it has not excessively diminished the importance of the concept of Normative Power Europe. Rather, it has highlighted the challenges the EU faces in projecting its influence in a changing global landscape.
The effective use of soft power depends on others adhering to international norms and upholding them domestically. However, Russia’s aggression in Ukraine, China’s stance on Taiwan and the assertive rhetoric and forceful moves of the new American President, signal a growing reliance on ‘hard power’ in global relations. Meanwhile, smaller nations continue to lean towards a rules-based system, as it provides them with a sense of security and protection from the direct dominance of major powers. Therefore, the concept of NPE
remains relevant, albeit with significant limitations, and the EU continues to promote its values and norms in other areas of the world. The EU’s efforts to tackle climate change and promote sustainable development are all examples of its ongoing commitment to using soft power to shape the global agenda.
The concept of Normative Power Europe is most often applied to the European Union’s foreign policy in areas such as the protection of democracy, human rights, minority rights, the rule of law, and so on.4 The EU has taken a strong stance on issues such as democracy, the rule of law, human rights, freedom of expression or religious freedom, and has sought to promote these values through its engagement with other countries and international organisations, because these issues are equally strongly observed internally. The same goes for the EU’s emphasis on the importance of independent judiciaries, accountable governance and the fight against corruption in Europe and among its members, and then it can be credible in its dealings with other countries and credibly committed to developing these values through its engagement with the wider international community. The EU has also been able to actively promote labour standards, the right to form trade unions, the protection of minors at work or the ban on prison labour internationally through its foreign policy, because these values are core principles of its internal approach.5 Against this background of NPE applied in traditional areas, the EU’s promotion of its norms and values in sustainability, environmental protection and climate change should be considered. It provides a complex picture of opportunities, challenges and approaches, as well as the ways and means by which the EU has sought to shape the global agenda and promote a more just and sustainable world through its foreign policy.
3. Climate diplomaCy Vs. energy diplomaCy
European foreign policy has been strongly influenced by action to tackle climate change, and it plays an essential role in the EU’s external relations. The EU has always been a global leader in the fight against climate change, and its foreign policy reflects this commitment. The EU has actively participated in international efforts to mitigate the effects of climate change, including through the United Nations Framework Convention on Climate Change (UNFCCC), the Kyoto Protocol and the Paris Agreement. The EU has undertaken very ambitious efforts to transform the European economy and has also worked to promote
4 Ian Manners, ‘European Union, Normative Power and Ethical Foreign Policy’ in David Chandler and Volker Heins (eds), Rethinking Ethical Foreign Policy: Pitfalls, Possibilities and Paradoxes (Routledge 2006) 116–36.
5 Jan Orbie, ‘Promoting Labour Standards through Trade: Normative Power or Regulatory State Europe?’ in Richard G. Whitman (ed.), Normative Power Europe. Empirical and Theoretical Perspectives (Palgrave Macmillan 2011) 161–84.
the transition to a low-carbon economy globally and to support sustainable development in other countries. In line with its own efforts to address climate change, the EU has also integrated climate change considerations into its foreign policy priorities. For example, the EU has sought to address the security implications of climate change, including through efforts to prevent climate-related conflict and instability. Similarly, the EU has made climate change a key component of its development policy and has worked to promote sustainable energy and infrastructure projects in developing countries. The EU has established a number of dialogues and initiatives to promote climate action and exchange best practices, including with major emitters such as China and the United States. The EU has integrated climate change mitigation measures into its foreign policy, reflecting the EU’s commitment to tackling this critical global issue.6
Climate diplomacy is one of the few tools the EU can use to promote global action on climate change. One of the key differences between climate diplomacy and traditional diplomacy is the focus on a specific issue. Climate diplomacy focuses on the global challenge of climate change and reducing greenhouse gas emissions, while traditional diplomacy covers a wide range of issues such as trade, security, human rights and development. Climate diplomacy refers to the practice of conducting diplomatic efforts and negotiations to address climate change and its impacts, and to promote global cooperation and action on climate issues. Climate diplomacy is a relatively new and specialised form of diplomacy that has emerged in response to the growing recognition of the urgency of addressing anthropogenic climate change.
Energy diplomacy is very different from climate diplomacy. Energy diplomacy focuses on securing reliable and affordable energy supplies, promoting energy efficiency and conservation, and reducing dependence on foreign energy sources. It involves working with other countries to secure their own access to energy resources, promote investment in the energy sector, and develop their own energy security strategies. Climate diplomacy, on the other hand, focuses on negotiating and implementing international agreements to address climate change and reduce global greenhouse gas emissions. It involves working and cooperating with other countries to develop and implement policies to reduce emissions, promote sustainable development and build resilience to climate impacts in all countries involved. Climate diplomacy involves negotiations at the global level, where countries with little in common come together to develop and implement global agreements to mitigate and
6 Elisa Morgera, ‘Ambition, Complexity, and Legitimacy of Pursuing Mutual Supportiveness through the EU’s External Environmental Action’ in Bart van Voorden, Steven Blockmans and Jan Wouters (eds), The EU’s Role in Global Governance. The Legal Dimension (Oxford University Press 2013) 195–208.
adapt to climate change. Energy diplomacy, on the other hand, often involves negotiations at the bilateral or regional level, with countries working together to secure access to energy resources and develop energy infrastructure between those interested as buyers or suppliers.
There are also many common elements between climate and energy diplomacy. Energy diplomacy is a tool for advancing foreign policy objectives in several respects, including overall security by focusing on security of energy supply. It can help strengthen economic ties and promote trade with countries that are crucial for diversifying EU’s energy imports and ensuring energy security. It can also help build relationships with key energy producing countries and secure access to strategic energy resources. However, as energy resources are concentrated in a few, not necessarily friendly, countries, there are important limitations that need to be taken into account. Energy supplies could be weaponised, as demonstrated by the strategies used by Russia in the period leading up to the war against Ukraine. A European external energy strategy must therefore be based on clear security interests of the EU and its member states. Including these aspects in foreign policy means that foreign energy policy is guided by European self-interests and motives related to internal concerns, not necessarily taking into account the interests of European partners.
It should be emphasised that the EU is also internally quite diverse in terms of energy mix, energy supply directions and reliance on different technologies. This makes it difficult to conduct a convincing normative external energy policy. It can be tricky to approach other countries with clear prescriptions and consistent approaches in this area when EU members do not have a single energy policy and some are still dependent on coal and other fossil fuels, some are intensive users of nuclear energy while some others oppose it intensively. It is difficult to conduct a credible EU energy diplomacy when individual Member States approach the foreign partners and encourage them to develop conflicting policies based on different technologies.
Viewed through the prism of the NPE, foreign policy in the field of energy is to a lesser extent an expression of the normative approach of the EU or its member states. It is directly related to the economic interests of the EU, even if it addresses or respects the corresponding interests of partners, especially in developing countries. Second, the EU has not been very successful in formulating a coherent and efficient internal energy policy and has not provided a consistent example of how the European energy strategy could be applied in countries with different economic circumstances. At the same time, however, energy policy can make an important contribution to the transformation of the energy sector, with the aim of decarbonising the energy used for production, transport, heating,
and so on. Energy diplomacy can therefore be used to better address environmental and climate change concerns, such as promoting the transition to cleaner and more sustainable energy sources and reducing greenhouse gas emissions. This can help to build partnerships and cooperation with other countries, not so much to promote European energy policy, but rather on shared environmental objectives.
It should be noted that climate diplomacy has an unprecedented degree of universality and urgency. Climate change is a complex and multifaceted process that requires coordinated global action to address its impacts. Climate diplomacy involves negotiations and collaboration among a wide range of stakeholders, including governments, international organisations, civil society and the private sector. Climate diplomacy involves balancing the competing interests of different countries and actors, including developed and developing countries, and reconciling conflicting priorities and objectives. This requires a nuanced understanding of the political, economic and social factors that influence climate change policy and decision-making. Achieving global cooperation in this area can only be based on collaboration and engagement, not on the use of strong coercion and power.
The European Union has been at the forefront of global efforts to combat climate change, and its climate policy can be seen as a form of soft power, promoting its norms and values.7 It is therefore an area where the concept of Normative Power Europe can be analysed in terms of how it is used to guide European diplomacy. Through its climate policy, the EU seeks to promote its norms and values. The EU supports the importance of multilateralism and cooperation in addressing global challenges, including climate change. This approach serves as justification of the EU’s climate policy. The EU underlines that it reflects its commitment to promoting its norms and values, such as sustainability, cooperation and social justice. And the diplomacy that promotes such a global agenda in a positive direction becomes an indispensable instrument of the EU’s international efforts.8 Climate diplomacy involves balancing the competing interests of different countries and actors, including developed and developing countries, and reconciling conflicting priorities and objectives. This requires a nuanced understanding of the political, economic and social factors that influence climate change policy and decision-making.
7 Katja Biedenkopf, Claire Dupont and Diarmuid Torney, ‘The European Union: A Green Great Power?’ in Robert Falkner and Barry Buzan (eds), Great Powers, Climate Change, and Global Environmental Responsibilities (Oxford University Press 2022) <DOI: 10.1093/oso/9780198866022.003.0005>.
8 Sebastian Oberthür and Claire Dupont, ‘The European Union’s International Climate Leadership: Towards a Grand Climate Strategy?’ (2021) 28(7) Journal of European Public Policy 1095–1114 <https://www.tandfonline. com/doi/epdf/10.1080/13501763.2021.1918218?needAccess=true> accessed 20 January 2025.
While the EU seeks to promote its values and norms in its foreign policy, it also recognises that these values and norms are closely linked to its own interests. For example, the promotion of democracy, human rights and the rule of law can be seen as important not only for ethical reasons but also for the EU’s own security and stability. Similarly, the EU’s climate policy is driven not only by normative concerns, but also by economic and geopolitical interests. The EU recognises that tackling climate change is essential for the long-term sustainability within its own territory, as well as for the stability of the global economy. The EU also recognises that climate change is a global problem that requires international cooperation and leadership, and that the EU can provide such leadership. Ambitious in its internal climate policy, the EU acknowledges that its own interests are best served by promoting a strong and effective international response. In this sense, the EU’s approach does not imply that its foreign policy is entirely driven by universal values, but rather that its interests are closely linked to its normative positions. The EU seeks to promote these values not only for ethical reasons, but also argues that does so not only in its own interest, but also in the interest of the wider international community.
4. eConomiC interests and npe
It should be noted that the EU’s normative power is not universal or uncontested. Perceptions of what is good for the world differ even between the EU and the US.9 Other countries, including major global powers such as China, India or Russia, may have different norms and values that conflict with those of the EU. Some countries may see EU norms and values as incompatible with their own cultural or religious traditions and resist attempts to adopt them. These countries may view the EU’s normative power as a form of cultural imperialism and resist attempts to promote EU norms and values. Such resistance to the EU’s internationally promoted values can also be seen in the context of the environmental climate. Especially when EU policies and instruments affect their direct economic interests. Even in the case of the US, which is generally close to the EU in terms of values, norms and standards, the American regulatory framework may make it difficult to accept the detailed implications of EU normative policy prescriptions, particularly in the environmental or climate field. The withdrawal of the United States from the Paris Agreement under the Trump administration deepens the rift between EU and US climate policies. While the European Union remains committed to ambitious climate action, emphasising renewable energy, emissions reductions and multilateral cooperation, the US has shifted its focus to deregulation and support for the fossil fuel industry. This divergence highlights a stark
9 Michael Smith, ‘The European Union, the United States and Global Public Goods: Competing Models or Two Sides of the Same Coin?’ in Richard G. Whitman (ed.), Normative Power Europe. Empirical and Theoretical Perspectives (Palgrave Macmillan 2011) 127–40.
contrast in policy priorities, and raises concerns about the effectiveness of global efforts to combat climate change.
There is also an inverse relationship between economic interests and normative policy. As is well known, the European Union seeks to promote its values and norms while defending its economic interests. At the same time, the EU recognises that its economic strength and competitiveness give it the ability to promote and defend its values and norms globally. Only as a major economic power can it effectively influence other countries. And it ensures a positive contribution to the world order. In practice, when the EU defends its economic interests by promoting a level playing field for its companies and by tackling trade barriers and unfair trade practices, it reinforces the rules-based system that is in the interest of every trading nation. This is because the EU’s trade policy is based on the principles of free and fair trade and seeks to promote open and transparent markets, rules that are important globally important, while protecting European companies from unfair competition. And it comes on top of other policies that have an important impact on the global system. For example, the EU promotes development cooperation, sustainable economic growth and helps to reduce poverty in developing countries. The EU’s external policy recognises that sustainable economic growth and poverty reduction are essential to promote stability and security and to create new markets for European businesses. Furthermore, the EU seeks to promote its economic interests by shaping global economic governance through organisations such as the World Trade Organization and other institutions that foster international cooperation. The EU recognises that these organisations are key actors in shaping the global economic landscape and seeks to promote a rules-based international order. Therefore, even if the perception of the EU’s international policy is based on a clear notion of its economic interests, the defence of the EU’s economic interests is neatly narrated in terms of the undisputed principles of safeguarding a level playing field for its companies, addressing trade barriers and unfair trade practices, promoting sustainable economic growth and reducing poverty in developing countries, and shaping global economic governance.
This is particularly evident in the area of environment and climate. The EU has put in place a very ambitious climate policy with measures that have a significant impact on high emitting sectors of the European economy. The European Green Deal strengthens climate policy by setting an ambitious target for the EU to become climate neutral by 2050, i.e.to become a net-zero greenhouse gas economy. To achieve this goal, the EU needs to accelerate the implementation of carbon reduction instruments and introduce new measures designed to achieve this goal. This is not an easy task and may require far-reaching interventions in economic mechanisms. Measures taken in Europe to achieve climate neutrality by 2050
would require radical adjustments in the production of some European industries, with significant implications for international competitiveness. The motivation to achieve this is based on environmental consideration and climate science.
5. eu diplomaCy and gloBal Commons
The EU’s climate policy emphasises that climate actions is not only in the EU’s own interest, but that the EU sees climate as a global issue that needs to be addressed by all countries. In the EU’s foreign policy, climate is seen as a global commons that suffers from inadequate global action. Climate change is a global phenomenon and cannot be solved by one region or a few countries alone. Climate has to be understood as global commons that belongs to everyone on our planet and should be governed globally.
The problem of the ‘overuse of the commons’ can be understood as the challenge of managing common resources such as land, water or air when individual actors have incentives to exploit these resources for their own benefit, often leading to overuse and degradation of the resource. The concept of the ‘tragedy of the commons’ was first described by the British economist William Forster Lloyd in an 1833 article entitled ‘On the Checks to Population’.10 However, the concept gained widespread attention after the American ecologist Garrett Hardin published a seminal article entitled ‘The Tragedy of the Commons’11 in 1968. In his article, Hardin argued that the depletion of common resources, such as fisheries or grazing land, can occur when individuals pursue their own self-interest at the expense of the collective good, leading to a situation where no one has an incentive to conserve the resource. In the context of climate change, the tragedy of the commons refers to the tendency for individual countries or actors to prioritise their own short-term interests, such as economic growth or energy security, over the long-term goal of reducing greenhouse gas emissions and avoiding the worst impacts of climate change.
The tragedy of the commons is particularly relevant to the issue of climate change because the atmosphere is a shared resource that is subject to greenhouse gas emissions from a wide range of sources, including the burning of fossil fuels, deforestation and industrial
10 William Forster Lloyd, ‘Archives. W. F. Lloyd on the Checks to Population’ (1980) 6(3) Population and Development Review 473–96 <https://doi.org/10.2307/1972412> accessed 21 January 2025. See also W. F. Lloyd, Two Lectures on the Checks to Population Delivered Before the University of Oxford in Michaelmas Term 1832 (Collingwood for the University of Oxford 1833) <https://archive.org/details/twolecturesonch00lloygoog/page/n2/mode/1up> accessed 21 January 2025.
11 Garrett Hardin, ‘The Tragedy of the Commons’ (1968) 162(3859) Science New Series/American Association for the Advancement of Science 1243–48 <https://www.jstor.org/stable/1724745> accessed 21 January 2025.
processes. While individual countries may have some control over their own emissions, the collective impact of these emissions contributes to global warming, with the greatest burden often falling on the most vulnerable communities and ecosystems.
Addressing the tragedy of the commons in the context of climate change requires collective action and international cooperation to promote the long-term goal of reducing greenhouse gas emissions and avoiding the worst impacts of climate change. This may include mechanisms to incentivise individual actors to reduce their emissions, such as carbon pricing or emissions trading schemes, as well as efforts to build trust, transparency and mutual accountability among countries and other stakeholders. It also requires recognising and addressing the underlying drivers of the tragedy of the commons, such as unequal power dynamics and the prioritisation of short-term economic growth over long-term sustainability.
To deal with this phenomenon, the world needs powers, movements and leaders to promote climate action globally. Consistently, climate policies should be seen as a response to the governance of the global commons, i.e. resources or spaces shared by all countries and peoples, the use and management of which requires international cooperation and collective action. From this perspective, the EU’s insistence on an international climate policy has an additional justification. The EU is an actor that takes action to protect the global commons in the interest of all. The EU’s intentions in its foreign policies are clear and consistent with its internal actions. Overall, EU climate policy can be seen as a response to the tragedy of the commons, recognising the need for collective action and international cooperation to address the global challenge of climate change and promote a more sustainable and equitable future for all. The strength of the normative approach, based on the EU’s set of norms and beliefs, is reinforced by the contribution to the common good. When the EU acts on climate change, it is difficult for its international partners to argue that these policies are driven by selfish motives to impose the European value system and promote European interests.
6. eConomiC interests in the Climate diplomaCy – the Case of CBam and the proposal to Create Climate CluB
However, this moral and ethical position has to be confronted with the reception of the practical implementation of the European approach. Even if there is little criticism of the EU’s climate engagement, the projection of the European approach may meet with resistance. The EU’s climate policy is based on the ‘polluter pays’ principle and the introduction of an EU-wide cap-and-trade system for CO 2 emissions. The EU has developed
a very complex emission trading system that requires owners of covered installations to surrender allowances to emit CO 2 The amount of global emissions allowed by the covered industries is reduced each year. This leads to an increase in the price of CO2, creating incentives to invest in climate-friendly technologies. The price of CO 2 fluctuates because allowances can be traded on the market. The EU is seeking to extend this system and link the CO 2 markets of cooperating countries.12
As the limit on allowable emissions gets lower, the demand for allowances pushes up production costs. In order to avoid the relocation of affected industries to countries with no or low carbon costs, resulting in so-called ‘carbon leakage’, the European Commission has come up with a draft regulation on the Carbon Border Adjustment Mechanism – CBAM. In short, CBAM aims to impose obligations and costs on imported products similar to those imposed on European production. However, there are significant problems with this approach.13 The ETS is a unique system that is not fully applied outside Europe. There are attempts to introduce similar systems in some countries, but nowhere is it as elaborate and comprehensive as in the EU This means that even countries with ambitious climate policies may not have implemented a carbon price, and their climate policies use different measures to achieve greenhouse gas emission reductions. The European insistence on developing carbon markets may be contested and resisted by other partners as inappropriate to their particular circumstances.
The main motivation for introducing the CBAMs is the risk of carbon leakage, i.e. the risk that production of carbon-intensive products in regions with high carbon costs will decline and be replaced by imports from countries where such costs are low or non-existent. At the same time, it is often argued that it creates a level playing field between domestic production, which faces high carbon costs, and imports, which do not. CBAM could also be seen as a measure to offset the unfair advantage of those suppliers who do not bear the costs of GHG reduction.
12 Jos Delbeke and Peter Vis (eds), EU Climate Policy Explained (Routledge 2015) <https://climate.ec.europa.eu/ system/files/2017-02/eu_climate_policy_explained_en.pdf> accessed 31 January 2025.
13 Eva Pander Maat, ‘Leading by Example, Ideas or Coercion? The Carbon Border Adjustment Mechanism as a Case of Hybrid EU Climate Leadership’ (2022) 7(1) European Papers –European Forum Insight 29 April 55–67 <https://www.europeanpapers.eu/en/system/files/pdf_version/EP_EF_2022_I_005_Eva_Pander_Maat_00546. pdf> accessed 21 January 2025.
The economic problems associated with carbon leakage can occur in many countries, not just in Europe, where trading partners move at different speeds and have different policies to reduce emissions.14
The EU’s trading partners negatively affected by the Carbon Border Adjustment Mechanism may see its implementation not primarily as a climate measure, but as the realisation of the EU’s economic interests, and as a form of protectionism that could harm their own economic interests. The Paris Agreement is based on nationally determined contributions to the fight against climate change and does not contain provisions that directly affect cross-border trade. Encouraging other parties to the Paris Agreement to adopt carbon pricing goes beyond its provisions. A climate foreign policy promoting CBAM would de facto aim to ensure that other countries, including the least developed countries, adopt similar instruments to those adopted by the EU and implement more far-reaching policies than they have voluntarily agreed under the UNFCCC
To counter such perceptions, the EU should make the most of the NPE and climate diplomacy. First, it should engage in dialogue with the most or potentially affected countries to explain the objectives of the CBAM and address their concerns and misconceptions. The EU should be clear and transparent about its intentions and implications to ensure that it is non-discriminatory and compatible with international trade rules. The EU should also be sensitive to any legitimate criticism from its trading partners. The CBAM and many other EU climate measures may have negative impacts on other countries that are, or could be, supportive of European climate ambition. The EU can address concerns about the competitiveness of affected countries not only through diplomacy, understood as dialogue, but also by including in its policies towards these countries support for the development of low-carbon industries and technologies, as well as assistance with capacity building and technology transfer. This can help ensure that affected countries can compete on a level playing field, while promoting sustainable development.
The introduction of the CBAM raises another issue that needs to be reflected in the EU’s climate diplomacy. The European Commission has designed the CBAM with the aim of making it fully compatible with the World Trade Organization. The design of the CBAM is entirely legal in nature and is based on an analysis of previous cases that have been disputed between WTO members. The issue of WTO compliance is essential for the international
14 Trevor Houser, Rob Bradley, Britt Childs, Jacob Werksman and Robert Heilmayr, Leveling the Carbon Playing Field. International Competition and US Climate Policy Design (Peterson Institute for International Economics and World Resources Institute 2008).
acceptance of this instrument. At the same time, it is important for the EU to fully respect the rules-based system, as such respect is fundamental for normative international policy.
On this issue, it is worth recalling that in its very first decision, the WTO Appellate Body ruled in 1996:
WTO Members have a large measure of autonomy to determine their own policies on the environment (including its relationship with trade), their environmental objectives and the environmental legislation they enact and implement. So far as concerns the WTO, that autonomy is circumscribed only by the need to respect the requirements of the General Agreement on Tariffs and Trade and the other covered agreements.15
The EU is willing to use its normative power to assemble like-minded countries to work together to achieve climate goals. The EU therefore proposes that countries with a similar sense of climate urgency and approach could form an additional pressure group – called the Climate Club – based on a common normative approach to climate change.
The idea of a Climate Club has been around for decades. The theoretical concept of a Climate Club was popularised by William Nordhaus,16 who saw it as a tool to overcome ‘free-riding’ in international climate policy and ensure global uptake of climate measures. In his view, countries willing to be very ambitious and take costly action to put a price on carbon should form such a club and impose the cost of their contribution to global warming on trade with all the unwilling ‘free-riders’. In Nordhaus’s original proposal, the focus was on coercing or ‘incentivising’ the rest of the world through a group of large, economically advanced countries, major emitters of greenhouse gases (GHG), willing to pursue ambitious climate policies. The Climate Club could easily be expanded, as many other countries would decide to join, not because they want to pursue ambitious climate policies, but because they want to avoid additional costs.
Such an idea of coercing climate laggards in addition to normative power could be seen as attractive because negotiations within the UN platform are time-consuming and inefficient in the moment of climate urgency. There have been some negotiations within the G7 and
15 World Trade Organization, ‘United States – Standards for Reformulated and Conventional Gasoline (‹US –Gasoline›) WT/DS2/AB/R. Report of the Appellate Body’ (29 April 1996) AB-1996-1 30 <https://docs.wto. org/dol2fe/Pages/SS/directdoc.aspx?filename=Q:/WT/DS/2ABR.pdf&Open=True> accessed 22 January 2025.
16 Wiliam Nordhaus, ‘Climate Clubs: Overcoming Free-riding in International Climate Policy’ (2015) 105(4) American Economic Review 1339–70.
G20 countries, with follow-up work within the OECD.17 It should be noted, however, that the early materialisation of the Climate Club is far from the coercive nature of the original Nordhaus idea. The possible functions and actions of the Club and its members have not been considered in detail, as there are huge differences between possible partners. It resembles the concept of using normative power rather than coercion. It presupposes the involvement of major international players in climate policy in order to create the momentum to bring the concept to life. There is a clear role for European diplomacy to engage all those countries willing to move forward. Current climate policy within the EU is de facto an incarnation of the idea of a climate club. The EU is made up of members with similarly ambitious climate policies and common internal instruments to reduce CO 2 emissions. The EU is the most ambitious signatory to the Paris Agreement and fully supports global climate action. At the moment, the EU appears to be acting alone, and pushing the idea of a Climate Club risks provoking a negative reaction even from the EU’s closest partners in the climate negotiations. Therefore, a well-crafted climate and energy diplomacy aimed at disseminating examples of real energy and climate action in Europe is needed, as well as skilful persuasion using all possible diplomatic means to bring the idea of the Climate Club closer to operational reality.
7. normatiVe ConsistenCy in foreign poliCy
There is also the question of consistency between the different norms and approaches preached in EU foreign policy. Adherence to a high-profile principle of a ‘rules-based global system’, based on the participation of all countries, must be consistent with the actual meaning of the EU’s climate policy actions in order to encourage other countries to adopt equally ambitious climate measures. This can happen if agreed rules and approaches are reinterpreted to promote more urgent climate action in the interests of ambitious climate policy, and if, for example, the demands of the World Trade Organization on existing trade disciplines are interpreted with an obvious bias.18 Similarly, the EU’s promotion of climate action is often associated with measures that are similar or identical to those taken by the EU For example, insisting on a carbon price and carbon markets could give the impression that the EU is disregarding or underestimating efforts based on climate
17 [‘The G7 asks the Organisation for Economic Co-operation and Development (OECD), in tandem with the International Energy Agency (IEA), to host an interim secretariat for the Climate Club’]. Federal Ministry of Economic Affairs and Climate Action, Germany and G7, ‘G7 Establishes Climate Club’ (2022) Joint Press Release 12 December 2022 Federal Ministry for Economic Affairs and Climate Action Germany <https://www.bmwk.de/Redaktion/ EN/Pressemitteilungen/2022/12/20221212-g7-establishes-climate-club.html> accessed 10 May 2023.
18 Vincent Doix, ‘L’ajustement fiscal à la frontière, qualification et interactions avec le système commercial international’ (2020) XXXIV(3) Revue Internationale de Droit Économique 319–42 <https://shs.cairn.info/revue-internationale-de-droit-economique-2020-3-page-319?lang=fr> accessed 22 January 2025.
change mitigation measures that are not in line with the EU approach. In addition, the EU needs to be vigilant that climate measures affecting the EU’s foreign partners, first and foremost the CBAM, are not seen as serving the EU’s interests in a disguised way. Some of the less developed trading partners complain that all instruments applied by the EU lead to ‘green protectionism’. It is therefore important to respect other principles, in particular those contained in international climate and environmental agreements. It is also necessary to be consistent with the commonly accepted goals. Therefore, the CBAM directly refers to the EU’s intention to provide the best and most rapid response to rising temperatures caused by greenhouse gases of anthropogenic origin.
The Paris Agreement, negotiated under the UN Framework Convention on Climate Change (UNFCCC), addresses this issue. There is an enormous difference in approach between these two organisations. WTO is focused on commercial activities, based on rules subject to international review, advanced dispute settlement system and strong enforcement mechanism including permitted retaliation. The UNFCCC, which led to the creation of the Paris Agreement, is focused on mitigation measures to prevent climate change, based on free will and voluntary commitments. Article 3.5 of the United Nations Framework Convention on Climate Change states that ‘The Parties should cooperate to promote a supportive and open international economic system that would lead to sustainable economic growth and development in all Parties, particularly developing country Parties, thus enabling them better to address the problems of climate change. Measures taken to combat climate change, including unilateral ones, should not constitute a means of arbitrary or unjustifiable discrimination or a disguised restriction on international trade’.19
The outcome document of the 2012 United Nations Conference on Sustainable Development, ‘The Future We Want’,20 agreed with the active participation of the EU, urges countries to refrain from using unilateral economic, financial or trade measures and also stresses that countries promoting green economy policies should avoid unilateral measures to address environmental problems outside the jurisdiction of the importing country. It was also agreed that environmental measures to address transboundary or global environmental problems should be based as far as possible on international consensus.
19 United Nations, United Nations Framework Convention on Climate Change (1992) FCC/INFORMAL/84/ Rev.1 GE.14-20481 (E) <https://unfccc.int/sites/default/files/convention_text_with_annexes_english_for_posting. pdf> accessed 22 January 2025.
20 United Nations, ‘“The Future We Want”. Outcome Document of the United Nations Conference on Sustainable Development, Rio de Janeiro, Brazil, 20–22 June 2012’ (2012) UN <https://sustainabledevelopment.un.org/ content/documents/733FutureWeWant.pdf> accessed 22 January 2025.
Also on the earlier occasion of the UN Earth Summit in Rio de Janeiro in 1992, a resolution was adopted which contained principles relating, inter alia, to the issue of the use of trade measures.21 Principle 12 of the resolution repeats the language of the chapeau of Article XX of the GATT and goes on to emphasise that unilateral actions to address environmental problems outside the jurisdiction of the importing country should be avoided.
The introduction of CBAM by the EU can be seen as contradicting the principles contained in all these international agreements. In particular, the Paris Agreement assumes that climate action will be defined by signatories in the form of Nationally Determined Commitments. The CBAM refers directly to ‘incentivisation’ (by imposing payments for certificates linked to the import of certain goods from countries without a carbon price). The voluntary, bottom-up approach of the Paris Agreement is thus challenged by the EU’s willingness to encourage all countries to move faster. Of course, this can be explained by the EU’s determination to ensure that efforts to mitigate climate change are as urgent and widespread as possible. But equally, climate diplomacy needs to be credible to explain the motives behind the EU’s position.
In particular, when climate governance is seen in the context of the principle of common but differentiated responsibilities, which recognises that while all countries have a shared responsibility to address climate change, developed countries have historically contributed most to greenhouse gas emissions and therefore have a greater responsibility to take action and provide support to developing countries.22 This raises the issue of the different scope, scale and urgency of climate action by economies with different histories and characteristics. The EU’s normative approach must recognise this fact and take it into account in its international climate policy and diplomacy.
Some of the EU’s trading partners may see the Carbon Border Adjustment Mechanism not primarily as a climate measure, but as the realisation of the EU’s economic interests, the imposition of European policy design, and a form of ‘green’ protectionism that could
21 United Nations, ‘Report of the United Nations Conference on Environment and Development, Rio de Janeiro, 3–14 June 1992, Volume I: Resolutions Adopted by the Conference, Resolution 1, Annex I’ (1993) Sales No. E.93.I.8 and corrigendum A/CONF.151/26/Rev.l (Vol. I) UN <https://documents.un.org/doc/undoc/gen/ n92/836/55/pdf/n9283655.pdf> accessed 22 January 2025.
22 Anna Huggins and Rowena Maguire, ‘The Implementation of the Principle of Common but Differentiated Responsibilities within the Paris Agreement. A Governance Values Analysis’ in Vesselin Popovski (ed.), The Implementation of the Paris Agreement on Climate Change (Routledge 2019) 164–78.
harm their own economic interests.23 Given the EU’s economic and market strength, this approach can be seen as an example of a veiled form of ‘hard power’. To counter such perceptions, the EU should make the most of the NPE and climate diplomacy. Undoubtedly, it should engage in dialogue with the most or potentially affected countries to explain the aims and objectives of the CBAM and address their concerns and misconceptions. The EU should be clear and transparent about its intentions and impacts, which should help to convince that its climate policy and measures such as CBAM are non-discriminatory and compatible with international trade rules. The EU should also be sensitive to legitimate criticism from its trading partners.
It is quite clear that the CBAM, as well as many other EU climate measures, could have negative impacts on other countries.24 The EU can address these countries’ concerns and fears about their competitiveness by supporting the development of low-carbon industries and technologies, as well as helping with capacity building and technology transfer. There is also a need for high level of transparency in EU policies and for the involvement of a wider range of stakeholders. The activities of civil society and NGOs, the involvement of academia and research institutes, and the outreach of cities and regional governments can consistently demonstrate the EU’s normative approach to climate diplomacy. Climate policy must also be linked to broader efforts to promote global governance of other global commons, such as biodiversity, oceans and forests. This in turn requires coordinated action and cooperation between different sectors and stakeholders, including governments, civil society organisations, the private sector and local communities.
23 Rim Berahab and Uri Dadush, ‘What Will Be the Effect of the EU’s Carbon Border Tax on Morocco, and How Should Morocco React?’ (2021) PP 21/21 Policy Center for the New South Policy Paper <https://www.policycenter.ma/sites/default/files/2021-10/PP-21-21-RIM-DADUSH-.pdf> accessed 22 January 2025.
24 See some reflections of Geneviève Pons and Pascal Lamy of the Europe Jacques Delors think tank after their visit to Geneva and discussions on the trade-environment nexus with a wide range of interlocutors, including a dozen of developing countries’ ambassadors to the World Trade Organization: ‘The Carbon Border Adjustment Mechanism (CBAM) was not the main worry, as its intentions and rationale have been well explained even if its impacts have still to be managed. It was rather the deforestation free products regulation, or the corporate sustainability due diligence directive, not concerted before, not sufficiently explained, and not yet accompanied by supporting policies. Some evoke “regulatory imperialism”, others fear a “green panic”. The EU seems blind when faced with the impact of greening EU trade on exports from poor countries who need access to the vast EU market to grow their economies’. Geneviève Pons, ‘Back from Geneva’ (2023) Europe Jacques Delors <http:// www.europejacquesdelors.eu/news/back-from-geneva> accessed 10 May 2023.
8. ConClusion
The climate and, to certain extent, energy components of EU foreign policy are based on beliefs, norms, standards and approaches that can be described in terms of Normative Power Europe. EU climate action and climate diplomacy are coherent, mutually reinforcing and add credibility to any EU international engagement. The fact that the EU can easily demonstrate that its actions have a common international purpose, that they address the issue of governance of global commons, makes the substance of its diplomacy more convincing. This is also the case for energy diplomacy, but to a lesser extent, as the self-interest of the EU and its member states is more clearly articulated and served by the diplomatic effort. However, it should be noted that the perception of these EU policies may be different in countries that see EU policies as exerting pressure to accelerate or change domestic policies in the direction of Europe’s choice. This kind of perception can be reinforced by unilateral measures such as CBAM, which affect a wide range of countries struggling with poverty and development. In this context, it is important that the idea of the Climate Club, as a coercive tool, has gradually evolved into a format of closer cooperation among the group of countries determined to move faster and more radically in mitigating climate change.
C hapter 8
External partners in the EU’s energy transition: new dependencies or similar challenges?
by tomASZ obrEmSki
tomasz oB r EMS ki
tomasz obremski is a 2022/2023 postgraduate student at the College of Europe in Natolin and president of a national Ngo, the Polish forum of young diplomats. he is a graduate of international Economics at the warsaw School of Economics Sgh; development and international relations at Aalborg University in denmark and the European Academy of d iplomacy. h e has completed academic exchanges at National Chengchi University in taiwan and tsinghua University in beijing. he has gained professional experience in both Ngos and the private sector, including consulting in the energy sector and international business.
1. introduCtion
The evolving geopolitical landscape and the intensifying competition between major global powers have redefined the strategic interests of regions and nations. At the heart of this dynamic is the relationship between the European Union (EU) and the Association of Southeast Asian Nations (ASEAN). As two of the world’s largest and most successful regional integration projects, the EU and ASEAN have increasingly leaned on each other to uphold a multilateral, rules-based international order. This partnership has become even more important in face of the mounting pressure from U S.-China rivalry and the concurrent rise of global protectionism. The EU-ASEAN strategic relationship offers a unique path to strengthen stability and cooperation in Asia and Europe, a need that has become even more evident in the context of the global energy transition.
The ongoing energy crisis, exacerbated by geopolitical tensions such as Russia’s unprovoked invasion of Ukraine, has prompted the EU to seek alternative sources of energy. Southeast Asia, with its abundant resources such as liquefied natural gas (LNG) and coal, has emerged as a key region in this context. However, these resources are not only limited but also contested by other Asian nations. The emergence of new, wealthier European buyers has driven up energy prices, making them unaffordable for poorer countries and exacerbating energy insecurity, inflation and food shortages in the Global South. This situation highlights the complex interplay between energy policy and broader international relations, where energy is both a lever and a constraint in the exercise of soft power.
The concept of soft power, as developed by Joseph S. Nye,1 refers to the ability to shape preferences and influence outcomes through attraction and persuasion rather than coercion or payment. For the EU, energy policy is intrinsically linked to soft power. By promoting renewable energy initiatives, offering financial support for energy transition projects and championing environmental sustainability, the EU seeks to project an image of a responsible global actor. However, this projection is complicated by the realities of the energy market and the EU’s strict environmental regulations, which are often perceived as double standards by ASEAN countries facing development challenges and energy poverty.
1 Joseph S. Nye, ‘Public Diplomacy and Soft Power’ (2008) 616(1) The ANNALS of the American Academy of Political and Social Science 94–109, 94 <https://journals.sagepub.com/doi/epdf/10.1177/0002716207311699> accessed 23 January 2025. When introducing the concept in 1990, Nye stated: ‘[the] second aspect of power-which occurs when one country gets other countries to want what it wants-might be called co-optive or soft power in contrast with the hard or command power of ordering others to do what it wants’. See Joseph S. Nye, ‘Soft Power’ (1990) 80 Foreign Policy 153–71 <https://www.jstor.org/stable/1148580> accessed 23 January 2025.
The research question guiding this study is: How can the EU, as a strategic partner, provide soft security to ASEAN in the context of energy transition? This question addresses the non-military aspects of security, focusing on economic development, trade, connectivity, energy infrastructure, climate initiatives and diplomatic engagement. The underlying hypothesis is that by fostering energy cooperation, supporting infrastructure projects such as the Global Gateway Initiative (GGI) and promoting just energy transitions, the EU can enhance regional stability and resilience in Southeast Asia. This approach is consistent with the broader strategic objective of counterbalancing the influence of major powers, namely the United States and China, while promoting shared values such as multilateralism and sustainability.
This chapter adopts a deductive research design, beginning with an exploration of the theoretical underpinnings that frame EU-ASEAN relations – focusing on soft power, constructivism and regionalism. The study then operationalises these theories to examine empirical initiatives, such as the Global Gateway Initiative and energy transition projects, and analyses their impact and potential. By combining theoretical insights with empirical analysis, this research seeks to provide a comprehensive understanding of how energy policy can serve as an instrument of soft power and contribute to regional security.
The chapter is structured as follows: First, a theoretical framework is presented, integrating key concepts from soft power, constructivism and regional integration theories. Next, the empirical analysis looks at specific EU-ASEAN initiatives, assessing their effectiveness and challenges. The final section reflects on the findings, offers policy recommendations and discusses broader implications for the future of EU-ASEAN relations.
In summary, the interplay between energy and soft power is central to understanding EUASEAN relations in an era of energy transition. By examining this relationship, the study aims to shed light on how strategic energy cooperation can be leveraged to promote soft security and support a multilateral, sustainable global order.
2. methodologiCal approaCh
This study adopts a deductive research approach, rooted in the analysis of EU-ASEAN energy relations and their implications for soft security. By drawing on established theories in international relations, such as soft power and constructivism, the research seeks to bridge the gap between theoretical frameworks and practical initiatives, ensuring a coherent and comprehensive exploration of the topic.
The research begins with a thorough theoretical conceptualisation and operationalisation of key concepts, focusing primarily on soft power and energy security. By clearly defining these concepts, the analysis provides a solid basis for examining how they are manifested in the EU-ASEAN relationship.
Data for this research is gathered from a range of sources, including official EU and ASEAN policy documents, academic literature and reports from international organisations. This comprehensive data collection allows for a qualitative content analysis that interprets both the strategic intentions and the perceived impacts of EU energy investments. The study also integrates perspectives from expert commentary and analysis, providing a deeper understanding of how these initiatives are perceived on the ground by both European and Southeast Asian stakeholders. This multi-layered analysis ensures that the research captures the complexity of EU-ASEAN relations while remaining grounded in empirical evidence.
A critical component of this approach is connecting theory to practice. The research examines how energy investment serves as an instrument of soft power, attracting ASEAN nations to align themselves with EU norms and standards. Using constructivism as a lens, the study explores how shared values, norms and discourses influence the evolution of this partnership. This theoretical perspective allows for an interpretation of the EU’s normative power in the region, while taking into account the challenges posed by other influential actors, such as China. In this way, the analysis does not merely describe initiatives, but critically assesses their strategic significance.
The scope of this research is deliberately focused specifically on non-military soft security measures. It acknowledges that the findings may not fully account for the broader geopolitical factors that could influence energy and security dynamics.2 In addition, while the study provides a comprehensive view of EU-ASEAN energy relations, it does not delve deeply into the domestic political complexities of individual ASEAN member states, which could also influence the findings. These limitations are recognised in order to maintain the focus of the study and provide a clear and manageable research narrative.
2 Aleksandar Fatić, ‘Conventional and Unconventional – “Hard” and “Soft” Security: The Distinction’ (2002) 5(3) SEER: Journal for Labour and Social Affairs in Eastern Europe 93–8 <http://www.jstor.org/stable/43292068> accessed 23 January 2025.
3. theoretiCal framework
The relationship between the European Union (EU) and the Association of Southeast Asian Nations (ASEAN) can be analysed through various International Relations (IR) theories, but this chapter will primarily use the concepts of soft power and neoliberal institutionalism, supported by aspects of constructivism. This will provide a comprehensive understanding of how energy and soft power are intertwined in shaping EU-ASEAN interactions and why this relationship is strategically significant.
3.1. Neoliberal institutionalism and soft power
Neoliberal institutionalism forms the foundation for this analysis, emphasising the importance of international cooperation, trade and institutions in achieving mutual benefits. This theory argues that states act rationally and are motivated by self-interest but recognise that cooperation in a positive-sum game can maximise their gains. Institutions, such as international organisations and agreements, are crucial in reducing uncertainty and facilitating cooperation, even among actors with divergent interests.3
In the case of EU-ASEAN relations, the EU seeks to project influence and achieve stability through non-coercive means, primarily through the use of soft power. Joseph Nye’s concept of soft power is crucial here, defined as ‘the ability to affect others to obtain the outcomes one wants through attraction rather than coercion or payments’.4 The EU uses soft power in the ASEAN region by promoting its values, culture and policies, aiming to attract and influence ASEAN states through norms and standards rather than military or economic pressure. Educational exchanges, cultural ties and economic partnerships are tools the EU uses to foster a cooperative and interconnected relationship.
3.2. Linking soft power to energy policy
The integration of soft power into energy policy is essential to understanding the EU’s strategic approach in Southeast Asia. The EU’s promotion of renewable energy and sustainable development is not simply a matter of environmental concern, but a deliberate strategy to solidify its soft power. By positioning itself as a leader in energy transition, the EU seeks to project an image of a responsible and innovative global actor. This energy-based soft power strengthens its credibility and attractiveness, and aligns ASEAN states with the EU’s vision of sustainable development.
3 Michael W. Doyle, ‘Liberalism and World Politics’ (1986) 80(4) American Political Science Review 1151–69 <https://www.jstor.org/stable/1960861> accessed 23 January 2025.
4 Joseph S. Nye, ‘Public Diplomacy and Soft Power’ (n 1) 94.
The European Investment Bank’s (EIB) green policies, such as its refusal to finance fossil fuel projects, illustrate the EU’s commitment to sustainability. However, these policies also highlight the challenges in balancing green ambitions with the economic realities of ASEAN countries, where access to affordable and reliable energy remains a priority. The EU’s emphasis on renewable energy projects, infrastructure development under the Global Gateway Initiative and joint energy transition partnerships reflects its strategy of using energy as a tool to extend its influence while promoting global climate goals.
3.3. Constructivism: The role of norms and identity
While neoliberal institutionalism explains the functional aspects of cooperation, constructivism provides insights into the normative and ideational dimensions of EU-ASEAN relations. Constructivism emphasises the importance of norms, ideas and identities in shaping state behaviour. Unlike realism, which focuses solely on material power, constructivism allows for an understanding of how shared norms and values can drive cooperation and how social constructs influence policy decisions.5
In the context of EU-ASEAN relations, constructivism explains the role of identity, perception and normative power. The EU’s emphasis on promoting human rights, democracy and environmental standards reflects its identity as a normative power. Moreover, the school recognises that identities are not fixed but can evolve through social interactions, making it well suited to capturing the dynamics of the evolving EU-ASEAN relationship and the idea of national branding.6 ASEAN, with its diverse cultural and political backgrounds, does not always share these values, but engages in dialogue and cooperation because of the EU’s attractive norms and the benefits of partnership. Constructivism also highlights the evolving nature of norms, suggesting that ASEAN states may gradually adopt some EU standards through social interactions and partnerships.
3.4. Operationalising theoretical concepts
To link theory with empirical analysis, this chapter operationalises soft power and neoliberal institutionalism through specific energy and infrastructure initiatives. The Global Gateway Initiative, Just Energy Transition Partnerships (JETPs) and renewable energy investments serve as case studies to analyse how the EU uses soft power to promote its norms and values. These initiatives also show how institutional mechanisms facilitate cooperation and align
5 Salvador Santino F. Regilme, ‘It Takes Two to Tango: A Constructivist Analysis of EU-ASEAN Interregional Relations’ in Astrid Boening, Jan-Frederik Kremer and Aukje van Loon (eds), Global Power Europe Vol. 2 Global Power Shift (Springer Berlin Heidelberg 2013) 237–52 <https://doi.org/10.1007/978-3-642-32416-1_14>.
6 Katarzyna Pisarska, The Domestic Dimension of Public Diplomacy: Evaluating Success through Civil Engagement (Palgrave Macmillan 2016) 26.
interests. The impact of EU soft power is thus assessed by examining ASEAN’s alignment with EU energy and climate policies, the adoption of EU regulatory standards and the success of people-to-people initiatives. It also analyses the role of formal agreements, such as the EU-ASEAN Strategic Partnership and bilateral energy dialogues, to understand how institutions facilitate collaboration and mitigate conflicts. Moreover, the chapter will examine how EU norms influence ASEAN states’ policies, even when these norms conflict with local priorities or cultural values. This will include a discussion of EU narrative framing, national branding and the evolution of ASEAN perceptions.
4. empiriCal analysis
4.1. Background
The European Union (EU) and the Association of Southeast Asian Nations (ASEAN) represent two of the world’s most economically interconnected and significant regional integration projects. Although located on opposite sides of the Eurasian continent, both organisations share a commitment to upholding a multilateral world order and promoting open trade – a commitment that is now being tested by rising protectionism and the intensifying geopolitical rivalry between the US and China.7 These global dynamics have underscored the strategic importance of closer cooperation between the EU and ASEAN, bringing them together in their efforts to maintain a stable and rules-based international system.
Southeast Asia’s strategic resilience is critical given the region’s vulnerability to external pressures and disputes over trade routes, energy dependencies and the influence of foreign investment. To remain neutral and avoid internal fragmentation, ASEAN needs to ensure its economic and energy stability. However, given its limited military presence in the region, the EU has sought to establish itself as a soft security partner for ASEAN, focusing on energy infrastructure and connectivity as key areas for fostering stability.
This context explains the EU’s strategic recalibration towards becoming a more active geopolitical actor under the European Commission.8 Efforts to strengthen partnerships, including the elevation of EU-ASEAN relations to a strategic level through a virtual ministerial
7 Barbara Lippert and Volker Perthes (eds), ‘Strategic Rivalry between United States and China: Causes, Trajectories, and Implications for Europe’ (2020) 4 German Institute for International and Security Affairs – Stiftung Wissenschaft und Politik SWP Research Paper <https://www.swp-berlin.org/publications/products/research_papers/2020RP04_ China_USA.pdf> accessed 23 January 2025.
8 European Commission, ‘Speech by President-Elect von der Leyen in the European Parliament Plenary on the Occasion of the Presentation of Her College of Commissioners and Their Programme’ (27 November 2019) <https://ec.europa.eu/commission/presscorner/detail/en/SPEECH_19_6408> accessed 23 January 2025.
summit in 2020, marked a new phase in their mutual engagement. The decision was not groundbreaking, as the EU already had such declarations in Asia with India, China, South Korea, or Japan, and ASEAN had previously granted such status to even more countries, including Russia. While strategic partnerships can underline the relevance of the respective relations and take them to the next level, there are no concrete definitions of what they mean, as they differ in nature, scope and objective.9 Although this partnership declaration was primarily symbolic, it nevertheless emphasised the need for deeper cooperation to address the multifaceted challenges posed by global power shifts and energy crises.
Soon after, the EU published the Strategy for Cooperation in the Indo-Pacific to ensure compatibility among member states, following similar documents issued earlier by France, Germany and the Netherlands.10 It reaffirmed ASEAN’s centrality and outlined the EU’s goals of stabilising the region and balancing tensions without resorting to confrontation.11 This strategy emphasised ASEAN’s role as a key partner, capable of convening multilateral platforms and ensuring regional stability.
New EU instruments, such as the European Peace Facility (EPF) and the Global Gateway Initiative (GGI), were designed to enhance the EU’s capacity to support its partners. However, the unprovoked Russian invasion of Ukraine disrupted these plans, redirecting EPF resources to defence assistance and raising questions about the EU’s abilities to finance ambitious infrastructure projects under the GGI 12 The resulting energy crisis exacerbated inflation and strained the EU’s economic resources, with far-reaching consequences, even for developing countries that depend on stable energy prices. Increased energy and food costs have negative effects far beyond Europe, and many developing countries cannot afford the price spikes that led to malnutrition and power outages in 2022. This creates a situation where
9 Federiga Bindi and Irina Angelescu (eds), The Foreign Policy of the European Union: Assessing Europe’s Role in the World (3rd edn, Brookings Institution Press 2022) 341.
10 European Commission and High Representative of the Union for Foreign Affairs and Security Policy, ‘Joint Communication to the European Parliament and the Council – The EU strategy for cooperation in the Indo-Pacific’ (2021) 16.9.2021 JOIN(2021) 24 final <https://www.eeas.europa.eu/sites/default/files/jointcommunication_2021_24_1_en.pdf> accessed 23 January 2025.
11 Patryk Kugiel, ‘The EU Strategy for Cooperation in the Indo-Pacific: Stabilisation Instead of Confrontation’ (2021) The Polish Institute of Foreign Affairs PISM <https://www.pism.pl/publications/the-eu-strategy-for-cooperation-in-the-indo-pacific-stabilisation-instead-of-confrontation> accessed 23 January 2025.
12 Patryk Kugiel, ‘Implementation of the EU Strategy for the Indo-Pacific Is High on Ambition, Low on Outcomes’ (2022) The Polish Institute of Foreign Affairs PISM <https://www.pism.pl/publications/implementation-of-theeu-strategy-for-the-indo-pacific-is-high-on-ambition-low-on-outcomes> accessed 23 January 2025.
the Global South does not share the West’s perspectives on the war and is sceptical about supporting Ukraine, as prolonging the conflict is simply unaffordable.13
The EU-ASEAN Commemorative Summit in December 2022, which marked the 45th anniversary of their official dialogue, was a critical moment in reaffirming this strategic partnership. Despite notable differences on key geopolitical issues such as the war in Ukraine and tensions over Taiwan, the summit yielded concrete commitments. The EU pledged € 10 billion for GGI investment in ASEAN over five years and highlighted plans for bilateral initiatives, including free trade agreements (FTAs), an EU-ASEAN Energy Dialogue, and enhanced monitoring of state-led investments.14
The Summit provided a platform for direct engagement between leaders from both regions, facilitating a shared understanding of priorities and challenges. While it identified promising areas for cooperation, including energy and economic integration, it also highlighted the limitations of the multilateral framework, particularly with regard to human rights, WTO disputes and divergent narratives on global conflicts.
Before the summit, Yeo Lay Hwee, a director at the EU Centre in Singapore, had stated that ‘In security cooperation, both the EU and ASEAN can work together to engage the USA and China to lower the rhetoric on containment and rivalry and promote more collaboration to address challenges to our global commons, such as climate change’.15 It explains some of the ideas behind the strategic partnership, namely that both formats can help each other in the security field, limit the risk of a US-China conflict and tackle global warming together. The EU aspires to be a security actor in Asia and to be present in most of the import dialogue platforms to which ASEAN can provide access.
4.2. The Global Gateway Initiative
To analyse the potential of EU-ASEAN energy relations, it is necessary to understand the concept and the shortcomings of the EU’s recent flagship international development project.
13 Miłosz J. Cordes, ‘The West Needs a Communication Strategy about the War in Ukraine’ (2023) Casimir Pulaski Foundation Commentary <https://pulaski.pl/en/experts-commentary-the-west-needs-a-communication-strategyabout-the-war-in-ukraine-milosz-j-cordes/> accessed 23 January 2025.
14 Council of the European Union, ‘EU-ASEAN Commemorative Summit (Brussels, 14 December 2022) – Joint Leaders’ Statement’ (2022) 16014/22 COASI 244 ASIE 109 <https://www.consilium.europa.eu/media/60846/ eu-asean-leaders-statement.pdf> accessed 23 January 2025.
15 Nana Shibata, Rhyannon Bartlett-Imadegawa and Catherine de Beaurepaire, ‘ASEAN and EU Elevate Ties as Vietnam Snags Billions to Go Green’ Nikkei Asia (15 December 2022) <https://asia.nikkei.com/Politics/ International-relations/ASEAN-and-EU-elevate-ties-as-Vietnam-snags-billions-to-go-green> accessed 10 May 2023.
In December 2021, the European Commission announced a plan to mobilise € 298 billion by 2027 to finance investments in developing countries, focusing on five areas: digital, climate and energy, transport, health and education. The money is to be raised through the so-called Team Europe approach, which involves the European Commission, member states’ financial institutions and the EU’s financial arms, the European Investment Bank (EIB) and the European Bank for Reconstruction and Development (EBRD). It is the European contribution to bridging the gap to achieve the UN Sustainable Development Goals. This is in line with liberal institutionalism’s emphasis on creating international structures for mutual benefit, and underlines how economic engagement fosters global stability.
Although not officially stated, it is quite clear that it is designed as a European response to China’s Belt and Road Initiative (BRI), which is feared to dilute European norms and create a debt trap for recipient countries through unsustainable practices. The qualitative difference is that GGI projects are meant to be a superior offer, promoting democratic values and high standards, being transparent and based on equal partnership. From a constructivist perspective, this illustrates how norms and values shape the EU’s strategic choices. It is also designed to work with initiatives of like-minded countries, such as the US’s Build Back Better World (B3W), the UK’s Clean Green Initiative, Japan’s Partnership for Quality Infrastructure or the G7’s Global Investment and Infrastructure Partnership Plan.16
In terms of the GGI’s relevance to ASEAN, however, five serious shortcomings can be identified that call into question the initiative’s ‘game-changer’ status.
How realistic is the financial goal?
The first scepticism concerns funding. The declared EUR 298 billion does not reflect a tangible and existing fund, but rather an estimate that would never be reached without serious contributions from both the private sector and Member States’ funds. Only a small part (around €18 billion through the EU’s external assistance programmes) is expected to be in the form of grants, while the rest will be in the form of loans and guarantees.17 This
16 European Commission and High Representative of the Union for Foreign Affairs and Security Policy, ‘Joint Communication to the European Parliament, the Council, the European Economic and Social Committee, the Committee of the Regions and the European Investment Bank – The Global Gateway’ (2021) 1.12.2021 JOIN(2021) 30 final <https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52021JC0030> accessed 24 January 2025.
17 Farwa Sial and Xavier Sol, ‘The Emperor’s New Clothes. What’s New about the EU’s Global Gateway?’ (2022) Counter Balance/European Network on Debt and Development Eurodad 10 <https://counter-balance.org/ uploads/files/EU-global-gateway-report-FINAL.pdf> accessed 24 January 2025.
illustrates the EU’s attempt to leverage its soft power, as defined by Nye, through economic and infrastructural incentives rather than direct control or force.
For this figure, € 135 billion is earmarked under the European Sustainable Development Funds Plus, with the EU providing € 40 billion in guaranteed capacity. This represents a rather low leverage effect of 3.4. By comparison, the Juncker Plan, which sought to raise a similar amount, had a factor of 15, while the recently developed Neighbourhood, Development and International Cooperation Instrument has a factor of 10. However, the former was targeted at EU markets, while the latter was targeted at neighbouring regions.18
The growing uncertainty of the international scene and the distance would require more interest from private investors, which does not fit in with development projects that are supposed to be low interest. Falling short on the promise to deliver such capital could seriously undermine the EU’s credibility and its efforts to become a trusted provider of soft security. In this way, failure to mobilise adequate funds would weaken the EU’s attractiveness and soft power influence in ASEAN. The EU does not have a good track record in mobilising private capital for projects outside Europe, and it is not yet clear how it intends to change this.19
The next part of the target amount – € 145 billion – is expected to be raised through EU countries’ financial and development finance institutions, which remains the most uncertain. Although some projects are already underway, countries may want to wait and see how the initiative unfolds. Different members have different foreign policy objectives and strategic orientations in different parts of the world, especially in their neighbourhood or in former colonies with close cultural ties. This highlights the challenge the EU faces in achieving cohesion and how different national interests affect the overall strategic unity of the GGI as a soft power tool.
Is there anything new?
The second argument against the GGI is that it is merely a rebranding of existing initiatives rather than a real shift in EU development policy. Many of the projects listed were already in the planning or even implementation phase before they were brought together under
18 Simone Tagliapietra, ‘The Global Gateway: A Real Step towards a Stronger Europe in the World?’ (2023) Bruegel Blog <https://www.bruegel.org/blog-post/global-gateway-real-step-towards-stronger-europe-world> accessed 24 January 2025.
19 Farwa Sial and Xavier Sol, ‘The Emperor’s New Clothes. What’s New about the EU’s Global Gateway?’ (n 17) 14.
the GGI umbrella. Stakeholders and Heads of State have recognised this.20 This reliance on existing efforts rather than innovative solutions limits the EU’s soft power impact, as attractiveness is built on offering something different and appealing. It may be a strategy to gain recognition for the project, but as it evolves, it must clearly demonstrate the added value of the new approach and where new opportunities lie. The EU remains a larger provider of foreign direct investment (FDI) globally than China, but the BRI, despite scepticism and criticism, has become an international brand and trademark of Chinese foreign cooperation with the developing world. From a constructivist perspective, the EU must also work to reshape perceptions and build a strong normative identity if it is to compete effectively. The first steps of the GGI can be seen as an attempt to consolidate the EU’s actions and increase its recognizability, rather than to add value.
Is it all about infrastructure?
Third, too much attention to the initiative could undermine other EU development policies. By bringing together existing schemes and initiatives under the new GGI brand, the EC aims to establish its new geopolitical image as an alternative to other partners, notably China. As the then EU Commissioner for International Partnerships, Jutta Urpilainen, admitted, ‘it is also a geopolitical project’ as ‘infrastructure is at the core of geopolitics today’.21 This underlines how the EU seeks to enhance its geopolitical influence through economic soft power. The focus on connectivity should not detract from the EU’s very successful efforts in the developing world, such as conflict resolution, support for social protection, governance and civil society engagement, which are essential for building inclusive societies and without which infrastructure serves only the privileged.22 In ASEAN, the EU has mediated, inter alia, in the Mindanao terrorist crisis in the Philippines.23 This mediation effort can be seen as an embodiment of liberal ideals, emphasising dialogue and peaceful conflict resolution. Although important alongside the five main areas of GGI, more attention should be paid
20 Farwa Sial and Xavier Sol, ‘The Emperor’s New Clothes. What’s New about the EU’s Global Gateway?’ (n 17) 11.
21 Michele Barbero, ‘Europe Is Trying (and Failing) to Beat China at the Development Game’ Foreign Policy (10 January 2023) <https://foreignpolicy.com/2023/01/10/europe-china-eu-global-gateway-bri-economic-development/> accessed 24 January 2025.
22 Svea Koch, Niels Keijzer and Mark Furness, ‘The European Union’s Global Gateway Should Reinforce but Not Replace Its Development Policy’ (2023) German Institute of Development and Sustainability IDOS <https:// www.idos-research.de/uploads/media/German_Institute_of_Development_and_Sustainability_EN_Koch_Keijzer_ Furness_27.02.2023.pdf> accessed 24 January 2025.
23 Jeoffrey Houvenaeghel, ‘The European Contribution to the Mindanao Peace Process’ (2015) 1 European Institute for Asian Studies EIAS Briefing Paper <https://www.eias.org/wp-content/uploads/2016/02/EIAS_Briefing_Paper_20151_Houvenaeghel_Mindanao.pdf> accessed 24 January 2025.
to the human factor. A strategic partnership cannot be developed without people-to-people exchanges. Success in the area of energy transition also requires simultaneous efforts in R&D cooperation and educational exchanges. Here, the EU’s approach to knowledge and cultural exchanges is an example of soft power strategies aimed at fostering a deeper bond.
Can GGI compete with BRI?
GGI is presented in contrast to the BRI. The question, however, is to what extent non-Chinese projects represent a real alternative or merely a counterweight. The EU’s involvement in a particular project does not mean that BRI projects would be any less welcome in other parts of these countries. The infrastructure gap in the developing world is too big to be filled by a single investor, and especially in Southeast Asia, with its geographical proximity to Beijing, countries welcome any development aid that comes in. From their perspective, the B3W, G7 plans, BRI and GGI are not competing alternatives but complementary sources of aid. This suggests that theories of regionalism and inter-regionalism must take into account cooperation and coexistence rather than mere competition. It is not a question of choice, but of sharing. If influence in a given country is seen as competitive, there is a serious risk infrastructure fragmentation, the emergence of different interest groups and, ultimately, the division of societies with internal tensions. If GGI is to increase social resilience, synergies with the BRI must be recognised and worked on with the Chinese. This approach reflects constructivist principles, emphasising the importance of shared norms and dialogue rather than outright rivalry.
What is there for ASEAN?
At the commemorative EU-ASEAN summit, EUR 10 billion was pledged to the region under the GGI. This is not part of a dedicated programme, but a share of the above-mentioned € 298 billion, less than 3.5% of the target. The initiative covers four main geographical areas: the Western Balkans and the European Neighbourhood, Africa, Latin America, and the Asia-Pacific region. The stabilisation of the Middle East and Africa, closer to Europe’s borders, is naturally a priority for the EU. Cultural ties with Latin America also attract much attention. It is understandable that the Asia-Pacific region might be at the bottom of the list for the EU, but leaving such a small fraction to such a populous region casts doubt on the idea of elevating the relationship to a strategic level. Several flagship projects have already been announced. For ASEAN, these include energy projects such as two hydropower plants and both offshore and near-shore wind farms in Vietnam, but also digital capacity in the Philippines and transport upgrades in Laos
and Indonesia.24 The EU factsheet does not include all initiatives, but only a sample list of the most notable projects has been presented up to 2023. A more comprehensive list should follow to better communicate the added value of the GGI. This ties in with Nye’s concept of soft power, as well-designed and well-communicated projects can enhance the EU’s influence by attracting partners through economic and cultural appeal. Nevertheless, projects are already underway, ranging from concrete scientific research on the Mekong and Thái Bình River systems to student exchanges through Erasmus scholarships, the European Fund for Sustainable Development, the ASEAN Catalytic Green Finance Facility and Just Energy Transition Partnerships (JETPs).25 These initiatives are crucial in promoting inter-regionalism and deepening the EU’s soft power impact in ASEAN.
4.3. Energy transition
Energy cooperation, especially in the field of green energy, remains one of the most recurring buzzwords in EU-ASEAN relations. During the Commemorative Summit, both parties agreed to launch an Energy Dialogue as part of the Action Plan to implement the ASEAN-EU Strategic Partnership (2023-2027).26 As they face the pressing challenge of energy transition, this dialogue aims to enhance the exchange of best practices, regulations and experiences to make informed investment decisions. The theoretical framework emphasises how the EU’s actions align with soft power strategies, using economic and regulatory influence rather than coercion. The focus is primarily on renewable energy sources. The European Investment Bank (EIB) no longer finances any fossil fuel or hydrocarbon projects, nor does it support low-emission investments in high-emission companies.27 On the one hand, this has made the EIB the world’s first green development bank, but on the other hand, this policy limits possible projects, particularly in the transport sector, which often involves high-emission infrastructure that needs to be sustainably improved. The EIB’s policy reflects liberal institutional values that emphasise sustainability and normative influence, but creates a paradox that complicates ASEAN’s energy transition.
24 European Commission, ‘Global Gateway. EU-Asia and the Pacific Flagship Projects for 2023’ (2023) <https:// international-partnerships.ec.europa.eu/system/files/2023-05/Asia-Pac-flagship-projects-for-2023-v10.pdf> accessed 12 May 2023.
25 European Council, ‘EU-ASEAN: Global Gateway’ (2022) <https://www.consilium.europa.eu/media/60832/ global-gateway-asean-factsheet_final.pdf> accessed 24 January 2025.
26 European Union External Action Service, ‘Plan of Action to Implement the ASEAN-EU Strategic Partnership (2023-2027)’ (2022) AFM-EU/2022/01/POA <https://www.eeas.europa.eu/eeas/plan-action-implement-asean-eu-strategic-partnership-2023-2027-0_en> accessed 12 May 2023.
27 Jennifer Rankin, ‘European Investment Bank to End All Loans to Oil and Gas Firms’ The Guardian (Brussels, 28 October 2021) <https://www.theguardian.com/world/2021/oct/28/european-investment-bank-to-close-loopholeallowing-it-to-lend-to-oil-and-gas-firms> accessed 24 January 2025.
4.4. Renewables will not be enough
Despite being a vast and diverse region, Southeast Asia has limited renewable energy options. At the end of the last decade, it produced 20% of its energy from renewables, mainly hydropower, with the remaining 80% split almost equally between coal, oil and gas, the latter having almost 3% of the world’s natural gas reserves.28 Despite the growth in the total capacity of green sources, their share in total final energy consumption actually fell from 39% in 2000. This is because the potential of solar and wind power is often below the profit margin, while building dams on abundant large rivers damages the local environment.29 The challenges facing ASEAN highlight the need for a tailored, contextualised approach to energy policy, as constructivist theories emphasise the role of local realities and social structures in shaping energy solutions.
With high annual rainfall and large river flows, most ASEAN countries have promising hydropower potential, with an installed capacity of 48.8 GW However, excessive damming of some rivers has had a negative impact on local ecosystems and agriculture, raising concerns in all Mekong countries. Cambodia, for example, has halted further investment. A viable solution could be run-of-the-river hydropower on a smaller scale, offering a more environmentally responsible approach. These plants use only part of a river to generate electricity and are particularly suited to isolated regions, providing a solution for rural and mountainous areas beyond the reach of national electricity grids.30 Promoting this technology is in line with the EU’s soft power efforts, as it represents a sustainable and culturally sensitive approach that can win the trust of local communities.
The solar potential is considered moderate because of frequent rainfall and cloudy skies. Solar farms also require a large land area, which is difficult to find in the densely populated or forested areas of ASEAN. So far, Thailand and Vietnam have been the main investors in these resources, with a total installed capacity of 22.8 GW by 2020.31 The EU’s technical expertise in maximising solar efficiency could be used as part of its soft power strategy, emphasising cooperation rather than imposition.
28 Worldometer, ‘Natural Gas Reserves by Country’ <https://www.worldometers.info/gas/gas-reserves-by-country/> accessed 16 May 2023.
29 Hon Chung Lau, Kai Zhang, Harsha Kumar Bokka and Seeram Ramakrishna, ‘A Review of the Status of Fossil and Renewable Energies in Southeast Asia and Its Implications on the Decarbonization of ASEAN’ (2022) 15(6) Energies 2152 <https://doi.org/10.3390/en15062152> accessed 24 January 2025.
30 ibid
31 ibid
Similarly, wind power has the lowest installed capacity of any renewable energy source in ASEAN, with limited potential for expansion. Wind is only strong enough along the coast. In 2020, the total installed wind capacity was just 2.7 GW, mostly from offshore farms. By comparison, Poland, which also has moderate wind conditions, had almost 7 GW of onshore capacity in the same year.32 Offshore wind has some potential in coastal countries, but must coexist with busy trade routes in the South China Sea, which further limits options. 33 The EU can offer strategic advice on optimising offshore wind development while addressing maritime challenges, a soft power approach that emphasises shared expertise.
The third renewable energy source is biofuel, produced from unused livestock feed, reaching 8.35 GW in 2020. Geothermal energy, mainly in Indonesia and the Philippines, ranks fourth with a total capacity of 4.06 GW, although it has limited exponential growth potential and sustainability concerns. 34 The limitations of these resources point to the need for a comprehensive and adaptive energy transition strategy, underlining the role of the EU in guiding ASEAN towards diverse and sustainable energy solutions.
Moreover, none of the ASEAN countries currently has a nuclear power infrastructure. Although some governments have considered the possibility, social perceptions are largely negative and it is difficult to find optimal sites at a safe distance from population centres. EU soft power initiatives could include educational campaigns to change public opinion, aligning with Nye’s concept of influencing through attraction and credibility. Given these constraints, and the growing energy needs of developing countries, a comprehensive green transition will be difficult to achieve. Between 2010 and 2020, coal capacity in ASEAN tripled to almost 75 GW. While investment in renewables remains a priority for decarbonisation, greater efforts are needed to limit emissions while maintaining economic growth. 35
4.5. Decarbonisation of industries
Between 2010 and 2020, coal capacity in ASEAN tripled to almost 75 GW, while gas and oil increased slightly or remained flat. Gas emits half the CO 2 of coal, making it a more transition-friendly source. ASEAN members have access to both resources and continue to build new coal plants. Here, the EU’s experience with decarbonisation can serve as a
32 Statista, ‘Total Wind Power Capacity in Poland 2022’ <https://www.statista.com/statistics/421509/total-windpower-in-poland/> accessed 16 May 2023.
33 Hon Chung Lau, Kai Zhang, Harsha Kumar Bokka and Seeram Ramakrishna, ‘A Review of the Status of Fossil and Renewable Energies in Southeast Asia and Its Implications on the Decarbonization of ASEAN’ (n 29).
34 ibid
35 ibid
valuable model, enhancing its soft power through the sharing of expertise. To limit climate damage, coal plants should not only be phased out faster than planned, but also gasified. Both the US and the EU have done this in the last decade, and these experiences could be very useful. The cost of generating electricity is similar, but the difference lies in the infrastructure. Coal is easier to extract and transport, while gas requires more advanced technology and systems of pipelines or liquefied natural gas ports, which few ASEAN ports have. This presents an opportunity for the EU to provide support in infrastructure development, thereby reinforcing its role as a soft security provider. However, the question remains as to whether EU funds can be directed towards gas infrastructure, as they are currently not eligible under the EIB’s ‘no to hydrocarbons’ rule. This rule could be reconsidered if projects have a tangible impact on reducing greenhouse gas emissions.36
Transport is another emissions-intensive sector in ASEAN, largely road-based. ASEAN has ambitious plans to replace internal combustion vehicles with electric vehicles (NEVs), but foreign assistance in building infrastructure would be welcome. Still, this does not fully solve the problem as electricity generation needs to be green. Aviation emissions could be reduced by expanding biofuel refining capacity, where the EU could share its expertise. However, the sustainability of biofuel production remains a concern. In shipping, hydrogen fuel could become viable as ship technology advances.37 The EU’s soft power approach could include facilitating these technological transitions, focusing on common environmental objectives. In mountain and maritime regions, the challenge remains as they cannot rely heavily on railways and will continue to depend on emissions-intensive transport for some time to come.
Hydrogen has the potential to reduce the carbon footprint of heavy industry where renewables cannot provide sufficient power. However, hydrogen production is costly and technologically complex. Green hydrogen remains a distant dream for ASEAN, so blue hydrogen, produced through coal gasification or steam methane reforming technology, becomes the interim solution. The CO 2 produced in this process can be captured and stored through Carbon Capture, Utilisation and Storage (CCUS) systems, for example in saline aquifers, which are abundant in ASEAN countries. This scenario highlights the potential for international cooperation, as theorised in regionalism, to create CCUS corridors and share technological advances. The EU’s expertise in hydrogen technology, from production to storage and CCUS corridors, could
36 ibid
37 Hon Chung Lau, Kai Zhang, Harsha Kumar Bokka and Seeram Ramakrishna, ‘A Review of the Status of Fossil and Renewable Energies in Southeast Asia and Its Implications on the Decarbonization of ASEAN’ (n 29).
be invaluable. However, the question remains whether Europe is well placed to develop a competitive hydrogen industry that can export know-how to ASEAN 38
Given these complexities, to limit GHG emissions in ASEAN, the EU should focus not only on building renewable capacity, but also on developing hydrogen and NEV infrastructure. It may need to make exceptions to its ban on hydrocarbon projects, especially if coal gasification can significantly reduce emissions in the short term. The EU’s willingness to adapt its policies could be seen as a pragmatic soft power strategy that respects local needs. The EU could implement projects similar to those at home, such as efficient grids, interconnectors and CO 2 filters. ASEAN also has a role to play: developing a hydrogen strategy and phasing out subsidies for coal-fired power plants. These cooperative efforts align with theories of inter-regionalism, which emphasise shared responsibility and collective action.
4.6. Just Energy Transition Partnerships (JETPs)
The Commemorative Summit was not just about EU-ASEAN relations; another significant partnership was signed: a JETP with Vietnam, the third of its kind in the world. If successful, it could be extended to other countries; for example, a JETP with Senegal was launched in June 2023. The JETP initiative reflects the EU’s use of soft power, offering financial and technical assistance in exchange for alignment with environmental goals.
The JETP, developed in parallel to the Summits, is a financing mechanism whereby rich countries provide funds to developing countries that are heavily dependent on coal to help them phase out and transition to renewable energy. This partnership also addresses social impacts to ensure a just transition. JETP’s social focus is in line with the EU’s liberal values, promoting equitable and sustainable development.
JETP is backed by multilateral and national development banks and finance agencies, with an International Partners Group (IPG) that includes the EU, Japan, the US and several European states. The first agreement was signed with South Africa after COP26 in Glasgow. The second and third agreements were signed with ASEAN countries: Indonesia during the G20 summit in Bali and Vietnam during the EU-ASEAN summit in Brussels.
Under the Indonesia JETP, the country will receive $20 billion over three to five years, half of which will be mobilised by the IPG. This funding aims to shift the emissions peak
38 Piotr Przybyło, ‘Europe’s Hydrogen Strategy Failure. Negligible Chances for Extensive Production of CostEffective Green Hydrogen in Europe’ (2023) Casimir Pulaski Foundation Policy Paper <https://pulaski.pl/en/ pulaski-policy-paper-europes-hydrogen-strategy-failure-negligible-chances-for-extensive-production-of-cost-effective-green-hydrogen-in-europe-piotr-przybylo/> accessed 25 January 2025.
to 2030, double the use of renewable energy and achieve net zero emissions by 2050, ten years ahead of schedule. Vietnam will receive $17 billion over a similar period.39 Indonesia, which is heavily dependent on coal, needs more comprehensive just transition mechanisms. Vietnam, which already generates almost half of its electricity from renewables, can focus on expanding this capacity. The differences between these JETPs illustrate the need for the EU to adopt a tailored approach, as suggested by constructivist theories that emphasise context-specific strategies.40
In Vietnam, the 1,200 MW Bac Ai hydropower pumped storage project is labelled as a GGI project but is co-financed under JETP with the EIB, French AFD, German KfW and Japanese JICA.41 This co-financing illustrates how different EU initiatives and partnerships intersect and highlights the complexity of inter-regional cooperation. If the implementation of JETP proves to be effective, transparent and results in tangible emission reductions, the concept could be extended to more ASEAN countries, with the EU playing a central role. This potential expansion underlines the EU’s ambition to establish itself as a credible soft power and a key player in global energy transition efforts.
5. ConClusions
The evolving relationship between the European Union and the Association of Southeast Asian Nations is emblematic of the complexities inherent in global energy transitions and geopolitical dynamics. This study has explored the intricacies of EU-ASEAN cooperation, using theoretical frameworks such as soft power, inter-regionalism and constructivism to analyse energy partnerships and strategic initiatives. The findings underline that while the EU has made significant strides in using energy policy as an instrument of soft power, the practical implementation of these policies often faces significant obstacles rooted in the economic and social realities of Southeast Asia.
From a theoretical perspective, the EU’s normative emphasis on sustainability and multilateral cooperation positions it as a global leader in promoting green energy transitions.
39 European Council, ‘EU-ASEAN: Global Gateway’ (n 25).
40 Katherine Kramer, ‘Making the Leap. The Need for Just Energy Transition Partnerships to Support Leapfrogging Fossil Gas to a Clean Renewable Energy Future’ (2022) International Institute for Sustainable Development Policy Brief <https://www.iisd.org/system/files/2022-11/just-energy-transition-partnerships.pdf> accessed 25 January 2025.
41 Vietnam Electricity Corporation, ‘Co-Financiers of Bac Ai Pumped-Storage Hydropower Plant Project Works with EVN’ (2023) <https://en.evn.com.vn/d6/news/Co-financiers-of-Bac-Ai-Pumped-Storage-HydropowerPlant-Project-works-with-EVN-66-163-3357.aspx> accessed 25 January 2025.
The operationalisation of soft power, as exemplified by initiatives such as the Global Gateway Initiative and Just Energy Transition Partnerships, demonstrates the EU’s ambition to influence ASEAN’s energy landscape through value-based cooperation rather than coercion. However, the empirical analysis shows that these soft power aspirations need to be tempered with pragmatic adjustments, especially as ASEAN countries grapple with development needs and energy security challenges.
Policy implications and strategic recommendations:
1. Flexible engagement: The EU needs to adopt a more adaptive approach, recognising that rigid adherence to normative policies can create barriers rather than bridges. By being open to transitional energy solutions, such as natural gas, the EU can facilitate a more realistic and inclusive path towards decarbonisation in Southeast Asia.
2. Tailor-made cooperation: The diverse energy profiles and socio-economic contexts of ASEAN member states require differentiated strategies. Investments in renewable energy need to be complemented by infrastructure projects that address immediate energy security needs while laying the groundwork for long-term sustainability.
3. Balancing soft power with economic realities: The EU should continue to use its soft power through education, cultural exchanges and technical expertise, but it must also recognise ASEAN’s economic constraints. Effective partnerships will require a balance between normative influence and tangible economic incentives that are attractive and feasible for ASEAN countries.
4. Inter-regional cooperation: Building synergies with other global actors, including China’s Belt and Road Initiative (BRI) where possible, can enhance the impact of EU initiatives. Emphasising cooperation over competition can help avoid fragmentation and foster greater regional stability.
The wider significance of this study is that it highlights the need for a nuanced, well-rounded approach to international energy diplomacy. The EU’s ambition to be a global leader in sustainability is laudable, but it must be done with a deep understanding of the economic and developmental realities of its partners. Only by remaining flexible, adaptable and proactive can the EU ensure that its values become enablers rather than barriers to meaningful and effective partnerships. As global energy dynamics continue to evolve, the EU’s ability to act as a trusted and influential partner in Southeast Asia will depend on its willingness to integrate strategic pragmatism with its normative agenda.
C hapter 9
The EU’s intentional and unintentional impact on third countries’ energy, environmental and climate policies
by UrSZUlA SZAlkowSkA
urszula SzalkoWS ka
Urszula Szalkowska is a project and business manager with specialist expertise in global energy, transport, environment and climate change, combining a legal background with an understanding of technology, market, and policy. over the last 6 years, she has established and successfully managed a global subscription website service on energy in transport, providing in-depth regulatory analysis coupled with market data. most recently she joined a US-based company specialising in helping businesses reduce carbon intensity and develop sustainable solutions in the energy transition, where she was responsible for managing their European operations. her professional carrier began in the Polish central administration, where, as an executive responsible for market surveillance, she managed the establishment and organisation of the Polish fuel quality monitoring system and was responsible for the Council of m inisters’ plan on fuel quality. She took part in the Polish and EU legislative process and represented Poland at official EU and UN meetings and working parties.
1. introduCtion
The aim of this article is to discuss how the EU influences third countries in direct and deliberate ways, using CBAM as an example, but also in less obvious ways – without specific, dedicated diplomatic action on the part of the EU. With reference to the latter, the article presents the issue of the EU’s external partners in energy transition from the perspective of third countries that can benefit from the EU’s experience, work and regulatory approach. It provides examples of two different consultancy projects carried out in Zimbabwe and Curaçao, where EU policies have not been widely disseminated through diplomatic efforts or even economic mechanisms. In both cases, European experience and lessons learned were used to advise governments on fuel policies in these countries.
The paper begins by describing the EU’s direct external action towards third countries through the Carbon Border Adjustment Mechanism (CBAM). It explains this new concept, the first of its kind in the world, which will have a significant impact on the EU’s trading partners, but also on its internal economic development. It shows how the theoretical concept of imposing a penalty on an invisible but ultimately harmful element (anthropogenic greenhouse gas emissions) creates a new economic reality, a new financial system, new formal structures and administrative systems. It exists and is growing in the EU and will be imposed on economic partners, initially with a limited scope, but eventually extending to more industrial sectors.
In contrast to the external objective of CBAM’s, other policies discussed in this paper, such as the EU’s fuel quality and vehicle emissions regulations, were developed uniquely with the aim of regulating the EU’s domestic industries, with no intention of exporting them beyond its borders. However, their technological importance, advances and scientifically proven impact on industrial applications have made them benchmark policies for most countries in the world. This article explains these regulations and highlights their impact on third countries, using the example of fuel policies in Curaçao and Zimbabwe.
2. eu’s poliCies with direCt and indireCt external effeCts
2.1. Emission trading system and supplementing clean border adjustment mechanism as an example of direct action
In recent decades, energy, the environment and, more recently, climate change have been among the top priorities in the European Union’s internal and external policies. Usually, the EU policy makers deliberately design regulations and directives with the expected
outcome in mind. The expected outcome of legislative proposals is predicted and defined in impact assessments. However, there are examples of policies supported by thorough impact assessments whose implementation in real life takes a different or unexpected turn or has unforeseen side effects. A good example is the 2003-05 climate policy with its flagship emission trading scheme (ETS) regulated by Directive 2003/87/EC of the European Parliament and of the Council of 13 October 2003 establishing a scheme for greenhouse gas emission allowance trading within the Union and amending Council Directive 96/61/EC 1
The ETS was the world’s first major carbon market, requiring industrial operators to buy permits to emit CO 2 . It has been operational since 2005. The specific amount of carbon dioxide equivalent (CO2-eq) emitted each year at EU and Member State level corresponds to the number of allowances issued by Member State authorities, which are reduced linearly each year. An allowance is equivalent to 1 tonne of CO2-eq and the annual linear reduction factor has been 2.2% from 2021 onwards and will increase in the future. This factor is a means of gradually reducing greenhouse gas emissions from the industrial sectors covered by the ETS Sectors covered by the ETS, as listed in Annex I of Directive 2003/87/EC, include: production of iron, steel, ferrous metals, aluminium, chemicals, hydrogen, electricity and intra-EU aviation. In total, the EU ETS covers 8640 electricity, heat and industrial installations and 390 aircraft operators in the EU,2 the European Free Trade Association (EFTA), i.e. Iceland, Lichtenstein, Norway and power stations in Northern Ireland.3 This represents 36% of total EU greenhouse gas emissions.
Allowances are purchased by regulated entities through auctions. From 2021, 57% of total allowances are auctioned, with the remaining 43% distributed to industry free of charge. This means that only slightly more than half of all industries covered by the ETS are required to reduce GHG emissions each year, while the remaining 43% are not bound by this obligation for reasons explained below.
1 European Parliament, ‘Directive 2003/87/EC of the European Parliament and of the Council of 13 October 2003 establishing a scheme for greenhouse gas emission allowance trading within the Union and amending Council Directive 96/61/EC’ (ETS Directive) (2003) OJ L 275 32 25.10.2003 <https://eur-lex.europa.eu/legal-content/ EN/TXT/PDF/?uri=OJ:L:2003:275:FULL> accessed 27 January 2025.
2 European Commission, ‘Report from the Commission to the European Parliament and the Council on the Functioning of the European Carbon Market in 2022 pursuant to Articles 10(5) and 21(2) of Directive 2003/87/EC’ (2023) 31.10.2023 COM(2023) 654 final <https://eur-lex.europa.eu/legal-content/EN/TXT/ PDF/?uri=CELEX:52023DC0654> accessed 27 January 2025.
3 European Council, ‘Agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community’ (2020) OJ L 29 31.1.2020 7–187 <https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex:12020W/TXT> accessed 27 January 2025.
In order to comply with the ETS rules, obligated parties are allowed to emit greenhouse gas emissions in amounts corresponding to the number of allowances they have purchased and in accordance with the permits issued by the administration of a Member State in which they are located. Individual installations or plants are compared to sectoral benchmarks, which are based on the average performance of the 10% most efficient installations in a sector or sub-sector.4 Reductions are achieved through the use of modern, efficient technologies or production processes, low-carbon input energy or carbon capture and storage. In the past, compliance with the ETS could also be achieved through ‘capacity-building activities’ in developing countries and countries with economies in transition. These were projects that qualified under the Kyoto Protocol’s Joint Initiatives (JI) and Clean Development Mechanism (CDM). The CDM allowed emission reduction projects in developing countries to earn Certified Emission Reduction (CER) credits. CERs could be traded and sold in industrialised countries with greenhouse gas emission reduction obligations to contribute to reduction targets.5 JI (now defunct) allowed countries with commitments under the Kyoto Protocol to transfer or purchase emission reduction units (ERUs) to meet part of their emission reduction target.6
All obligated parties under the ETS surrender allowances before 30 April each year.7 The number of allowances surrendered should be equal to the amount of GHG emissions emitted by the obligated party in a previous year. If the number of allowances held by an obligated party is insufficient, i.e. the installation has emitted more GHGs than allowed, the obligated party must purchase more allowances and surrender the missing number. If the number of allowances exceeds the amount of GHG emissions emitted, the excess allowances can be transferred (sold) on a carbon market. Allowances are valid for 10 years. Anyone can buy and sell allowances, which are decoupled from products or sectoral emissions. The auctioning of allowances is detailed in Commission Regulation (EU) 2023/2830 of 17 October 2023.8 All Member States participate in auctions organised by the European Energy
4 ETS Directive (n 1) Art. 10a (2).
5 United Nations Framework Convention on Climate Change, ‘Clean Development Mechanism’ <https://cdm. unfccc.int/> accessed 5 May 2023.
6 United Nations Framework Convention on Climate Change, ‘Joint Implementation’ <https://ji.unfccc.int/index. html> accessed 5 May 2023.
7 ETS Directive (n 1) Art. 12.
8 European Commission, ‘Commission Delegated Regulation (EU) 2023/2830 of 17 October 2023 supplementing Directive 2003/87/EC of the European Parliament and of the Council by laying down rules on the timing, administration and other aspects of auctioning of greenhouse gas emission allowances’ (2023) OJ L 2023/2830 20.12.2023 1–56 <https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=OJ:L_202302830> accessed 28 January 2025.
Exchange (EEX AG), which was selected by the European Commission as the common auction platform. In November 2024, at the time of writing, the allowance price fluctuated between EUR 63 and 67 for 1 tonne of CO2-eq. In 2022, the last full year for which data are available, EEX AG held 222 auctions. In 2021, total auction revenues amounted to EUR 38.8 billion. The EU carbon market is classified as a financial instrument and is therefore subject to the same regulatory rules as the EU financial market, including supervision by Member States’ financial authorities.
If the operator does not surrender the required number of allowances, it faces a penalty of at least EUR 100 per tonne of CO 2 . The EUR 100 was introduced in 2013 and has since increased annually in line with the European Index of Consumer Prices.9 Member States are responsible for enforcing the rules and imposing penalties.
Emissions from installations or aircraft should be monitored and reported by obligated parties in accordance with Annex IV to Directive 2003/87/EC and Commission Implementing Regulation (EU) 2018/2066.10 Emissions should be measured or calculated. The reports should be verified by an independent verifier against the methodology set out in Annex V to Directive 2003/87/EC, which includes strategic analysis, process analysis and risk analysis, and in accordance with Commission Implementing Regulation (EU) 2018/2067.11
Member States are allowed to distribute free allowances in certain cases. For example, free allocations may be given to district heating and cogeneration for economically justified needs. Member States whose GDP per capita at market prices in 2013 was less than 60% of the Union average may grant transitional free allocations to electricity generating installations for the modernisation, diversification and sustainable transformation of the energy sector.12 In addition, industrial sectors and subsectors deemed to be at risk of carbon leakage will also receive free allowances until 2030. The risk of carbon leakage is measured using a complex formula based on the ratio of the total value of exports, imports and total market size of the
9 ETS Directive (n 1) Art. 16.
10 European Commission, ‘Commission Implementing Regulation (EU) 2018/2066 of 19 December 2018 on the monitoring and reporting of greenhouse gas emissions pursuant to Directive 2003/87/EC of the European Parliament and of the Council and amending Commission Regulation (EU) No 601/2012’ (2018) OJ L 334 31.12.2018 1–93 <https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32018R2066> accessed 28 January 2025.
11 European Commission, ‘Commission Implementing Regulation (EU) 2018/2067 of 19 December 2018 on the verification of data and on the accreditation of verifiers pursuant to Directive 2003/87/EC of the European Parliament and of the Council’ (2018) OJ L 334 31.12.2018 94–134 <https://eur-lex.europa.eu/legal-content/ EN/TXT/PDF/?uri=CELEX:32018R2067> accessed 28 January 2025.
12 ETS Directive (n 1) Art. 10c.
product to its emission intensity divided by gross value added.13 These sectors are listed in Commission Delegated Decision (EU) 2019/70814 and include: petroleum extraction, coal mining, iron ore, chemical and fertiliser minerals, manufacture of oils and fats, starch and starch products, sugar, refined petroleum products, industrial gases, dyes, pigments, organic and inorganic basic chemicals, fertilisers, plastics in primary forms, cement, aluminium, nuclear fuels. In total, the list includes 63 sectors and sub-sectors responsible for 94% (the vast majority) of industrial emissions in the EU ETS 15
The European Commission publishes an annual report on the functioning of the European carbon market. The most recent version of the report is from November 202416 and it covers the market in 2023 and partially 2024. According to the report, sectors covered by the ETS reduced greenhouse gas emissions by 47% since 2005. In 2023, emissions decreased by 16.5% compared to 2022. In 2022, compared to 2021, emissions from stationary installations decreased by 1.8%; from industrial installations, they decreased by 6.4%, and in the electricity/ heat generation and aviation sectors, emissions increased by 2.4% and 77% respectively.17
In 2019, the European Commission launched a new policy agenda to take Europe towards climate neutrality by 2050, with the aim of decoupling economic growth from resource use. It is the European Green Deal.18 Under the Green Deal, the interim target is to reduce greenhouse gas emissions by 55% from 1990 levels by 2030. To deliver this target, the EC is proposing, inter alia, to revise and reform or introduce new legislative acts in the ‘Fit for 55’ package. One of the initiatives is to substantially revise the ETS to increase the level of annual GHG emission reductions, and to include the maritime sector and to create a separate ETS for road transport and buildings. In practical terms, this means that the
13 ETS Directive (n 1) Art. 10b.
14 European Commission, ‘Commission Delegated Decision (EU) 2019/708 of 15 February 2019 supplementing Directive 2003/87/EC of the European Parliament and of the Council concerning the determination of sectors and subsectors deemed at risk of carbon leakage for the period 2021 to 2030’ (2019) OJ L 120 8.5.2019 20–26 <https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32019D0708> accessed 28 January 2025.
15 European Commission, ‘Report from the Commission to the European Parliament and the Council on the functioning of the European carbon market in 2022 pursuant to Articles 10(5) and 21(2) of Directive 2003/87/ EC (Report on European Carbon Market in 2022)’ (2023) 31.10.2023 COM(2023) 654 final <https://eur-lex. europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52023DC0654> accessed 28 January 2025.
16 European Commission, ‘Report from the Commission to the European Parliament and the Council on the functioning of the European carbon market in 2023 (Report on European Carbon Market in 2023)’ (2024) 19.11.2024 COM(2024) 538 final <https://climate.ec.europa.eu/document/download/92ec0ab3-24cf-4814ad59-81c15e310bea_en?filename=2024_carbon_market_report_en.pdf> accessed 28 January 2025.
17 ibid 2, 21, 36.
18 European Commission, ‘The European Green Deal’ <https://commission.europa.eu/strategy-and-policy/priorities-2019-2024/european-green-deal_en> accessed 7 May 2023.
number of available allowances will decrease more sharply, which is likely to have an impact on their price.
If the EU continues with the free allocation mechanism, the objective of the ETS and its principles would be jeopardised. As mentioned above, the ETS covers 36% of the EU greenhouse gas emissions. Of these, 47% are not covered by auctioned allowances, i.e. they are not covered by a financial mechanism linked to GHG emissions. This means that only 17% of EU industrial emissions are covered by the ETS carbon pricing mechanism. This is too low to have a significant impact on overall GHG emission reductions and can be seen as an inequitable instrument.
The European Commission reports that the EU’s most ambitious climate policy in the world increases the risk of carbon leakage from the EU to other parts of the world where carbon pricing mechanisms or other similar measures do not exist or are not as stringent as in the EU. As a result, production will be relocated to third countries and demand for third country products may increase due to the price differential, which will be exacerbated by the projected higher allowance price under the revised, more stringent ETS. The consequences of this process are increased GHG emissions in third countries, which in an extreme scenario could outweigh the GHG emission reductions within the EU. With these consequences, the EU could no longer be perceived and presented as a global leader in climate action. This is contrary to the EU’s own ambition that ‘the European Union’s international leadership must go hand in hand with bold domestic action’.19
For all these reasons, the EU has developed the Carbon Border Adjustment Mechanism (CBAM). This mechanism puts a carbon price on goods and materials imported into the EU to cover the carbon emissions caused by the production of those goods and materials outside the EU.
CBAM covers only a small fraction of the sectors covered by the ETS These are iron and steel products and materials, aluminium products, electricity, cement, fertilisers and hydrogen. Although organic chemicals and refinery products are the largest in terms of cumulative EU GHG emissions and risk of carbon leakage, they are they are excluded from the scope of the carbon border adjustment mechanism Regulation.20 This is due to technical limitations and a lack of science-based processes to clearly define the emissions embedded in
19 European Commission, ‘Proposal for a Regulation of the European Parliament and of the Council establishing a carbon border adjustment mechanism’ 14.7.2021 COM(2021) 564 final 2021/0214 (COD) 1 <https://eur-lex. europa.eu/resource.html?uri=cellar:a95a4441-e558-11eb-a1a5-01aa75ed71a1.0001.02/DOC_1&format=PDF> accessed 28 January 2025.
20 ibid 20.
imported goods. This means that the regulatory doors are left open for further inclusion of more products and sectors in the future, i.e. CBAM will evolve.
For products covered by the CBAM, from 1 October 2023 their importers have to report the verified direct and indirect GHG emissions embedded in those products. From 1 January 2026, they will be required to purchase and surrender CBAM certificates, similar to ETS allowances. Not all products and importers will be covered by this obligation immediately upon implementation. Implementation will be phased in along with the phase-out of free allowances under the ETS In 2026, it will be 97.5% free allowances and 2.5% CBAM certificates, decreasing to 51.5% free allowances with 48.5% CBAM certificates, and to 0% free allowances with 100% CBAM certificates in 2034. The CBAM certificate price is set by the European Commission based on the average EU ETS allowance prices at the weekly close of the common auction platform, i.e. EEX AG. There are new administrative and formal requirements for importers of goods, such as becoming an authorised CBAM declarant and submitting annual declarations of imported products imported, their embedded emissions and the CBAM certificates to be surrendered. The carbon price paid in the country of origin will be deducted from the CBAM certificates.
An overview of the comments and positions expressed by economic operators, industry associations, NGOs and foreign governments revealed an interesting bipolar picture of strong support for the CBAM, usually voiced by EU-based companies and organisations, and strong criticism of the measure, usually expressed by foreign companies representing the industries that would be subject to the CBAM 21 Rusal, the Russian-based primary aluminium producer, one of the largest in the world, supplying 20% of the EU’s aluminium demand in times before the EU sanctions due to Russia’s invasion of Ukraine, expressed its doubts about the CBAM’s projected outcome.22 According to the company, there is little carbon leakage in the EU primary aluminium sector. They state that ‘since 2000, the EU PA [primary aluminium] smelting capacity shrunk by ca. 30%, while the EU consumption of PA grew by approximately the same percentage’.23 They further state that ‘no new
21 European Commission, ‘EU Green Deal (Carbon Border Adjustment Mechanism) public consultations and feedback’ <https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/12228-EU-Green-Deal-carbon-border-adjustment-mechanism-/feedback_en?p_id=7587254> accessed 5 May 2023.
22 European Commission, ‘EU Green Deal (Carbon Border Adjustment Mechanism) public consultations and feedback – Feedback from Rusal, Feedback reference F510337 submitted on 01 April 2020’ <https://ec.europa. eu/info/law/better-regulation/have-your-say/initiatives/12228-EU-Green-Deal-carbon-border-adjustment-mechanism-/F510337_en> accessed 5 May 2023.
23 ibid
smelters were commissioned in the EU for the last 30 years as a result of high cost, primary in electricity and labour’.24
It is possible that before climate action became part of the EU’s direct and indirect climate-related external policies, some industrial production had moved to third countries because of lower labour, energy and material costs, i.e. better economic conditions. Today, however, carbon intensity, environmental performance and sustainability are becoming part of the economy and, more directly, part of the financial system. At the moment, this is happening mainly in the EU, but it is slowly spreading to third countries. It is becoming a new indirect language of diplomacy, beyond official talks and summits. It will be carried out by economic operators, companies and investors. Will CBAM make foreign production more sustainable? Only time will tell. One of the think tanks associated with the oil industry in Saudi Arabia, in its commentary25 on the potential impact of CBAM, states that ‘Saudi Arabia can align its Circular Carbon Economy strategy and clean hydrogen development plans with this EU climate policy. For example, it could consider implementing a national MRV [monitoring, reporting and verification] strategy for exported products to value the embedded emissions in its exported products. A national carbon fund, based on a carbon export tax, could help Saudi commodities avoid having to pay carbon import taxes to the EU. Saudi Arabia can also use this fund to catalyze domestic investment in carbon capture and underground storage, the production of green hydrogen and renewable energies to achieve its zero-carbon commitment by 2060’.26 The European Commission certainly welcomes this comment, as it confirms the EU’s precise objective and the impact it wants to have on the climate policies of third countries and their industries.
2.2. EU’s fuel quality, vehicle emissions requirements and biofuels blending programmes as examples of indirect external action
Beyond the targeted policy measures and the direct impact of EU energy policy on third countries, European energy, environmental and climate laws and practices influence other countries in more subtle ways. Ideas originating in the EU are sometimes used as an inspiration, a benchmark or a selective example in the internal decisions of third countries. These examples or inspirations do not travel with official policymakers, are not part of the official knowledge transfer in EU-funded initiatives, and are not imposed by regulations. On the contrary – they are only disseminated through individually selected technical
24 ibid
25 Bertrand Rioux and Dongmei Chen, ‘Commentary: Potential Implications of the EU Carbon Border Adjustment Mechanism’ (2022) King Abdullah Petroleum Studies and Research Center <https://www.kapsarc.org/research/ publications/potential-implications-of-the-eu-carbon-border-adjustment-mechanism/> accessed 29 January 2025. 26 ibid 2.
projects, often as a result of independent consultations and technical advice, and are based on well-documented and scientifically sound EU fuel quality and vehicle emissions legislation. The highest level of technical expertise and many years of scientific work, testing and cross-industry cooperation have resulted not only in the EU’s domestic legislative framework, but also in the global recognition of these policies and their adoption by many jurisdictions beyond the EU’s borders. These policies are described below.
a) EU requirements on fuel quality and vehicle emissions requirements
To-date, the world’s fuel quality regulations and vehicle emission standards are based on the research, analysis and expertise gathered in the so-called Auto Oil Programs in Europe, the USA and Japan. The EU Auto Oil Programme developed the concept of a ‘systems approach’, whereby both fuels and vehicles work together as a system and should be improved in parallel to enhance their impact on the environment and air quality, health and the durability and technical performance of vehicles.
In the EU, exhaust emissions from passenger cars were first regulated in the 1970s by Council Directive 70/220/EEC of 20 March 1970 on the approximation of the laws of the Member States relating to measures to be taken against air pollution by gases from positive-ignition engines of motor vehicles.27 This Directive imposed a new requirement on car manufacturers to limit vehicle emissions of carbon monoxide (CO) and hydrocarbons (HC). It was important to regulate CO because of its proven effects on air pollution and health –aggravating existing cardiovascular disease and impairing visual perception.28 HC has respiratory, neurological and carcinogenic effects. It is a precursor of smog.29 According to the European Commission, this first EU legislation on exhaust emissions resulted in a 90% reduction in CO and HC emissions from passenger cars between the 1970s and 1996.30 However, these improvements were offset by an increase in traffic. The European Commission therefore decided to reassess its policy and in 1992 organised a multi-stakeholder conference to discuss future vehicle emission standards. The conference launched the Auto-Oil
27 European Council, ‘Council Directive 70/220/EEC of 20 March 1970 on the approximation of the laws of the Member States relating to measures to be taken against air pollution by gases from positive-ignition engines of motor vehicles’ (1970) 6.4.1970 OJEC L 76 171–91 <https://eur-lex.europa.eu/legal-content/EN/TXT/ PDF/?uri=CELEX:31970L0220&qid=1740139341547> accessed 21 February 2025.
28 G. Rosner, Diesel Fuel and Exhaust Emissions (World Health Organization – International Programme on Chemical Safety – United Nations Environment Programme – International Labour Organization et. al. 1996).
29 ibid
30 European Commission, ‘Communication from the Commission to the European Parliament and the Council on a future strategy for the control of atmospheric emissions from road transport considering the results from the Auto/Oil programme’ (1996) 18.06.1996 COM(96) 248 final 2–41 <https://eur-lex.europa.eu/legal-content/ EN/TXT/PDF/?uri=CELEX:51996DC0248> accessed 29 January 2025.
Programme, which resulted in new air quality targets for Europe and a plan to achieve them. The plan was based on the results of the Auto Oil research programme – the European Programme on Engines, Fuels and Emissions (EPEFE)31 – which combined the resources and expertise of the automotive and fuel industries to provide a deep understanding of the relationship between engine technology, fuel quality and vehicle emissions. EPEFE carried out more than 2,000 emissions tests on petrol and diesel fuels burned in different types of vehicles.32 The aim of the programme was to identify and implement measures to reduce road traffic pollution, with particular emphasis on nitrogen oxides (NOx), sulphur oxides (SOx), particulate matter (PM), lead and tropospheric ozone forming emissions. Their effects on air quality and health are well documented by the World Health Organization. NOx is a respiratory irritant and impairs visibility. It is also a precursor of photochemical smog and acid rain. It also has an indirect impact on climate change through its role in ozone formation.33 SOx cause respiratory and visibility problems, have a long atmospheric lifetime and lead to widespread acidification.34 PM is hazardous to human health due to its effects on cardiovascular, pulmonological and reproductive systems.35 Volatile organic compounds (VOCs) and NOx are precursors of ozone and secondary organic aerosols in the presence of sunlight. In humans, they cause memory loss and respiratory irritations.36
As a result of the research, the European Commission proposed two sets of measures. The first set of measures focused on vehicle technology and included: (1) new exhaust emission limits for CO, HC, NOx, HC+NOx, PM and (2) the introduction of on-board diagnostic (OBD) systems. The second set of measures focused on fuels and included limits for petrol and diesel quality characteristics such as sulphur, vapour pressure, olefins, aromatics, benzene, oxygen, cetane, density, poly-aromatics.37 Below is a brief explanation of why these fuel characteristics are so important and why the EU decided to regulate them.
31 A. Petit, J. G. Jeffrey, F. H. Palmer and R. Steinbrick, ‘European Programme on Emissions, Fuels and Engine Technologies (EPEFE) – Emissions from Gasoline Sulphur Study – The Engineering Society for Advancing Mobility Land Sea Air and Space, International Spring Fuels & Lubricants Meeting Dearborn Michigan 6–8 May 1996’ (1996) SAE International <https://saemobilus.sae.org/papers/european-programme-emissions-fuels-engine-technologies-epefe-emissions-gasoline-sulphur-study-961071> accessed 29 January 2025.
32 ibid 10.
33 G. Rosner, Diesel Fuel and Exhaust Emissions (n 28).
34 ibid
35 ibid
36 ibid
37 European Automobile Manufacturers Association, Alliance of Automobile Manufacturers, Engine and Truck Manufacturers Association, Japan Automobile Manufacturers Association, Worldwide Fuel Charter 2013 (5th edn, ACEA 2013).
Sulphur has a significant impact on vehicle catalysts, which help reduce emissions of HC, CO and NOx. The lower the sulphur content, the better for the catalyst. In modern vehicles, which are required to reduce NOx and CO 2 emissions and are therefore equipped with three-way catalysts, the sulphur content can only be minimal.38 Olefins in petrol can cause deposits in the engine intake system and their evaporation into the atmosphere contributes to ozone formation,39 Aromatics in petrol can also lead to deposit formation. EPEFE has shown that reducing aromatics reduces CO 2 40 Benzene in petrol is carcinogenic.41 Cetane in diesel ensures easy ignition and affects NOx emissions. Density affects diesel injection timing emissions and fuel consumption. Polyaromatics in diesel are regulated due to their carcinogenic effects on human health.42
b) Biofuels programme
The longest known and most significant history of ethanol use as a transport fuel is in Brazil, where it was introduced as a fuel in the 1970s in response to the global oil crisis. As early as 2005-06, Brazil reported that its domestically produced sugarcane-based ethanol accounted for 44% of total gasoline consumption.43 Ethanol blends in the Brazilian market vary between E20-25 (20-25% by volume of ethanol blended with petrol), E85 (85% of ethanol blended with petrol) or E100 (almost 100% of ethanol sold as a neat fuel). Vehicle manufacturers are adapting their vehicles to the Brazilian market, offering so-called flex-fuel vehicles (FFVs) with materials and mechanical parts adapted to run on high ethanol blends. These technical aspects of vehicle compatibility were among the most important covered in the final report.
Ethanol is ethyl alcohol produced from starch- or sugar-based feedstocks, including wheat and maize (the main feedstocks in Europe), corn (the main feedstock in the US) or sugar cane (the dominant feedstock in Brazil), which can be blended with fossil-based petrol. There are several reasons for blending ethanol with petrol. The most important is that ethanol is produced from renewable feedstocks, which are less harmful to the environment than fossil-based feedstocks (crude oil), especially when produced from alternative feedstocks
38 ibid 30.
39 ibid 31.
40 ibid
41 ibid
42 ibid
43 Ministry of Mines and Energy and Empresa de Pesquisa Energetica EPE, ‘Brazilian Energy Balance 2007: Year 2006 Executive Summary’ (2007) Ministerio de Minas e Energia – EPE.
such as crop residues or wood chips (so-called cellulosic feedstocks). They are less harmful to the environment because the CO 2 emissions released when the fuel is burned in a car are offset by the CO 2 captured when the plants (feedstocks) from which ethanol is made grow. According to research and studies by the Argonne National Laboratory in the US, corn-based ethanol can reduce CO 2 emissions by 40% compared to fossil petrol, and by 88108% if advanced cellulosic feedstocks are used.44 In Europe, researchers are finding similar results. According to the European ‘Well-to-Wheels analysis of future automotive fuels and powertrains in the European context’, the average GHG emissions of the ethanol blend in the EU were 52gCO2-eq/MJ in 2017 and are projected to fall to 44gCO2-eq/MJ in 2025 and beyond.45 This is around 45% lower than the emissions from fossil-based petrol in the EU.
Another feature of ethanol is that it has a higher octane rating than petrol. A higher octane number improves the fuel’s anti-knock properties, making it easier to start the engine and easier to drive. On the other hand, ethanol has a lower energy content, i.e. lower fuel efficiency. Typically, ethanol is added to petrol at a level of 5-10%, which is considered a safe limit compatible with the existing vehicle fleet.
In the EU, fuel quality legislation began to regulate ethanol in petrol in the early 2000s.46 Initially, ethanol blends were limited to 5%, and in 2010 the limit was raised to 10%. This was preceded by a very lengthy process of preparation and consultation. Discussions on the proposal to amend the so-called Fuel Quality Directive,47 which is linked to another
44 Michael Wang, Uisung Lee, Hoyoung Kwon and Hui Xu, ‘Life-Cycle Greenhouse Gas Emission Reductions of Ethanol with the GREET Model. Presentation at the 2021 National Ethanol Conference, February17, 2021’ (2021) Alternative Fuels Data Center <https://afdc.energy.gov/files/u/publication/ethanol-ghg-reduction-with-greet. pdf> accessed 9 May 2023.
45 European Commission Joint Research Centre, Matteo Prussi, Marta Yugo, Luis De Prada, Monica Padella, Robert Edwards and Laura Lonza, JEC Well-To-Wheels report v5. Well-to-Wheels Analysis of Future Automotive Fuels and Powertrains in the European Context (Publications Office of the European Union 2020) <doi:10.2760/959137> accessed 29 January 2025.
46 European Parliament, ‘Directive 98/70/EC of the European Parliament and of the Council of 13 October 1998 relating to the quality of petrol and diesel fuels and amending Council Directive 93/12/EEC’ (Fuel Quality Directive) (1998) OJ L 350 28.12.1998 58–68 <https://eur-lex.europa.eu/resource.html?uri=cellar:9cdbfc9b-d814-4e9e-b05d-49dbb7c97ba1.0008.02/DOC_1&format=PDF> accessed 29 January 2025.
47 European Parliament, ‘Directive 2009/30/EC of the European Parliament and of the Council of 23 April 2009 amending Directive 98/70/EC as regards the specification of petrol, diesel and gas oil and introducing a mechanism to monitor and reduce greenhouse gas emissions and amending Council Directive 1999/32/EC as regards the specification of fuel used by inland waterway vessels and repealing Directive 93/12/EEC (Text with EEA relevance)’ (Fuel Quality Directive II) (2009) OJ L 140 5.6.2009 88–113 <https://eur-lex.europa.eu/legal-content/ EN/TXT/PDF/?uri=CELEX:32009L0030> accessed 29 January 2025.
piece of legislation on renewable energy48 described in the text below, lasted almost three years and were among the longest regulatory negotiations in the modern history of EU fuel and transport policies.
In 2007, the European Commission proposed a package of legislative initiatives to promote the reduction of greenhouse gas emissions and the uptake of renewable energy in various energy-intensive sectors. Some proposals were specific to the transport sector and the decarbonisation of fuels. These included a revision of the above-mentioned Fuel Quality Directive to encourage greater use of renewable fuels, i.e. ethanol in petrol and biodiesel in diesel, to reduce life-cycle GHG emissions from fuels. Renewable energy in transport and certain other sectors became the subject of a new legislative proposal – the Renewable Energy Directive (also known as RED).49 This Directive required Member States to achieve a 20% share of renewable energy in the EU’s overall energy mix by 2020, including 10% in the transport sector in each EU country. The Fuel Quality Directive, with its increased biofuel blends, including a 10% limit for ethanol in petrol, was consistent with the renewable energy target of the Renewable Energy Directive. The latter included significant new requirements for renewable fuels to count towards the target. These requirements were an important element in the negotiations between the various stakeholders during the legislative process and were the reason why the negotiations were the longest ever.
Firstly, biofuels (e.g. ethanol) have to meet the greenhouse gas savings threshold – their suppliers had to demonstrate that biofuels save at least 60% of greenhouse gas emissions compared to the fossil fuel replacement (petrol). The Directive introduced a methodology for calculating the GHG emissions of different types of biofuels. Secondly, biofuels should not be made from feedstocks grown on land that, prior to the cultivation of the feedstock, had one of the following statuses: high biodiversity value, defined as forest or other wooded land, protected area, grassland, land with high carbon stock, defined as wetlands, forested areas or land with trees of a certain height and canopy cover. Thirdly, feedstocks for biofuel production (regardless of country of origin) should come from regions where social sustainability is respected. The European Commission was asked to report on the impact of biofuels policy on the availability of food at affordable prices, on respect for land use rights and on whether countries ratified had International Labour Organization
48 European Parliament, ‘Directive 2009/28/EC of the European Parliament and of the Council of 23 April 2009 on the promotion of the use of energy from renewable sources and amending and subsequently repealing Directives 2001/77/EC and 2003/30/EC (Text with EEA relevance)’ (Renewable Energy Directive) (2009) OJ L 140 5.6.2009 16–62 <https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32009L0028> accessed 29 January 2025.
49 ibid
conventions. Verification of compliance with sustainability criteria had to be provided to biofuel suppliers by independent verifiers accredited by accreditation bodies.50
The Renewable Energy Directive did not address the hottest issue at the time, indirect land use change (ILUC). In simple terms, this phenomenon means that because biofuels are produced from feedstocks grown on agricultural land, food demand is met by agricultural production developed elsewhere. This agricultural production can lead to a change in land use (e.g. from pasture to cropland) and therefore to the release of significant amounts of CO 2 51 During the negotiations on the draft Renewable Energy Directive 2007-2009, ILUC was a very contentious issue and stakeholders could not agree on a common approach to regulating it. There were not enough studies, research and analysis to support legislation with science-based evidence. ILUC was another reason why negotiations took so long. The EU finally regulated ILUC in 2015 in Directive (EU) 2015/2013.52
2.3. Case Studies – EU’s indirect impact on third countries
a) Curaçao
Curaçao, a small, beautiful island in the Caribbean, is a constituent country of the Kingdom of the Netherlands with autonomy in all internal affairs.
In 2022, the government of Curaçao launched a project to address fuel quality issues experienced and reported by motorists. They complained that fuel was too expensive given its deteriorating quality and low efficiency, engine stalling, poor acceleration and delayed gear changes. Curaçao’s Minister of Economic Development set up a working group that brought together government representatives, representatives of the fuel value chain and vehicle owners. The working group sought solutions to the reported fuel quality problems. After analysing the fuel market in Curaçao, advisors identified several critical issues that, if addressed, could significantly improve fuel quality on the island. The EU’s history and extensive work on technical and regulatory aspects related to petrol and diesel quality characteristics was an important building block in Curaçao’s new fuel roadmap.
50 Renewable Energy Directive (n 48) Art. 17–19.
51 European Commission ‘Indirect Land Use Change (ILUC)’ (2012) EC Press Corner Memo 12_787 <https:// ec.europa.eu/commission/presscorner/detail/en/memo_12_787> accessed 29 January 2025.
52 European Parliament, ‘Directive (EU) 2015/2013 of the European Parliament and of the Council of 9 September 2015 amending Directive 98/70/EC relating to the quality of petrol and diesel fuels and amending Directive 2009/28/EC on the promotion of the use of energy from renewable sources (Text with EEA relevance)’ (2015) OJ L 239 15.9.2015 1–29 <https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32015L1513> accessed 30 January 2025.
In August 2023, Curaçao’s Council of Ministers adopted new fuel quality guidelines that incorporated EU fuel quality requirements equivalent to Euro 4 vehicle emission standards. As explained in the previous section of this article, thanks to the extensive existing research supporting the EU’s fuel quality regulations, the Curaçao government had the necessary certainty and confidence to regulate fuels in a similar way to the EU.
This is an example of how the EU can influence third countries without deliberately trying to do so. The implementation of EU-based regulations opens up the market for European vehicles and other mobile machinery because they are compatible with fuels of regulated quality. It also contributes to the reduction in exhaust emissions that has been observed in the EU over the last decades, which in turn improves air quality and the environmental footprint.
b) Zimbabwe
Until December 2022, Zimbabwe was the only African country blending ethanol with petrol at a level of 20%. In December 2022, Zambia is also reported to have introduced ethanol blending in the country.53
In 2012, the Zimbabwe Energy Regulatory Authority (ZERA) commissioned an expert study to advise the government on the technical and economic viability introducing ethanol blends into the country’s petrol pool. The author of this paper was part of the group of consultants selected to provide the expertise. The next part of the paper is based on her own experience of working on the project.
In 2012, ZERA, the newly established national authority responsible for regulating the entire energy sector in the country, was under the leadership of the opposition party led by Morgan Tsvangirai. In 2009, he had agreed to form a coalition government with his political opponent and Zimbabwean President Robert Mugabe.54 Tsvangirai became Prime Minister and some ministries, including ZARA, were in the hands of his political associates.
ZERA officials wanted an unbiased expert opinion on the use of ethanol to better understand whether Zimbabwe was ready for high ethanol blends and what conditions needed to be met to ensure a smooth introduction of high ethanol blends in the country. The reason for
53 Philip Chisalu, ‘OMCAZ Warns Against Illegal Blending of Petrol and Ethanol’ News Diggers (1 November 2022) <https://diggers.news/business/2022/11/01/omcaz-warns-against-illegal-blending-of-petrol-and-ethanol/> accessed 10 May 2023.
54 The Economist, ‘Bailing out Bandits’ (9 July 2016) <https://www.economist.com/middle-east-and-africa/2016/07/09/ bailing-out-bandits>; Krystian Chołaszczyński, ‘Afrykański model autorytaryzmu – Zimbabwe czasów Roberta Mugabe’ [An African Model of Authoritarianism – Zimbabwe under Robert Mugabe] Geopolityka.net (30 December 2011) <https://geopolityka.net/tag/krystian-cholaszczynski/> both sources accessed 9 May 2023.
commissioning the study was that Zimbabwe already had an ethanol production plant that had been operating in the Chipinge region since 2011 – Green Fuel – and its owners had been lobbying the government (ZERA) to allow the sale of ethanol as a fuel in the country. Essentially, ethanol production had started before there were any specific plans or demand for ethanol in Zimbabwe. The owners of the ethanol plant were said to be sympathisers of Mugabe’s ZANU-PF party,55 which was not directly running ZERA at the time. As the ethanol story unfolded, this element proved very important to the country’s biofuel policy.
In early 2013, ZERA received a detailed consulting study on ethanol with clear recommendations that high blends should not be introduced in Zimbabwe at that time. The country’s vehicle fleet was not fit to run on more than 5% ethanol, and the government and ethanol producers lacked economic, social and technical impact assessments. The report referred to research and studies on the subject in countries with a longer history and experience with biofuels and ethanol in particular, with the hope that these good examples and lessons from the past would be used to the benefit of the new renewable fuel market in Zimbabwe.
The above considerations were shared with ZERA. It was clear that the introduction of high-level ethanol blends in the country should trigger discussions on all aspects related to technological readiness, infrastructure, financial implications, land-related and social implications, etc. A proper impact assessment was needed. Members of Tsvangirai’s party and his cabinet rejected rapid mandatory blending of ethanol at 10% or above,56 instead allowing E5 blending, much to the disappointment of the ethanol producer – Green Fuels. Selling ethanol domestically was the only way the company could make a profit, as it could not export to any of the regions with biofuel mandates. This was because the owner of Green Fuels was on the US and EU sanctions list as a supporter of the Mugabe regime.57 The Republic of South Africa, a neighbouring country with a biofuels policy, would also not buy ethanol from Zimbabwe because its policy was based on the rule that only domestically produced biofuels could be marketed. There was no international market for Zimbabwean ethanol.
55 VOA News, ‘Police Arrest Chisumbanje Villagers in Rautenbach Land Row’ (9 January 2013) <https://www.voazimbabwe.com/a/chisumbanje-villagers-arrested-police-macdon-investment-green-fuel/1580725.html> accessed 9 May 2023.
56 Thabo Bhebhe and Gemma Ware, ‘Zimbabwe’s Blend of Ethanol and Politics’ The Africa Report (27 May 2013) <https://www.theafricareport.com/5708/zimbabwes-blend-of-ethanol-and-politics/> accessed 7 May 2023.
57 Juliette Garside, David Pegg and Holly Watt, ‘Alleged Mugabe Cronies Kept Offshore Firms Years after UN Alert Raised in Panama Papers: A Special Investigation Zimbabwe’ The Guardian (6 April 2016) <https://www.theguardian. com/news/2016/apr/06/mugabe-zimbabwe-john-bredenkamp-billy-rautenbach-offshore-sanctions-panama-papers> accessed 7 May 2023.
Just a few weeks after ZERA received the final expert report on ethanol, Zimbabwe held its 2013 elections.58 Mugabe was declared the winner and the era of Mugabe and Tsvangirai joint government came to an end. ZERA’s political leadership was replaced by Mugabe’s ZANU-PF.59 Almost overnight, the new government introduced a new fuel law allowing high blends of ethanol. The level fluctuates according to the production of ethanol at Green Fuel’s plant. Green Fuel has secured demand for its expensive ethanol in Zimbabwe.
The decision was not supported by any market, social or economic assessments. The Green Fuel project sparked a great deal of controversy.
Green Fuel owns two sugar cane plantations – 9,000 hectares in the Chisumbanje Estate and 3,500 hectares in the Middle Sabi Estate.60 On its website,61 the company claims that the ethanol project benefits the country and the local community in many ways, including job creation, as it employs over 3,000 people, and technical and infrastructural development in the region, such as roads, schools, churches and social services. They also claim that 10% of the land planted to sugar cane is distributed to smallholders for their own use. This will increase to a total of 5,000 hectares and benefit 10,000 families once the project is completed. The company also claims that the use of ethanol in Zimbabwe contributes to fuel security reducing dependence on imported petroleum products and saving approximately US$3.8 million per month. Their website also falsely claims that ‘the use of ethanol in the place of unleaded petrol decreases harmful greenhouse gas emissions by up to 90%’.62 As explained in previous chapters, both US and EU research studies show that, depending on the feedstock used, ethanol can reduce greenhouse gas emissions by about 40-50% compared to gasoline, unless it is made from cellulosic or waste material. In this case, the reductions can be higher. However, this is not the case with Green Fuel’s production, which is based on sugar cane.
58 BBC, ‘Zimbabwe Election 2013: Voting Around the Country’ (31 July 2013) <https://www.bbc.com/news/ world-africa-23517601> accessed 6 May 2023.
59 Brian Raftopoulos, ‘The 2013 Elections in Zimbabwe: The End of an Era’ (2013) 39(4) Journal of Southern African Studies 971–88 <https://www.tandfonline.com/doi/abs/10.1080/03057070.2013.862101> accessed 7 May 2023.
60 Green Fuel, ‘Our Estates’ <https://www.greenfuel.co.zw/our-estates/> accessed 7 May 2023.
61 <https://www.greenfuel.co.zw> accessed 7 May 2023.
62 Green Fuel, ‘Our Vision’ <https://www.greenfuel.co.zw/our-vision/> accessed 7 May 2023.
The company says on its website that ‘ethanol blends up to 25% (i.e. 25% ethanol, 75% unleaded petrol) can be safely utilised in all petrol vehicles without any modification’.63 This is a false statement. Vehicles need to be technically adapted to run on E20 or E25. In Europe, where E10 (10% ethanol and 90% petrol) is sold in several countries, car manufacturers regularly update their list of E10-compatible models,64 as not all models can run on E10. For this reason, all countries maintain the conventional E5 grade (maximum 5% ethanol) as a safeguard to ensure that all drivers have access to fuel that is compatible with their cars.
As mentioned above, news articles about Green Fuel show that the project has been controversial. One of them reported that several villagers from Chisumbanje had been detained by the police after trying to reclaim land they claimed had been forcibly taken by the ethanol plant.65 The villagers took their case to court. During research on the ethanol project in Zimbabwe, Green Fuel representatives stated, without giving details, that some small farmers had to be relocated to land outside the plantation in order for the plantation to start. According to reports, 187 families moved to Mozambique after Green Fuel took over the land. Green Fuel claimed that all compensation had been paid.66
Biofuel projects are growing and expanding around the world, bringing benefits countries and local communities. They can be of great value if biofuels are produced from locally grown feedstocks or locally collected and processed waste and residues, and if they are carefully assessed in terms of their impact on the land, the local community, the food system and greenhouse gas emissions. Here the EU’s extensive research and sophisticated regulations can serve as a help, inspiration or example. Had the Zimbabwe ethanol project been preceded by a thorough analysis, verified by an independent third party, it could have been an outstanding development in this part of the world. But it wasn’t, and it became a symbol of the ambiguous involvement of business in politics at the expense of science and technical impact assessment.
63 Green Fuel, ‘Ethanol and your Vehicle’ <https://www.greenfuel.co.zw/ethanol-and-your-vehicle/> accessed 7 May 2023.
64 European Automobile Manufacturers’ Association, ‘E10 Petrol Fuel: Vehicle Compatibility Check List (2021 Update)’ (2021) ACEA <https://www.acea.auto/publication/e10-petrol-fuel-vehicle-compatibility-list-2021-update/> accessed 31 January 2025.
65 VOA News, ‘Police Arrest Chisumbanje Villagers in Rautenbach Land Row’ (n 55).
66 Thabo Bhebhe and Gemma Ware, ‘Zimbabwe’s Blend of Ethanol and Politics’ (n 56).
3. ConClusions
The EU is undoubtedly at the forefront of global environmental and climate change policies and regulations. The Union was the initiator of the first regulations on the sustainability aspects of renewable energy, to ensure that the replacement of fossil energy is not equally damaging to the environment. Its extensive research and regulatory approaches can be used by third countries. And they are often used as sources of reliable information and scientific background. In this indirect and unintentional way, the EU is influencing decision-makers, industries and societies in third countries without any targeted diplomatic action. This was demonstrated by the successful example of Curaçao and the opposite – the missed opportunity in Zimbabwe.
The role of technical and regulatory expertise will grow in the future. The EU’s climate and energy regulatory framework has expanded enormously and become very sophisticated. It continues to influence third countries through measures such as CBAM, which are designed to influence the behaviour of decision-makers and economic operators in a particular way. Equally, it continues to influence third countries through the advice and expertise developed in the EU based on years of research and analysis in the fields of environment, energy and climate change mitigation. The language of technical, regulatory and market intelligence can be as powerful as the language of diplomacy, sometimes more so, because it can show the real impact of policies.
B i B liography
Books – artiCles – reports
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College of europe | ul. nowoursynowska 84, 02-797 warszawa Poland
The College of Europe, established in 1949 in Bruges and in Natolin in 1992, is the oldest postgraduate institute of European Studies.
Every year, nearly 130 graduates from the world’s top universities in more than 30 countries come to study at the College of Europe in Natolin. Most of them are citizens of the EU or neighbouring countries. Natolin’s unique, bilingual (English-French) European Interdisciplinary Studies programme enables them to study at the highest level, learning from an international group of some of the most eminent lecturers and experts coming from 24 countries. No two students in one promotion follow the same curriculum, as the College of Europe in Natolin offers a fully personalised, intercultural learning experience.
Since the beginning of its existence, the College of Europe in Natolin has specialised in issues of EU enlargement and strategies towards its neighbours.
In 2018, the College of Europe in Natolin unveiled an innovative initiative – the Nests. These are distinct thematic units operating beyond the European Interdisciplinary Studies programme. To guide students towards tackling pressing issues with tangible solutions on critical topics like energy and climate, migration, media and disinformation, digital transformation, geostrategy, and religion and politics, the Nests serve as incubators for fresh perspectives and actionable insights.
Mentored by accomplished practitioners, each Nest is a breeding ground for Natolin Transforming Ideas. This publication gives students of the College of Europe in Natolin an opportunity to share their ideas and perspectives, to shape today’s global challenges into tomorrow’s solutions.
