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 MULTIDIMENSIONAL NATURE OF THE EU’S ENERGY SECURITY The Case of Caspian Basin Alternative Natural Gas Reserves.

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Presentation on theme: " MULTIDIMENSIONAL NATURE OF THE EU’S ENERGY SECURITY The Case of Caspian Basin Alternative Natural Gas Reserves."— Presentation transcript:

1  MULTIDIMENSIONAL NATURE OF THE EU’S ENERGY SECURITY The Case of Caspian Basin Alternative Natural Gas Reserves

2 What are challenges to energy security of the EU?  Intensifying energy dependence on third party energy supplies as a result of declining indigenous reserves in the backdrop of increasing demand.

3 EU’s natural gas balance New Policies Scenario (implementing declared policy commitments)

4 What are challenges to energy security of the EU?  Escalating dependence on handful number of supplier, especially Russian Federation. In the last decade the EU (especially the Eastern member states) has found itself under the Russian vertical monopoly over the supply of natural gas, which discourages and undermines the European consumers' drive for diversification efforts. At the same time, such a monopolistic position allows Gazprom, Russian state gas company, to set the price for the gas sales and discriminate between the European states in doing so. Consequently, such a market condition causes a rift among the European energy consumers and undermines attempts to establish fully functioning common European energy policy.

5 What are challenges to energy security of the EU?  Difficulty of establishing a single European energy market due to the lack of multiple participants in energy sales, which undermines the liquidity of the markets, especially of natural gas provision. This in turn makes the end consumers vulnerable to the big monopolistic suppliers.

6 What are challenges to energy security of the EU?  Rising energy bills resulting from increasing demand in international markets and recurrent price hikes triggered by cyclical cut offs (or fear of cut offs) in producing regions. Such a threat affects balance of payments of the European governments, which are already in dire economic situation resulting from global economic downturn and the following euro-crisis.

7 What are challenges to energy security of the EU?  Increasing carbon footprint stemming from continuous and intensifying usage of traditional fossil fuels, gradual phasing out of carbon friendly nuclear power plants and technical unfeasibility of switching to no-carbon renewable energy sources once and for all.

8 In light of these risks to the energy security of the EU, the Caspian basin has emerged as a new important energy source for the former. However, dubbing the region important does not reflect the consensus on what makes it so important.

9 LITERATURE Although there is an avalanche of literature on the EU’s energy security, which correspondingly also touches upon the Caspian basin's energy potential (in terms of natural gas reserves), existing studies tend to regard this strategic region as either of enormous potential or of limited potential in terms of its current and prospective future contribution to the EU’s energy security. These studies usually assess the potential of the Caspian natural gas reserves against one of the several pillars (dimensions/facets) of the EU’s energy security needs and then generalise it as an overall analysis of the regions alternative energy potential. To put it simply, they tend to analyze, for example, whether new alternative supplies will diminish the EU’s geopolitical dependence on Russian supplies (e.g. Z. Baran, 2006; S.E. Cornell, 2008; P. Baev, 2008; V. Socor, 2008; E. Suleymanov, 2006 ), or how commercially attractive are these reserves in terms of cost effectiveness vis-á-vis other supply sources, including supplies from Russia (e.g. Mavrakis, 2006; A. Cohen, 2009; R. Jones, 2010; Remme et. al, 2008 ), or how will these new reserves affect the resilience of the EU’s natural gas supplies ( C. Dieckhoner, 2012; M. Bilgin, 2009 ). Others argue against the supply potential of the region or indicate their apprehensions due to geopolitical risks surrounding the Caspian basin ( B. Shaffer, 2010; M. Crandall, 2006; S. Blank, 2011 ).

10 PROBLEMS WITH EXISTING APPROACHES  Such uni-dimensional investigations become a justification of policy recommendations, which do not illustrate the issue in specific terms.  All the more so, quite often, experts in academic literature, as well as those involved in Caspian energy politics engage in “parallel debates”, where one group of experts argue in favour of advantage of this new energy source in one pillar (for example, economic benefits) of energy security, while others show limitations in another one (e.g. security concerns and subsequent vulnerability of regional energy transportation).

11 MY PROPOSAL: MULTI-DIMENSIONAL LENS  When analyzing the potential contribution of the Caspian basin energy reserves, the assessment must refrain from definitive “yes” or “no” answers, as there is not a single common denominator for feeding into different pillars of energy security (of the EU). Instead one should assess it as a four- dimensional chess game, that consists of resilience of supply, geopolitically and economically favourable terms of provision, and finally, environmentally acceptable level of energy security.

12 WHY TO USE MULTIDIMENSIONAL LENS? This research is, firstly, underpinned by the rationale that a simple aggregated answer to the “How can Caspian basin natural gas reserves contribute to the energy security of the EU” question will miss the differential level of contribution potential of the mentioned alternative reserve basin in different pillars of the EU's energy security. Nevertheless, it by no means denote that every pillar of the EU's energy security is independent and that events in one pillar will not affect the others ( e.g. physical cuts of supplies might increase the price of energy and reduce competitiveness, i.e., affect economic dimension), which I will acknowledge and also scrutinise in this PhD. However, if the aim is a comprehensive evaluation of the new alternative energy supply source, then this aim necessitates unpacking of the concept of energy security and looking at the things in more detail. Such a detailed analysis will reveal the advantages and disadvantages of this alternative energy source in different pillars of energy security and minimise bias and partiality in energy literature.

13 WHY TO USE MULTIDIMENSIONAL LENS?  Secondly, this approach might also have policy relevance. Breaking down the concept of energy security might enhance the predictability of the official policy-making by bringing attention to the nodes of energy politics, which might yield the most desirable outcomes. That is to say, if the EU (or individual member states) is more concerned about the political aspects of its energy security and if as a result of a research (presuming an official one) it is revealed that the Caspian basin alternative reserves will be beneficial in this aspect, then it can be expected that the official Brussels (or combination of individual member states and the private businesses) will push harder for reaching out to these reserves. In this case, therefore, "" non-biased” and thorough exploration of the new supply potential is paramount.

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