Insights from Brussels - Green shift without green talk
“Donald Trump has done more to drive the phasing out of fossil fuels than Greta Thunberg.” With this statement, Social Democratic EU parliamentarian Bruno Tobback tried to convince Espen Barth Eide that demand for Norwegian gas in Europe will fall faster than many believe. The claim explains a paradox that characterizes Brussels: There is little talk about climate, but a lot about energy transition.
The Belgian Tobback and the Norwegian Foreign Minister met at a breakfast seminar on oil exploration in the Arctic, in Brussels last week. Barth Eide was in the EU capital to, reportedly , receive criticism for Norway's EEA lag in energy matters. Europe is paying a high price for the war in the Middle East, and energy is once again the number one topic in all European capitals. What kind of policy will the EU use to meet the energy crisis? I have encountered that question everywhere I have been in recent weeks. It was the topic at the Enlit conference in Bergen, where industry players associated with the Green Region Vestland are trying to predict how large the European demand for Norwegian climate technology will be. It was the topic at the Energy Hub Conference in Molde, where the Aukra community and the industry there are planning for the future of the gas plant at Nyhamna. And it was the topic at the annual meeting of the North Sea Commission in Lelystad in the Netherlands, where county council representatives from Møre og Romsdal and Vestland met colleagues from across the North Sea region.
It's been a long time since there were school strikes for climate and rallies for green stocks on the stock exchanges. The political backlash against the climate agenda is evident across Europe, not to mention Donald Trump's USA. It is also being felt in the EU. This applies to everything from symbolic things, such as the planned Industrial Decarbonisation Accelerator Act being named the Industrial Accelerator Act (IAA) when it was presented in March, to more substantive changes. Requirements for climate reporting for companies have been removed. The EU gave in to pressure from Norway and the US and postponed climate requirements related to methane emissions . The requirements for the car industry to transition to zero-emission cars by 2035 have been postponed and eroded. Several governments are also demanding that the Commission grant them more room to manoeuvre to compensate for high energy prices, and there are even murmurs about easing sanctions on Russian gas . A group of member states, led by Italy, have in recent months fought to weaken the European carbon quota system ETS in order to reduce costs for industry.
What seems strange is that the core of the EU's policy for the green transition nevertheless seems to remain. The latest energy crisis even seems to contribute to an intensification of efforts. So far, attempts to erode the emissions trading system have not been successful. A majority of member states believe that it would penalize companies that have already invested in reducing their CO2 footprint. The EU confirmed its goal in March of cutting net greenhouse gas emissions by 90 percent by 2040. A number of new initiatives to accelerate the transition away from fossil fuels are being rolled out this year.
The aforementioned IAA proposes that public procurement and support should help create European markets for its own industrial products made with low or zero emissions. During the summer, the Commission will present an action plan for electrification. It will contain a new electrification target and measures to electrify industry, buildings and transport. Investments in the energy transition will be stimulated through a separate Clean Energy Investment Strategy . Another initiative, the grid package, will accelerate the development and interconnection of grids to make electrification possible. It is this package that is causing headaches for Norwegian and Swedish politicians, with a fight over congestion revenues and attempts to centralize planning that are rejected in both countries. Even where the EU admits that it has changed its position, the reversal suggests that the strategy is to stand firm on the phasing out of fossil energy. Commission President Ursula von der Leyen has called the phasing out of nuclear power in Europe a “strategic mistake” and has launched a strategy for the development of small, modular nuclear power plants .
It cannot of course be ruled out that there will be significant steps that change this picture. This will be particularly true if there is no peace between Trump and the clerical regime in Iran, and the energy shortage becomes even more acute in the coming months. Moreover, it is still the member states that must be responsible for most of the implementation of the energy transition. Both the ability and enthusiasm vary. The flagship, Germany's energiewende , is not on track to achieve its climate goals for 2030 . If the far right were to win the presidential election in France next year, the ideological resistance to anything that smacks of climate policy would strengthen even more. Nevertheless, the main picture is clear for now: Despite the lack of green sentiment, the green direction of energy policy remains. This is due to two words that are now repeated even more often in Brussels than climate was mentioned a few years ago: security and competitiveness .
We are on the way out of a world order characterized by economic globalization and international rules with some authority. The new era is characterized by less cooperation, more contradictions and more competition between the great powers. In such a world, dependence becomes a political weapon. Europe has several such critical dependencies, and they limit the freedom of action of the EU countries. There is a lot of talk about military dependence, but energy is just as important. After the phasing out of Russian gas in the EU, liquid gas from the United States and the Middle East has filled the void. The United States has now overtaken Norway as the EU's largest gas supplier . Energy is thus yet another source of American power over Europe. The price increase after the closure of the Strait of Hormuz shows that dependence on imports from the Middle East also implies European vulnerability. Last week, the EU's energy and defense commissioners issued a stark warning about how Europe's dependence on fossil energy could become dangerous in a war situation .
The EU has also fallen behind in economic competition with the US and China. There are different opinions about what the main reasons are, but there is no doubt that high energy prices are one of them. This is the second reason why it makes sense for the EU to accelerate the energy transition, completely independent of climate policy. It can simply provide cheaper energy and more autonomy. The transition from fossil to renewables gives more control over its own energy supply. And when there is enough non-fossil energy to push prices down, the competitiveness of European companies increases.
What does this mean? West Norway ? Firstly, there is reason to believe that the opportunities within climate technology and renewable energy investments – both in terms of research, investments and other European cooperation – will be great in the years to come. Secondly, that the tensions surrounding the EEA Agreement and energy will not disappear. Energy Union and integration of the power market have proven to have great political explosive power in Norway. Thirdly, Europe's consumption of gas will therefore decrease. But how much and how fast, what should local communities and businesses in West Norway actually plan for? All of this will help shape the future of the region, and VNB should report back on all of this, as thoroughly and early as possible.