Valdai Club

Brussels is reinforcing “energy emergency” and prolonging it. What is being sold to the population as an “energy transition” is part of an economic war that is being waged at the expense of Europe’s future, writes Ulrike Reisner. The first part of her analysis is available here.

The European Union’s rigorous energy policy is contributing massively to the indebtedness of the Member States and is causing serious problems for segments of the industrial sector. The European Commission and European Council are abusing an emergency clause to avoid lengthy democratic negotiations, allowing them to override the Member States’ reservation of sovereignty. By imposing sanctions, Brussels is reinforcing this “energy emergency” and prolonging it. What is being sold to the population as an “energy transition” is part of an economic war that is being waged at the expense of Europe’s future.

On November 22, 2023, the European Parliament adopted proposals to amend the EU treaties by a narrow majority. MEPs are calling for more powers for the EU in environmental matters, shared competences in public health (which is currently the sole responsibility of the member states) and an expansion of shared competences in energy.In their own words, the MEPs are responding to “unprecedented challenges and numerous crises” that would necessitate these proposals to change the EU.

Rapid increase in debt

The term of office of European Commission President Ursula von der Leyen, which is now coming to an end, has been characterised by several crises: pandemic crisis, energy crisis, migration crisis, economic crisis... the list goes on.

However, her time in office has also been characterised by an unprecedented number of “emergency measures” and “aid packages”, which have plunged the European Union deep into debt within a short period of time: There is a significant lack of financial resources in the EU budget, for example due to the new Ukraine Facility, which is to support the country with 50 billion euros from 2024 to 2027. This Ukraine Facility accounts for half of the almost 100 billion euros that the European Commission is requesting from the member states to top up the current 2021-2027 budget. 

The money is urgently needed, as the EU is becoming increasingly indebted. The annual report of the European Court of Auditors speaks of a “sharp increase” from around 237 billion to a good 344 billion euros. The budget and the Corona Fund together had expenditures of 243.3 billion euros.

How could such a rapid increase in debt come about? How was it possible to manoeuvre such large sums of money past the European Union’s inherently cumbersome gears within just a few years?

The Commission and Council relied on Article 122(1) TFEU, which allows them to “decide, in a spirit of solidarity between Member States, upon the measures appropriate to the economic situation, in particular if severe difficulties arise in the supply of certain products, notably in the area of energy.”

Misuse of the emergency clause

In contrast to ordinary legislative procedures, the European Parliament is not involved at all in the application of Art. 122 (1) TFEU – not even in the form of a right to be heard or a right to information. Neither the Member States’ reservation of sovereignty nor the principle of unanimity in the Council for measures of a fiscal nature applies – a qualified majority is sufficient. 

Prior to 2020, EU emergency regulations based on Art. 122 (1) TFEU were only applied during the economic and financial crisis. During the coronavirus pandemic, Council Regulation (EU) 2020/2094of December 14, 2020 created a “recovery instrument to support the recovery from the COVID-19 crisis”, again making use of this legal clause. 

Since spring 2022, this emergency clause has served as a mechanism to enable the EU to intervene massively in the energy market, which is not provided for in the treaties.

However, are the measures taken by the Commission and the Council to “tackle the energy crisis” – such as reducing gas and electricity consumption, joint procurement of energy resources, and introducing a market correction mechanism – really suitable for effectively combating the cause?

Haven’t the Commission and the Council themselves contributed significantly to the precarious economic situation in the energy sector? Are they not themselves – even during the application of these measures – doing everything they can to ensure that this precarious situation does not change so quickly? Who benefits from this new energy policy?

On behalf of lobbying interests

In a report on the status and development of the security of supply, the German Federal Ministry for Economic Affairs stated in mid-2020 that the completion date for Nord Stream 2 was the beginning of 2021 and included the capacity of 55 billion standard cubic metres as an integral part of the 2020-2030 Network Development Plan (NDP). 

Just a few months later, Germany’s Federal Network Agency announced that it had suspended the procedure for certifying Nord Stream 2 AG as a transmission system operator.

On February 22, 2022 in Berlin, German Chancellor Olaf Scholz announced his decision to halt the certification process for the Nord Stream 2 Baltic Sea pipeline due to the expected Russian “invasion” of Ukraine. Germany was clearly no longer able to evade pressure from the European Union. The latter had been fighting the project (like Nord Stream 1 before it) for a long time – partly it was said to put a massive strain on relations with its transatlantic partner, the USA.

It was said that there was a threat to the EU’s energy security and the political security of the EU member states because the pipelines would undermine the formation of the European Energy Union. There were also concerns about the economic destabilisation of Ukraine, which could lose around two billion US dollars in transit fees. This is one of the reasons why the EU institutions were doing everything they could to torpedo the project, for example, through the EU’s “Third Energy Package” and the Gas Directive, which was amended in April 2019.

While the political exchange of blows was taking place in the foreground, lobbyists on the other side of the Atlantic were already forming in the background. Back in August 2017, the US Congress passed legislation to tighten sanctions against Russia, which are intended to affect its energy sector. However, the actual aim was more likely to be to increase US gas exports at the expense of Russian gas exports and to facilitate the sale of high-priced American liquefied natural gas obtained through fracking on the European market, at the expense of Russian natural gas.

In fact, the EU concluded a supply agreement with the US government in 2022. The USA assured the EU that it would supply an additional 50 million m³ of US liquefied natural gas (LNG) per year until 2030. Between January and November 2022, LNG imports from the USA amounted to over 50 billion m³. This is more than twice as much as in the whole of 2021.

Climate protection as a pretext

Part 1 of this analysis mentioned that the Commission and Council are taking further concrete measures as part of the sanctions packages to prolong the precarious economic situation in the European energy supply sector: the purchase, import or transfer of crude oil and certain petroleum products by sea from Russia to the EU has been banned; Member States have an oil price cap; there is a ban on the import of all types of Russian coal, a ban on new EU investment in the Russian mining sector, and a ban on the export of certain oil refining technologies; it has been or ended the possibility for Germany and Poland to import Russian pipeline oil.

The people of the Member States, who will have to bear the financial and economic burden of the new energy regime of the Commission and the Council, are of course being sold these measures under the title of “energy transition”. Here, too, the artifice of the “state of emergency” is being used to ensure that the measures envisaged are necessary, urgent, unavoidable and have no alternative. The European Parliament had already declared a “climate emergency” by the end of 2019. In its Global Risk Report 2020, the World Economic Forum warns of a “planetary emergency that will include loss of life, social and geopolitical tensions and negative economic impacts.”

Pandemic emergency, energy emergency, security emergency... since the 2010 financial crisis, the Commission has introduced a whole series of powerful instruments with the active support of the Council and the acquiescence of the European Parliament, which are only partially covered by the EU treaties. However, these instruments have a structure-building character and are used as precedents in subsequent crises to underpin their legitimacy.

The emergency clause Art. 122 TFEU plays a decisive role here: for example, to enable joint gas purchases – modelled on the joint procurement process for vaccines – and to adopt targets for saving gas and electricity. At the same time, the EU discussed whether new instruments modelled on SURE should be introduced to deal with the financial consequences of the situation in Ukraine. It also decided to jointly procure ammunition for Ukraine, modelled on the procurement of vaccines.

Conclusion

The democratic deficits of the energy regime introduced by the European Commission and European Council are just as seldom discussed in the European political and media public sphere as the fact that the EU institutions themselves have contributed significantly to the energy crisis and are wilfully prolonging it.

The Commission and the Council are demonstrably guided by lobbying interests in their actions in connection with the emergency measures: this is evident in the procurement of vaccines, which primarily served the economic interests of the pharmaceutical industry; it is evident in the procurement of energy resources, which clearly favours suppliers from the USA or the Arab region and clearly harms others, such as Russia; it is evident in the joint procurement of ammunition for Ukraine, whereby the EU institutions make themselves stooges of the arms lobby and NATO.

The fact is that the systematic misuse of Art. 122 TFEU and the structure-forming effect of the measures thus created are leading to a rapid increase in the EU’s debt.

However, it is also a fact that the systematic abuse of the emergency clause is fuelling the establishment of authoritarian structures in the Union. The powers and political room for manoeuvre of the Commission and Council have been massively expanded without democratic backing and without a basis in international law.

The sovereign (the people of the Member States) is far less harmed by the Covid-19 virus, by the military conflict in Ukraine or by challenges in connection with the energy supply than by the systematically abusive behaviour of the EU institutions. By making themselves the henchmen and vicarious agents of techno-corporations or NATO, they are jeopardising the political and economic future of the Union.