The European Union’s climate agenda is currently in a state of disarray. The Green Deal, a critical initiative with the critical objective of reducing carbon emissions within the bloc by 55% by 2030, had a strong start with the passage of several significant legislation. Beginning in 2035, these measures included a prohibition on the sale of new combustion-powered vehicles and a carbon border tax. Nevertheless, Europeans are becoming more adamant about opposing environmentally restrictive policies whose advantages they find difficult to understand.
The European Union’s power sector is currently experiencing a concerning influx of Chinese and American firms, which is a less-discussed yet equally significant threat to the bloc’s energy and ecological transition.
Energy: How to Recover Our European Ambition (published in French) is a book that sheds light on a neglected issue that will significantly influence the energy strategy of the European Union in the lead-up to the European elections. It encourages the bloc to conduct a comprehensive assessment of the equilibrium between cooperation and competition in the context of sovereignty.
With regard to Europe’s energy sector, China
Despite the absence of quantitative data on China’s share of the European energy market at this time, it is widely recognized that the country is the source of 80% of the global manufacturing capacity for sustainable technologies across 11 segments, including a variety of lithium-ion battery components and solar wafers.
Chinese investors made significant investments in sectors that have historically been classified as “sovereign,” such as power transmission and distribution infrastructures, in order to take advantage of the sovereign debt crisis in Europe during the early 2010s. As of March, the State Grid Corporation of China (SGCC), also known as the State Grid, was the fourth-largest corporation in the world in terms of revenue, trailing only Walmart, Saudi Aramco, and Amazon. It was one of the most significant entities among them. Three Gorges Corporation, which operates the most extensive hydroelectric power complex globally, is also acquiring prominence.
In 2010, Three Gorges Corp. emerged as the winner of the tendering procedure for the 21% stake in EDP-Energias de Portugal SA that belonged to the Portuguese government. During the interim, SGCC expanded its influence in Italy by forming a partnership with the Italian government in 2014. This allowed the organization to obtain a 35% stake in the CDP Reti fund, which in turn granted it a blocking minority at both Terna, an electricity transmission network operator, and SNAM, the local gas network operator. In the same vein, State Grid made substantial strides in Greece in 2016 by acquiring a 24% stake in the national electricity transmission network operator from the Greek government.
Despite the fact that the Portuguese, Italian, and Greek circuits were the primary destinations, Chinese investors have also made investments in Luxembourg. Europe has been inundated with solar panels and electric vehicles (EVs) that are economical and produced by China’s green technology sector.
The EU energy sector is being penetrated by the United States.
The stakes are elevated by the fact that the EU’s energy strategy, which was poorly designed, has resulted in the United States and China competing for advantages.
On a global scale, or more specifically, within the European Union, the energy predominance of the United States has not been diminished by the conflict between Russia and Ukraine. Undoubtedly, the European Union promptly implemented sanctions against its longstanding trade partner in order to reduce its reliance on Russian gas, despite the fact that it was anticipated to serve as a transitional fuel during the energy shift, specifically for Germany. In part as a consequence of Moscow’s abandonment of its territory, the United States has emerged as the leading producer and exporter of liquefied natural gas (LNG) to Europe. Europe’s relative competitiveness and appeal to energy-intensive industries are diminished by energy inflation, while the United States benefits from increased trade and decreased domestic energy costs, which further exacerbates the price disparity.
In addition to the aforementioned concerns regarding energy supply, the European Union’s member states are currently struggling to establish a unified vision, which emphasizes the intricacies of strategic autonomy and sovereignty. In an effort to develop small modular nuclear reactors (SMR) of the fourth generation, a European nuclear alliance was established in November 2023, with a particular focus on French corporations. Concurrently, the American Westinghouse Electric Company is collaborating with countries such as Italy, Belgium, and Romania to develop lead-cooled fast reactors.
As John Kerry affirmed in September 2023, the coordination vacuum once again is advantageous to American influence in Europe. As members of the international consortium “Clean Fuel from SMR,” which is headed by American corporations, the Czech Republic, Slovakia, and Poland have been granted financial support and participation in coal-to-SMR feasibility studies. The financial resources and technical proficiency of these European Union member states are the primary reasons why they are seeking American assistance in the construction of new nuclear power facilities. Conversely, the EU continues to maintain its stance of non-support for domestic nuclear initiatives.
Deficiencies in the EU’s net-zero objectives
The bloc’s strategic independence may be significantly impacted by the magnitude of these foreign investments in renewable energy, new nuclear facilities, and infrastructure development, which are occurring at a time when the bloc is undertaking a decarbonization initiative.
Given the fragmented condition of the energy landscape in Europe, these investments have raised concerns about the security of continental energy.
- In the short term, the EU is compelled to seek out alternative foreign partners (excluding Russia) and merely reorient our energy dependence issue as a result of the energy crisis-induced supply issues.
- In the long term, Europe will be required to protect domestic energy manufacturers and utility operators, whom it has previously neglect, in response to Chinese dumping and US protectionism.
Eliminating one dependency without descending into another is the primary challenge facing Europe. EU member states must coordinate and expedite the development of their “green” technologies in place of importing climate-damaging fossil fuels (coal, gas, and oil).
In the direction of ecological sovereignty
These risks necessitate that the bloc assume a greater responsibility for its own energy infrastructure, in addition to paying closer attention to non-EU operators. In doing so, how does it simultaneously advance the ecological Deal’s objective of a “green, secure, and affordable energy supply”?
We recommend that EU member states prioritize the development of energy infrastructures that are truly European in nature. We expect that our electricity grid will be progressively powered by a diverse array of renewable energies as we approach decarbonization. The EU member states are responsible for the development and consolidation of extensive, interconnected networks at the European level, which will be necessary for the implementation of these arrangements.
Financing renewable energy is a second emergency. According to the European Climate Neutrality Observatory’s November warning, the European Union may be unable to achieve its net-zero objectives as a result of a lack of public investment at the EU level in renewable energy and other advancements. Instead of heeding the warning, member states reduced the Strategic Technologies for Europe Platform (STEP), an investment fund that is specifically designated for sustainable technology and renewable energy, by $1.5 billion in February. The two mechanisms proposed in our book to implement a radical shift in approach are a “European sovereign fund” that obtains revenue from carbon pricing and a “European transition savings account” that solicits private savings—a “European sovereign fund.”
The realization of these objectives will be contingent upon the imminent European elections. The development of secure, affordable, and environmentally responsible solutions could be facilitated by the attainment of results that are in line with a more ambitious European objective. In contrast, the bloc’s economic influence and sovereignty may be negatively impacted by an even stronger inclination toward nationalism.
