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Keep Shifting Paradigms: Lessons from Europe on Creating Low-Carbon Energy Security

Rethinking energy policy approaches

We like to say that conversations about energy security, whether in the US or Europe, are constantly evolving. But I am not convinced that the continuous shift in focus, whether it is reducing imports, increasing generation, or integrating markets, constitutes an evolutionary thought process. Instead I believe that this is a symptom of the reactionary nature of energy security policy creation. Energy security often gains traction in policy arenas following geopolitical or natural catastrophes, as we saw during the 2008-09 Russia-Ukraine gas conflict or following the Fukushima nuclear disaster in Japan. Often, however, policies intended to address crises ultimately revert back to existing thought and process paradigms, making fundamental change difficult. Governments tend to return to what is easy or comfortable, more of a security blanket than a revolutionary energy vision. In other words, energy security has become, for many, an excuse to double-down on the status quo.

Complicating these reactionary tendencies is the push for low-carbon energy policies to support climate change mitigation strategies. In order to meet the energy security challenges of the future while continuing to take the necessary steps to minimize the impacts of climate change, we must fundamentally rethink our approaches to energy policies. The reactionary approach will not work any longer.

Throughout the course of the MILESECURE 2050 research project, funded in part by the European Commission’s Directorate General of Research and Innovation, a consortium of researchers developed case studies from several European countries to determine what works, what doesn’t, and what is missing, in order to create a secure, low-carbon energy future in Europe. Our analyses and recommendations will be published as a book by Elsevier in 2016. I wanted to take this opportunity to share three specific paradigm shifts that the consortium has identified. Although these were developed with the project’s intended European perspective, they can be applied to every energy system across the world.

Rethinking interdependence

The confluence of energy, environment and security policies in the European Union not only occasioned the opportunity to implement comprehensive, ambitious reform agendas for the 21^st century, it also served as the historical foundation of the EU itself. From the European Coal and Steel Community, to the 1994 Energy Charter Treaty, to the 2015 International Energy Treaty, the underlying principle of the “European Project” was to achieve regional security through international energy supply coordination and energy market liberalization. This desire to expand the energy map has, however, had the unintended consequence of further insecurity, making energy supply vulnerable to the fluidity of geopolitical tensions.

Two case studies from Africa, DESERTEC and Morocco’s Noor Solar Project, are instructive in redefining multilateral interdependence. The DESERTEC project envisioned capturing solar energy from the Sahara and transmitting electricity across the Mediterranean Sea to southern Europe. Although the plan was developed prior to the 2011 Arab Spring, its vulnerabilities to geopolitical and regional instability are clear. In contrast, the Noor Solar Project is developed and maintained locally, and the energy produced will be used to power local communities. Funding for Noor has come from, among others, the African Development Bank, the World Bank, and the European Investment Bank. By supporting local efforts to build and expand renewable energy initiatives, Europe can broaden the market for renewable infrastructure and technologies, promote reduction of the global trade of fossil fuels, and help create a more interdependent global energy system without compromising its own security.

Decentralization

Much like conventional energy sources, accessible supplies of renewable energy are generally concentrated in specific geographical areas without regard to territorial or political boundaries. This often incentivizes the construction of regional large-scale projects to maximize the productivity of the source, while minimizing the costs of resource extraction or collection. Think of the large oil fields or giant wind parks. Where renewable energy sources are concerned, however, these areas of dense resource concentration frequently entail extreme meteorological conditions—such as intense sun or high winds—which make them at worst uninhabitable or at best physically removed from major centres of consumption, requiring significant investments in storage, transmission, and security.

Looking at two offshore wind parks, the North Seas Countries Offshore Grid Initiative (NSCOGI) and Kriegers Flak in the Baltic Sea, we find that centralized generation continues the old paradigm of supply side-orientation and produces inefficient and inflexible transmission and distribution processes. NSCOGI is essentially a multiplication, if not a scaled-up version, of Kriegers Flak, making the consequences (and costs) much more material. The point-to-point bilateral interconnections rely on increasing supply to or from a specific, central location, rather than balancing distribution based on demand that could be achieved through a systems-oriented, mesh design. Such an approach would require increased coordination among participating nations, but it would streamline efficiencies, making the overall energy system more secure.

III. De-Commoditization

Diversification of the energy markets is occurring at a rapid rate thanks to the integration of renewable sources. The increase in sources requires improved coordination and cooperation for distribution, but it also reduces the number and duration of supply disruptions for consumers, a key factor in measuring the security of an energy system. Further integration of national and regional systems will continue to improve reliability and, therefore, value. Increasing the value of the energy markets thus becomes conditional upon service. Shifting our thinking of the energy market from the use of certain, specific commodities to the integrated services of providing reliability and security through diversity is essential to total energy market integration.

The existing paradigm insists on a capacity or generation focus – in other words looking at economies of scale in the production and distribution process. This has been essential for the renewable energy industry to justify and validate renewables as a viable replacement for fossil fuels. However, it runs counter to the argument for efficiency, and it maintains the idea that bigger is better. In a low-carbon energy system, balance is better. In a secure energy system, flexibility and adaptability are better. The current glut of carbon assets and the interminable volatility of energy markets are built in to the fossil fuel industry’s boom-and-bust cycle, causing insecurity among producers and consumers. A service-oriented approach would end this cycle. Although the de-commoditization of the energy sector may seem counter to market liberalization, seeing service as the real value of an energy system enables energy market expansion. An analogy we often use to make this concept clearer is internet service. Consumers do not pay for the information and communications they see on their screens; they pay a provider for the service of making it available when they want it. There is no reason we cannot envision energy the same way. Rather than paying for consumption, we would be paying for availability and reliability.

Moving towards viable low-carbon energy security

These three paradigm shifts are not absolute; they are also not the only shifts necessary to develop viable low-carbon energy security. But they are part of the essential conversations we need to have as we move to harmonize energy policies, which should be structured to mitigate climate change and provide security of our energy systems. The MILESECURE 2050 research project has developed several insights into the possible ways forward, but the greatest insight any of us can take from our work is that the potential to create low-carbon energy security depends first and foremost on our willingness to reimagine the rules.

Max Gruenig is President of Ecologic Institute in Washington, DC, and Senior Fellow and Coordinator of European Research at Ecologic Institute in Berlin.