The Euro-Mediterranean cooperation

Several regional cooperation projects have been supported by the EU in order to create a more integrated Mediterranean energy market. Yet, all over the years the efforts to create regional market structures have remained curbed. “Earlier initiatives such as the Euro-Arab Dialogue and the Global Mediterranean Policy, introduced in the 1970s, failed to set off meaningful regional energy cooperation, more recent attempts since 1995 have generated little more political engagement in regional energy issues. Both the Euro-Mediterranean Energy Partnership (EMEP), part of the broader Euro-Mediterranean Partnership, and the European Neighbourhood Policy (ENP) have had difficulty in their attempts to institutionalize energy dialogue between European consumers and southern Mediterranean producers, and to lead to the approximation of normative and strategic energy priorities” (Darbouche, 2011).

Energy cooperation under the EMP

During the early years of the 1990s, a favourable regional context and the awareness of the strategic importance of energy in an ever more globalized and competitive world promoted a new European approach to Euro-Mediterranean energy relations.

“In establishing new energy policy guidelines, full account must be taken of globalization and the ‘One WorId’ concept. Better relations with third countries and the development of the international energy dialogue are central aspects, all the more so because some of these trading partners are not politically stable. […]The increased possibilities of trade resulting from these new interconnections will reinforce security of supply throughout the Community”(European Commission, 1995).

Therefore, it was within the embryonic Euro-Mediterranean Partnership framework that energy cooperation issues were definitely introduced.

Despite energy cooperation was not considered a priority as were issues relating to the Middle East peace process, security and political reform (Darbouche, 2011), there was a general recognition of the relevance of energy as an area of cooperation owing to the importance of the region, not only in terms of fossil fuel reserves, but also as a transit area for energy supplies. These are the reasons why EU energy security depended and depends on the social, political and economic stability of MENA countries.

In order to push Euro-Mediterranean cooperation in the field of energy policy, the European Commission set an action programme, whose core was a regional energy forum, which traditionally held its meeting at the level of directors-general. Over the years, the Euro-Mediterranean Energy Forum’s priority remained the convergence of the energy policies of the EU and the Mediterranean partners, the integration of the Mediterranean energy markets and strengthening competition within them, and the promotion of renewable energy sources in the framework of sustainable development (Darbouche, 2011).

However, the EU’s approach within the Euro-Mediterranean energy framework seems to have been insufficient, despite the fact that, according to the former energy commissioner, Andris Piebalgs, €55 million have been allocated to projects in the region to support the gradual integration of the Euro-Med energy markets. In addition, loans for nearly Euro 2 billion have been given by the European Investment Bank to support energy infrastructure priority projects, to complete the electricity and gas links in the region (European Commission, 2006).

Non-EU EMP countries originally welcomed energy cooperation. Nevertheless, EU’s Gas directive, entered into force in 2000, by liberalizing the internal gas market, undermined gas exporting countries’ interests. Especially, the state-owned gas companies in North Africa felt threatened by the impact the liberalization could have on their existing margins, market shares and the future of long-term contracts which had traditionally spread the risk of capital-intensive projects fairly between producers and consumers through price and volume mechanisms. Southern Mediterranean countries also complained of the uncooperative approach adopted by the European Commission in the formulation of the new legislation (Darbouche, 2011).

As a result, the Euro-Mediterranean Energy Partnership failed to reconcile producers and consumers’ interests, so, by then, its dimension was inevitably and gradually elided.

The ENP and energy security in the Mediterranean

As soon as the ENP was outlined, The EU set out to build an energy community inspired to the idea of ‘wider Europe’, shaped on the acquis communautaire. “Trade and investment are vital to improving economic growth and employment. Ensuring secure and sustainable energy supplies will call for additional, vast investments in Russia, the WNIS (Western Newly Independent States) and the Mediterranean. At the same time, economic diversification towards labour-intensive, employment-creating industries and services are urgently needed, not only in relatively resource-poor countries, such as Ukraine, Moldova and Morocco, but also in energy-rich countries, such as Algeria and Russia. Energy dominates imports from both regions, more so for trade with Russia than from the WNIS and the Southern Mediterranean, where textiles and agricultural produce represent a considerable share of imports from certain countries (Moldova, Morocco, Tunisia)” (European Commission, 2003).

As the implementation of the ENP went ahead, further details emerged on the way of energy cooperation. The ENP wanted to ameliorate energy networks by supporting strategic infrastructures such as liquefied natural gas (LNG) terminals, gas pipelines and electricity interconnections, as well as intensifying cooperation on issues of energy efficiency and technological innovation.

The ENP is perhaps the most explicit application of the europeanization argument to energy issues. The provisions of the ENP Action Plans shows the prevalence of the normative convergence approach. “Normative convergence is deployed through general claims for institutional upgrading, regional networks integration and interconnections, development of functioning markets, promotion of renewable energy and energy efficiency” (Escribano, 2010). Anyway, due to the fact that these general goals are shared, they are coupled with neighbours’ inclinations. Therefore, policy instruments may vary from country to country, creating non-standardized energy spaces.

Nonetheless , the ENP’s main tool, the Action Plan, proved to be insufficient.

“The fact that two most important energy suppliers of the EU, that is Algeria and Libya, refused to take part in this policy has constituted a serious setback for the ENP’s Mediterranean energy ambitions. Moreover, the big North African energy producers tend to be skeptical of the EU’s predilection for a market-oriented approach to its energy relations with the southern Mediterranean. Algeria for instance has seen its protracted efforts to reform its energy sector receive little or no support from the EU, at a time when the government needed all the support it could obtain to help it deal with fierce domestic opposition to such plans. What is more, the difficulties encountered by North African energy companies like Algeria’s Sonatrach in seeking to operate in the EU’s purportedly transparent and competitive internal market represent another discrediting factor of the EU energy policies. Sonatrach’s misadventures since 2007 with the Spanish political and industry authorities, which sought to curb its growing commercial ambitions in the Spanish downstream gas and electricity market, represent a blatant example of the inconsistency of the EU’s policies” (Darbouche, 2011).

 

The renewable energy and the UfM approach

EU pledged to reach the 20-20-20 targets, enacted through the climate and energy package in 2009: a cutting down in EU greenhouse gas emissions of at least 20% below 1990 levels, raising the share of EU energy consumption produced from renewable resources to 20%; and a 20% improvement in the EU’s energy efficiency. The 2009/28/EC directive on the promotion of the use of energy from renewable sources, sets the rules in order to achieve the renewable energy share goals by 2020. According to the directive, EU member states (MSs) can achieve national targets by investing in installation producing energy from renewable sources in third countries, provided that that energy will be consumed in member countries.

Fostering the production of energy from renewable sources in the Southern Mediterranean countries for consumption in the Northern part is a feasible option and the EU has developed its plans towards that area. The Mediterranean Solar Plan is a flagship initiative of the Union for the Mediterranean (UfM), launched at the Paris Summit of July 2008.

The role of the MSP is to serve as the common strategic policy framework to help identify and create the adequate institutional, socio-economic, and infrastructural conditions for a rapid, cost-effective, and lasting roll-out of renewable energy and energy efficiency technologies in the Mediterranean region.

The Union for the Mediterranean seems to have introduced a more functional approach to Euro-Mediterranean relations, placing technical cooperation and projects at the centre of the strategy to overtake those political obstacles that have traditionally subdued the development of the cooperation in the region.

The basic concept underlying the MSP is the development of solar energy systems capable of reaching a capacity of 20 gigawatts/year by 2020 and creating a ‘Euro-Med green energy market’. The argument in support of the MSP has been articulated around the political and economic threat that an overdependence on Russian energy supplies causes to Europe, underlying the need to diversify energy supplies.

The other main goals of the Mediterranean Solar Plan are to supply the local markets with most of the additional electricity produced while exporting part of it to other countries, in the region and beyond; improve energy efficiency and rationalize energy consumption in the Mediterranean; create new green jobs and industrial capacities in the southern and eastern Mediterranean countries.

The European Commission also contributes to the MSP by making funding available. Since June 2008, over € 5 billion have been made available through the Neighbourhood Investment Facility (NIF) for 12 projects in the region. In addition to this, the Commission provides financial support to the European Investment Bank’s Facility for Euro-Mediterranean Investment and Partnership (FEMIP).

UfM’s Solar Plan seems to be able to anchor Mediterranean producer countries’ institutional framework to the EU and to develop an Euro-Mediterranean energy scheme to promote private investment in both generation capacity and electricity corridors.

The magnetism of such initiatives has to be seen within the context of the upsides and downsides of the renewable energy. It tends to be more expensive than fossil energy. Renewable energy sources needs much more space compared to fossil fuel to produce the same quantity of energy, whereas people are living increasingly in concentrated urban settings. Here, the idea of exploiting North African desert and less populated areas shows its potential. Further, these geographical regions can better take advantage of solar and wind energy.

Algeria’s peculiarity

Its position in the Mediterranean sea has contributed to the creation of a special interdependent energy relationship between Algeria and European consumers. This relationship is particularly intense in natural gas markets in western Europe. Moreover, Algeria’s Sonatrach, as it led the way in the liquefied natural gas industrial field, played a fundamental role in the development of LNG markets.

The sense of weakness which affects the European gas market today gives Algeria a key role as reliable supplier.

Algeria is the Europe’s third largest supplier of natural gas according to BP data.

Despite the construction of an institutional architecture governing the relations between North and South in the Mediterranean, first with the EMP, through the ENP and the more recent UfM, EU-Algerian relations have evolve along a less linear pattern. “Upon its inauguration in 1995, the EMP met with unprecedented enthusiasm in Algeria, which took the decision to engage in earnest negotiations for the conclusion of a new-generation Association Agreement (AA) with the EU, regardless of the economic costs involved and widespread opposition among civil society organizations. However, in the face of the EU’s timid support for the regime’s counter-insurgency strategy, Algeria’s hopes for closer ties faded and AA negotiations with them” (Darbouche, 2010). When Adelaziz Bouteflika came to power, EU-Algerians relations improved up to the signing of the EU-Algeria Association Agreement in 2002, entered into force on 1 September 2005 which replaced the 1976 Co-operation Agreements.

But Algerian enthusiasm for EU Mediterranean policies has given way to a more reserved posture when the government “saw its protracted efforts to reform its energy sector in the early 2000s receive little or no support from the EU, at a time when the government needed all the support it could obtain to help it deal with fierce domestic opposition to such plans. In the end, the liberalization programme of the hydrocarbon sector was abandoned”(Darbouche, 2010).

It was confirmed by the tepid reception reserved for the ENP. Algeria’s reservation on the ENP stemmed from the approach as EU developed its ENP proposal with no prior consultation with the ‘counterparts’. The origins of this negative response can be traced back to the striking incomparability of the nature of the ENP with Algerian Foreign policy aspirations. A confluence of record high energy prices and the national company Sonatrach’s ambitious expansion programme along the natural gas value chain supported Algeria’s policy plans, generated a drift away from the proposed ENP framework, which was seen to reduce the concept of neighbourhood to a European projection of normative power.

“The first attempt at the formalization of EU-Algeria energy relations took place in 2006 when Algerian policymakers proposed concluding a ‘strategic energy partnership’ (SEP) with their European counterparts. Spurred on by reactions to the first gas transit dispute between Ukraine and Russia, Algeria sought to reassure its European customers over the reliability and stability of its gas supplies and to distance itself from the apparent politicization of natural gas trade on Europe’s eastern border” (Darbouche, 2010).

Algeria’s government proposed a Russian-like strategic partnership with the EU instead of an ENP Action Plan. The European Commission came out with a ‘road map accompanying the association agreement’ in 2008 which included five policy spaces: economic reform, trade issues, energy, mobility and fight against terrorism. Within the energy domain, the Road Map states the priority of ‘exploring the ways’ to conclude an energy strategic partnership aiming at a long-term ‘harmonization’ of EU and Algerian energy markets. This approach clearly implies another path to differentiation (Escribano,2010).

In short, Algeria has not seem to be very interested in EU’s model of extending its own market regulatory norms as a basis for strategic energy cooperation because it perceived the EU approach as too focused on rules and regulations, which added little value to the existing bilateral deals with EU member states. Furthermore, there was a widespread shared view that, despite “the EU stressed a strong commitment to market-based approaches to energy security, member-state behaviour became more geopolitical and cut across some of the basic principles enshrined within market rules” (Youngs, 2009).

The UfM has not impressed Algerians. “While most Euro-Mediterranean countries are enthusiastically queuing up for the Mediterranean Solar Plan and its Desertec industrial twin, Algeria has adopted a more cautious approach […] Indeed, although the government has indicated its willingness to develop renewable energy, it is anxious to avoid doing so in a way that leads to the dependence on imported technologies within the national economy” (Darbouche, 2011).

Anyway, Algeria was looking for ways to expand their energy sector into new directions and, as a result, seized the opportunity offered by the MSP, becoming one of the most important player in this game due to the potential intense exploitation of its huge desert areas for producing solar and wind energy.

 

 

REFERENCES:

Boumghar, L. (2013) The Algerian Position on the European Neighbourhood Policy, “European Institute of the Mediterranean (IEMed)”, pp. 207-209.

BP Statistical review of world Energy – 2014 full report.

Colombo S. & Abdelkhaliq N., (2012) The European Union and Multilateralism in the Mediterranean:Energy and Migration Policy, “Mercury”, E-paper No. 18.

Darbouche, H. (2010), ‘Energising’ EU–Algerian Relations, “The International Spectator”, Vol. 45, No. 3, pp. 71–83.

Darbouche, H. (2011) Third time lucky? Euro-Mediterranean energy co-operation under the Union for the Mediterranean, “Mediterranean Politics”, 16 (1), pp. 193-211.

Darbouche H. and Fattouh B. (2011) The Implications of the Arab Uprisings for Oil and Gas Markets, “Oxford Institute for Energy Studies Working Papers”, No. MEP 2.

Escribano, G. (2010) Convergence towards differentiation: the case of Mediterranean energy corridors, “Mediterranean Politics”, 15 (2), pp. 211–229.

European Commission (1995) White Paper: an energy policy for the European Union, COM (95) 682 final, Brussels.

European Commission (1996) Communication from the Commission to the European Parliament and the Council concerning the Euro-Mediterranean Partnership in the Energy sector, COM (96) 149 final, Brussels.

European Commission (2003) Communication from the Commission to the Council and the European Parliament: Wider Europe — Neighbourhood: A New Framework for Relations with our Eastern and Southern Neighbours, COM (2003) 104 final, Brussels.

European Commission (2006) Press release: Energy commissioner Piebalgs welcomes the Euro-Mediterranean Energy forum that takes place today in Brussels, IP/06/1238, 21 September, Brussels. 

European Commission (2007) An Energy policy for Europe, Brussels, COM (2007) 1 final, Brussels.

European Parliament and the Council (2009) Directive 2009/28/EC on the promotion of the use of energy from renewable sources and amending and subsequently repealing Directives 2001/77/EC and 2003/30/EC.

McGowan, F. (2008), Can the European Union’s Market Liberalism Ensure Energy Security in a Time of “Economic Nationalism”, “Journal of Contemporary European Research”, Vol. 4, No. 2, pp. 90-106.

Youngs, R. (2009) Energy Security: Europe’s New Foreign Policy Challenge (London: Routledge).

 

WEBLIOGRAPHY:

European Commission website (http://ec.europa.eu/europeaid/what/energy/policies/southern-neighbourhood/msp_en.htm)

Union for the Mediterranean official website (http://ufmsecretariat.org/mediterranean-solar-plan/)