Energy innovation in the EU: It takes two

When he assembled a new executive team to steer European Union (EU) policy for the next five years, Jean-Claude Juncker, the newly-elected President of the European Commission, sent a clear signal that energy is top priority, naming two commissioners to handle energy issues instead of one. 

Splitting the energy portfolio in two is one of the most significant changes in the new Juncker Commission, which now includes a vice president for Energy Union, Slovakia’s Maroš Šefčovič, and a commissioner for Energy and Climate Change, Spain’s Miguel Arias Cañete, who will report to the former. 

That change was an apt response to a series of daunting challenges – from the threat of gas and oil supply shock to the reverberations of the American shale gas revolution. 

What is less clear about the split is how the new one-two policy punch will work in practice. What can the duo sensibly achieve during their time in office? 

Let’s stick together 

Šefčovič is tasked with accelerating the creation of a fully integrated European market for energy – a goal that was supposed to be achieved by 2014 but has proven difficult to implement. Two forces underpin the new urgency. Conflict in the Ukraine has raised fears of threats to EU energy supplies. Russia provides some 30 percent of Europe’s gas and the risk of oil and gas cuts has European leaders scrambling to overcome obstacles to a more coherent and efficient Europe-wide energy system.

At the same time, European leaders are seeking a response to the US shale gas revolution, which looms as a threat to European industrial competitiveness. Shale gas has led to dramatically lower US electricity prices, creating a cost disadvantage for European rivals.

In his audition for the job, Šefčovič was mindful of both concerns. He vowed to reduce Europe's dependence on Russian gas by increasing the continent’s relationship with suppliers in Azerbaijan, Turkmenistan and other countries. “By supporting the South Stream project, we would only increase our dependence on Russia. We should rather support the Southern Corridor project, which will connect us with the Caspian Sea,” he said.

Šefčovič also argued Europe must get tough on waste and inefficient structures to address the issue of high European energy costs and industrial competitiveness. A greater interconnection of European networks would eliminate isolated "energy islands". Finland and the Baltic states need to combine better with the rest of the Europe, he explained. The EU should support gas exploration in the Mediterranean and build liquefied natural gas (LNG) terminals to reconnect Cyprus and Malta. 

Creating a dossier with the goal of forging a single European energy market – with harmonised rules and polices–is a resolute move on the part of EU leaders but anyone who’s seen the EU’s sluggish decision-making process will know how hard it will be to deliver. Fortunately, Šefčovič will have a powerful ally in the form of the former Prime Minister of Poland, and new President of the European Council, Donald Tusk. 

“I can hardly imagine a more devoted advocate of progress in this crucial area than him,” said Jerzy Buzek, member of the European Parliament (MEP) and chair of the chamber’s Industry, Research and Energy (ITRE) committee, in an interview in September. 

Decarbonisation: fortune or folly? 

In five years’ time, when people pass judgement on Arias Cañete’s tenure, one question they’ll ask: Has the development and market take-up of low-carbon energy technologies helped Europe meet its emission reduction goals and 2030 energy targets? 

That would be a real game changer. But to get there, Arias Cañete, who during his spare time raises bulls for fighting on his ranches in Andalusia, will need to muster a serious combative spirit. 

He faces a divided, and in some patches unconvinced, EU. While some member states, in particular central and eastern European countries, prefer low-cost energy from coal-fired power plants to maintain their competitiveness, others, such as Germany, would prefer Europe to be a decarbonisation pacesetter, speeding low-carbon technologies to market.

Arias Cañete will be forced to hit the ground running. The 2015 UN climate summit in Paris, which is supposed to result in a new globally binding climate agreement, is just around the corner. Were the global community to agree to an ambitious, albeit unlikely, target, he would find it easier to push more aggressive decarbonisation policies in Europe. 

If no deal is achieved, Arias Cañete’s policies should spread risk well to ward off investor uncertainty, says Bruegel, a Brussels-based think tank, in a memo to the new Commission. “To be on the safe side, Europe should support a wide portfolio of technologies, resilient to the failure of any individual technology,” the paper’s author, Georg Zachmann, recommends.

Two heads better than one? 

And finally, the great unknown: how will the Šefčovič-Arias Cañete partnership work? 

A new Commission architecture including seven powerful vice-presidents is about checking a trend toward excessive EU legislation. As the senior Commissioner, Šefčovič will have power "to stop any legislative initiatives" made by Arias Cañete. For the almost 600,000 people who signed a petition in opposition to Arias Cañete’s nomination, an institutional counterbalance is cold comfort. 

Both wear different political stripes – Šefčovič is centre-left, Arias Cañete centre right – but in practice this might not present a fault line, with both party groups, the Socialists and Democrats and the European People’s Party, in coalition in the European Parliament. 

In a newly released book entitled “Powers of Two: Finding the Essence of Innovation in Creative Pairs”, the author Joshua Wolf Shenk credits the “creative pair”, rather than the individual, with the most imaginative work in history. The hope around Brussels and beyond is that Europe’s two new energy czars can earn a chapter in a future edition.