Margrethe Vestager is one of the most influential women in Danish politics but it was her recent decisions as European Commissioner for Competition to take on both Google and Gazprom that turned her into a globally recognised figure.
The two cases are very different. Google’s dominance may be a fleeting one and its alleged ability to impose on its customers an inferior service – search algorithms favouring its own products – is limited by the availability of competing search engines. Gazprom, in contrast, fits better the textbook idea of a monopolist: switching to alternative energy sources is a considerably less trivial exercise than making Bing your new homepage.
Vestager maintains that Gazprom has abused its dominant position by charging unjustifiably high prices in a number of eastern European countries that depend almost entirely on imports of Russian natural gas, including Poland and the Baltic states.
At a time when the European Commission is trying to advance its agenda of building a common energy market in Europe, Gazprom was actively trying to stop its clients from reselling natural gas across borders, effectively segmenting the EU into isolated energy markets.
And, as the New York Times reported:
Gazprom might have been leveraging its powerful market position in Bulgaria and Poland by making supplies of gas conditional on those countries’ agreeing to participate in pipeline projects to carry even more Russian gas into Europe.
Gazprom has 12 weeks to respond to the charges and faces a fine exceeding €10bn. Cracking down on the Russian state-owned monopoly is justified, both on geopolitical and economic grounds.
As the EU’s numerous misguided fights with Microsoft have shown, heavy-handed antitrust policies can do more harm than good, punishing economic success and discouraging innovation. But such risks seem small in the case of Gazprom, an arm of the Kremlin. As a 2010 report by the Brussels-based European Centre for International Political Economy noted, for many years the EU did not dare apply its antitrust rules to Gazprom, “leaving the gas markets subject to monopolies and, in Central and Eastern Europe, to erratic regulatory supervision, and severe transparency deficits.”
That said, competition policy is a blunt tool. The EU needs to do much more than just punish a misbehaving gas company. It must create a genuinely competitive marketplace for energy, resilient to abuse by Russia or any other market actor, and providing the European economy with cheap, secure and, ideally, clean energy.
In recent years, the focus of EU energy policy has been the deployment of renewables and the building of a ‘smart grid’ able to make more efficient connections between suppliers of energy from intermittent sources, such as wind or solar, and end users whose demands are also variable over time. However, the EU will not secure energy independence without also increasing the absolute supply of energy on the continent. Trying to achieve this only through a wider use of renewables is unrealistic.
In the light of Canadian and US experience, shale gas may be one promising avenue towards unlocking Europe’s energy potential. This is why Gazprom and Russian-funded environmental groups have been vigorously campaigning against its exploration in countries including Poland. According to an estimate by the US Department of Energy, Poland has enough shale gas to meet its energy needs for the next 300 years. While contested, the estimate places Poland alongside Romania, Bulgaria, Germany and other countries with potentially large reserves – although considerable uncertainty exists over the precise amounts in each country.
The main barriers to shale gas exploration include the EU’s strict environmental standards – namely the so-called precautionary principle, which does not always square well with the use of new and yet-untried technologies – as well as Europe’s nimbyism, which is much less of an issue in the sparingly populated areas of Canada and the US.
The environmental impact of hydraulic fracking needs to be examined carefully. But it must also be weighed against the potential benefits of reducing carbon emissions by switching to shale gas from coal, which still represents a quarter of the EU’s total electricity production, and against the geopolitical costs of inaction, which leaves central and eastern European countries vulnerable to Gazprom’s scheming. While Vestager’s bold moves against Gazprom deserve applause, they are not nearly enough to address Europe’s energy woes.
from AEI » Latest Content http://ift.tt/1IdM0ut
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