Demand for a a common European energy policy
The threat of power shortages, electricity networks that can't handle the demand, and gas prices in the United Kingdom which seem to be spiralling out of control. These are just a few examples of the flaws manifesting themselves in the European energy market, which was liberalised - i.e. opened up to real competition - at the behest of the European Union. Now, however, even the European Commission in Brussels has been forced to acknowledge that the market isn't working properly.The intention was that producers of gas and electricity should be able to offer their product for sale throughout Europe. The consumers were to find themselves in the perfect situation: able to choose the cheapest supplier. In practice, however, the situation has proved a lot more difficult. In France, for example, powerful electricity supplier EDF is still 85-percent owned by the state.
It's an ill wind...
Or take Germany, where the former Red-Green coalition government invested heavily in wind energy. There's even a law which obliges Germany's individual federal states to give preference to 'clean' wind energy above less environmentally friendly energy sources if and when supplies are sufficient.
There's a problem, however. Most of the wind turbines are located in the north of the country, and the electricity network between the north and south cannot handle sudden increases in supply. Therefore, when wind speeds are high and stay that way, the additional supply of 'clean' energy gets channelled to the Netherlands, where the local network has already been close to the point of collapse on previous occasions.
Such problems are not that unusual, for the power grids linking the EU member states are known to have various bottlenecks which have still not been dealt with. As a result, there's also the threat of power shortages alongside that of the surges which test the system to almost breaking point. France, Germany, the Netherlands, Belgium and Luxembourg have now agreed to join forces in dealing with this problem.
Dwindling gas
Meanwhile, there are also clear signs of problems on the European gas market. In recent weeks, for example, gas prices in the United Kingdom have taken a massive leap upwards. The official British 'watchdog' for energy consumers, Ofgem, has already sounded the alarm in Brussels and wants the European Commission to investigate why the gas pipeline between Belgium and the UK is only working at 60 percent of its potential capacity.
Ofgem spokesman Mark Wiltsher explains that the British gas fields in the North Sea are becoming exhausted more rapidly than was originally forecast, and hence the country now needs to import gas from the European mainland. However, most of the pipelines needed for the suppliers are still under construction.
In a truly open and free market energy producers and suppliers should break their ties with the state and should not be retaining their monopoly over the distribution networks. However, in Europe at least, these factors still are still very much at play. One area which they should not affect at all is the supply of liquid natural gas, or LNG, which is shipped in tankers. Yet, here too, the British face a potential shortage because Spain is distorting the market for this product. The Spanish government is reportedly offering one-and-a-half times the market price for LNG, with Spanish consumers still only being required to pay the market price. The European Commission is now expected to look into this situation as well.
In defence of liberalisation
The European Commissioner for Competition, former Dutch government minister Neelie Kroes, acknowledges that there are problems, but reiterates that market liberalization was not a mistake. She argues that there are simply problems with its implementation.
On the other side of the coin, Dutch environmentalist and Club of Rome member Wouter van Dieren claims the liberalized gas and electricity markets just don't work at all. He says there are too many technical limitations to allow gas and electricity to be moved without restriction to any given place in the EU. Then there's the fact that electricity can't be stored for later use.
There are also numerous political obstacles, because the laws differed from country to country, as do the various member states' own national interests in this area. This brings Mr van Dieren to argue in favour of having a common European energy policy as opposed to a free market which 'doesn't work'. Such a policy, combined with a common European environmental policy, would in his opinion be more advantageous. He argues that it could - much like the European Common Agricultural Policy once did - ensure energy supplies at acceptable prices, something which appears not to be the case right now with gas supplies in the United Kingdom.