Bundestag’s amendment ruins EU Energy Market Security and enhances Russo-German influence on it

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The adoption of the amendments to the Gas Directive by the German Bundestag will lead to the destruction of the European gas market regulation system and the European energy security. Such actions will threaten the use of European gas supplies in the interests of the political influence of Russia and Germany on the EU market.

The Russian Federation with the German parliament coalition help succeeded in breaking down the unity of the European community in the matter of diversifying supplies and creating guarantees of non-monopoly European gas market functioning.

The ruling coalition of Germany tried to pass through parliament amendments to the law on ratification of the EU Gas Directive in the Kremlin’s interests. The Bundestag was supposed to ratify the Gas Directive updated by the European Union Council, which is part of the EU Third Energy Package. The changes concerned the operation of European standards with respect to gas pipelines built to Europe from third countries, e.g. Nord Stream-2.

The updated document requires a clear distinction:

– the same company can’t sell its fuel and transport it.

– Third companies must have access to the pipeline.

– Competitive transit tariffs are set by the recipient country.

– full transparency in the work.

– the rules do not apply to pipelines built before May 23, 2019. So, Nord Stream-2 does not fall into this category.

With such document Brussels tried to protect itself from the creation of a Gazprom monopoly in Europe.

The German government submitted to Parliament a draft ratification of the directive at the end of September, 2019. And the date “May 23, 2019” was placed in the document as an indicator, what pipelines are  regulated by this Directive. Two days before the vote, according to Bild, the ruling coalition represented by the CDU / CSU Angela Merkel and the Social Democratic Party (SPD) decided to remove Nord Stream-2 from the scope of the Gas Directive. 

From the text of the bill for ratification, words “May 23, 2019″ were transformed into “existing investments”. So the text of the Gas Directive looks like: “gives privileged status to existing investments in order to protect legitimate expectations.” Thus, the time frame was blurred. So, the German Government coalition was confident that the decision in this form would give a signal to other European Union members to overcome the general resistance to the construction of the gas pipeline and the redistribution of the natural gas supply market in Europe.

German amendments to the EU Gas Directive New Nord Stream 2 is in conflict with several of European goals and Regulations. Changes in the Gas Directive will undermine EU goals to secure the energy supply by diversification of EU imports. It will increase risks of repeating Europe’s previous experiences with Russia, which in both 2006 and 2009 decided to halt the transit of its gas via Ukraine over pricing disputes. 

Southeastern Europe will have negative impact, since this area is supplied mostly by Russia, via Ukraine. On the other hand Norway, Algeria and the LNG suppliers come out positively, since they can be more competitive. Poland retains its position as an important transit country, but Slovakia and the Czech Republic lose this role. 

Economy benefits for states according to scenarios: with Ukrainian pipeline, Nord Stream-2 without Ukrainian pipeline and combined routs Nord Stream-3 plus Ukrainan pipeline.
Most of the benefit goes to Russia and Germany, while other suppliers and transit countries get competitors.  

Germany  gets a direct connection to cheap Russian gas, and  becomes its main distributor in most of Europe. In fact, Berlin gets an opportunity to copy Russian policy of influence on gas importers in EU. 

Also the amendments means the conflict with the EU’s climate targets and the commitments of the Paris Agreement, since Russia uses EU money earned from gas purchases to invest in more infrastructure for fossil fuel production and management. According German MP Rebecca Harms (Greens),  the European bloc will not be able to achieve the decarbonisation of its economies and meet the obligations of the Paris Climate Agreement if it “continues to develop and pay for this huge fossil fuel infrastructure.”

By supporting the pipeline project with amendments to the EU Gas Directive, the German government is going against the will of the European Commission, the European Parliament. The German government is allowing a major rift between EU member countries to fester at a time when the EU needs cohesion more than ever before. 

The new pipeline does not diversify the EU’s energy supply neither from an energy source perspective nor from a route perspective as Russia is already the main supplier of Europe and the pipeline would lead to a concentration of routes in the Baltic corridor. 

The European Political Strategy Centre, the European Commission’s in-house think tank stated, that “Nord Stream 2, seen from a common EU perspective, is a project with neither economic rationale nor political backing” (EPSC, 2016). Nord Stream 2 threatens to plunge the Central Eastern European states back into a pre-2004 market of greater supply security risk and greater Russian leverage in their markets. 

Enabling Russia to bypass and reduce gas flows through Ukraine – which relies on the lucrative transit fees – it could once again use energy supplies as a lever to exert political pressure on the region.

Russia and Germany are the main beneficiaries and supporters of the Nord Stream 2 project. Northeast Europe, namely, Poland, Ukraine, Czech Republic and Slovakia oppose it because they will lose their advantage as transit countries. Central- and South Europe fear that the construction of result in closing down the Ukrainian route in which case there will be a shortage of cheap Russian gas in the region. Network flows show, that even if Nord Stream 2 would provide significantly cheaper gas, the benefits would never reach the Eastern part of Europe. A way to maintain solidarity would be to introduce a compensation scheme. 


Post Author: Intercourier

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