1. Nord Stream 2: Post Sanctions? Even if no further US sanctions are imposed the pipeline faces significant barriers from two directions. First, the application of EU energy law. Second, if the US/EU proceed to proactively ‘disarm’ of Russian energy power in CE Europe.
2. In my recent @HURI_Harvard paper I set out the argument that even if US sanctions are not imposed, the pipeline will face a significant legal battle through the EU courts. See: huri.harvard.edu/files/huri/fil…
3.I point out that in order to avoid the full burden of EU energy rules NS2 will have to seek an exemption under Art 36 of the Gas Dir 2009. However, given the impact on the functioning of the single market, competition & the lack of additional gas supply this would be difficult.
4. As a consequence the pipeline could face having to be unbundled, be subject to tariff transparency and third-party access. It could also face conditions on operation which would reduce its utilisation by half (this was the condition imposed on NS1's connecting pipeline OPAL
5. In addition to obtain certification all non-EU pipeline owners are subject to a supply security assessment under Article 11 of the Gas Directive. Do they pose a risk to the supply security of the Member State in question or the Union as a whole?
6.Article 11 could be very tricky for Nord Stream 2. Over the last three decades Member States have collected evidence of cuts off and threats of cuts. In addition to which there is the substantial evidence by the academic work by Larsson on the subject. ntrl.ntis.gov/NTRL/dashboard…
7. To make matters worse the EU General Court in T-883/16 Poland v. Commission took the view that obligation of energy solidarity contained in Article 194(1) TFEU is binding on the Member States.
8. Article 11 interpreted in the context of Article 194(1) TFEU is likely to make certification difficult to achieve. At the very least the national regulator will have to credibly take account of the interests of other EU Member States.
9. As I pointed out in my @HURI_Harvard article one specific option is still extant for the US would be to enact a targeted sanction against any person who sought to acquire Nord Stream 2. Then the pipeline would be caught between Article 11 and US sanctions.
10. In my recent article with @CidobBarcelona I argue that there is an alternative to US sanctions and the application of EU regulatory law, and legal battles all the way to the CJEU in Luxembourg.
11.That alternative would be for the US/EU to co-operate on developing a pro-active energy strategy to disarm Gazprom’s commercial & political influence in Central and Eastern Europe. See: cidob.org/en/publication…
12.The argument here is that the Western response to Russian ‘pipeline politics’ strategies through Yamal, Nord Stream 1, South Stream, Turk Stream 1 & 2 and Nord Stream 2 has been largely reactive.
13.The @CidobBarcelona article argues that the US/EU could develop a much more proactive strategy. It would have two major limbs. The first would focus on providing access to natural gas resources, more interconnections and storage facilities.
14. It is true that the EU’s ‘Energy Union’ programme did provide funding for more interconnections. However, it remains substantially incomplete. In CE Europe there are currently only two LNG terminals at Swinoujscie and Klaipeda.
15.And while the Baltic Pipeline will improve the supply security situation (bringing online 10bcm from Norway) it does not have sufficient capacity itself to transform supply security across the region.
16. What is proposed here is a major programme to increase the number of LNG terminals in Baltic harbours combined with a doubling in the size of the Baltic Pipeline.
17. In addition, the proposed three seas initiative pipeline which would result in a pipeline route running from north to south allowing gas flows from the Baltic to the Aegean and Adriatic should be developed. For three seas initiative details see: 3seas.eu
18. In addition, the single market in gas across the EU and Energy Community states should be fully interconnected. That will require more actual interconnections and pipelines connecting new LNG terminals to population centres.
19.Furthermore, interconnections into Ukraine and expansion of Ukrainian storage facilities will provide enhanced energy security for the region, and the ability to expand the scope of open gas trading platforms.
20.Taken together these measures would significantly undermine Gazprom’s market and political power, even with Nord Stream 2.
21.Renewables also have a significant energy security role here. Wind and solar farms can be rolled out to reduce supply security risk. Power networks can be enhanced to cope with more renewables on the grid, and CE Europe can become fully synchronised with the EU grids
22. A significant investment into renewables, smart grids and synchronisation will further undermine CE Europe’s dependence on Russian gas.
23. It could be argued that promoting investment in gas runs contrary to net zero ambitions. However, there is a energy security risk here. If no further gas infrastructure is brought into play it would undermine supply security by leaving Gazprom more dominant in CE Europe.
24.There is also the additional problem that governments would be likely to hesitate in deploying more renewables because gas is the key back up fuel, loading more gas dependent renewables on to your grid will make you even more reliant on Russian gas.
25.Hence investment in gas infrastructure is vital. Without it states will shun renewables and turn back to coal as a vital energy security hedge.
26.Taken together this proactive approach of gas infrastructure and a major renewables roll out would significantly reduce the impact of Nord Stream 2. It would in effect reduce Gazprom to their worst nightmare:-being merely just another commercial player in the market, Ends.
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