Laszlo Balogh / Reuters An engineer oversees the gas distribution system of Hungary's gas pipeline operator FGSZ in Kiskundorozsma, August 12, 2014.

Europe's Low Energy

The Promise and Perils of the Energy Union

In March this year, the European Commission (EC) announced that it was time to get serious about building a European energy union to complement the European economic union.

Just under a year earlier, Donald Tusk, who was prime minister of Poland and is now chairman of the European Council, had proposed a union as a way to negotiate better energy terms with Russia. After a three-year investigation, the EC had concluded that Gazprom, the Russian gas-exporting monopoly, had abused its position as the sole supplier in Bulgaria, Estonia, Latvia, Lithuania, and Poland by charging inflated prices and prohibiting these countries from reselling gas to others deeper in Europe. By forming a unified gas policy, Tusk argued, Europe could force Russia to play nicer.

A pressure meter is pictured at the gas storage facility of Hungarian state-owned energy group MVM in Zsana, November 3, 2014.

A pressure meter is pictured at the gas storage facility of Hungarian state-owned energy group MVM in Zsana, November 3, 2014.

At the time, some EU officials saw Tusk’s proposal as too radical. Germany in particular opposed the negotiation of even a common European price for Russian gas. As Gazprom’s most important customer, Germany enjoyed (and continues to enjoy) better terms with its Russian supplier. The Germans feared that, by combining forces with the rest of Europe, they would end up paying more. Similarly, Hungarian Prime Minister Viktor Orban opposed Tusk’s plan because his country, too, had negotiated bilateral agreements with the Kremlin that ensured Hungary of a steady supply of gas at favorable prices (in return for Hungary’s support for Russia in other realms, of course).

Such concerns delayed the energy union for a year. By early 2015, however, the EC, understanding that EU energy security was of the highest priority, was ready to move forward. And so, in March, the commission announced a plan to create a European energy union. The new design retains a substantial portion of Tusk’s original proposal, although it omits his idea that all European countries should be required to make joint purchases of gas. Instead, the plan allows EU countries to voluntarily purchase energy supplies as a group. A month later, the EC announced that, for its abuses

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