1. Peak Oil, Climate Change and energy
security in Europe: Austerity, A Green
New Deal and decarbonising the
economy
Dr. John Barry
School of Politics, International Studies and Philosophy
Queen‟s University Belfast j.barry@qub.ac.uk

2. The context
Climate change
Peak oil
Energy security
Austerity and economic recession

3. Energy Geo-Politics
 The rise of energy security
Crises
 Economic and Financial
 Political and Legal
 Civil and Military
Resource Nationalism
 ‘energy independence’ as new objective of national energy policy-makers
Political Instability
 In key energy producing and transit regions
Growing demand
 Rising Powers (BRICs)
Climate Change
 EU global leader
Price instability
 Spikes and disruptive lows
 Investment uncertainty
Peak oil
 Peak gas – at least inside the EU
 Unconventional sources – fracking

4. Pipeline Politics

6. EU Energy Politics
 Framing European Union energy politics
 ‘Energy Security’
 Dependency upon energy imports
 Concerns with security of supply
 Environmental stress
 Governance
 Developing shared institutions
 Formal rules, legal systems, binding treaties
 Informal patterns of cooperation, trust, reputational factors
 Pipelines do not solve energy security problems
 Pipelines transfer energy security problems to question of governance in transit
states
 Marketization
 Need to create competition amongst suppliers
 Energy prices set by supply and demand to solve energy security issues
 Promotion of market norms in energy by the European Commission

7. EU Energy Policy
 Core objective of EU energy policy is to achieve energy security through:
 The transformation of energy governance in Europe’s energy partners
 This is referred to in the broader literature as an ‘EU external governance’ strategy
 This transformation of energy partners will ensure:
 Cross-border regulatory harmonisation
 Crucially: based the adoption of EU standards by energy partners
 ‘Policy transfer’ at the heart of EU energy policy
 What policies? Global Best Practices for Energy Sector Reform
 Unbundling (building a competitive and structurally differentiated energy sector)
 Generation, Transmission, Distribution
 Market pricing
 Energy prices to be determined by supply and demand
 Private Sector Participation (explicit or implicit)
 New Regulatory Framework
 The governance dimension
 Independent regulatory agencies
 Clear legal framework so as to ensure a ‘positive investment climate’

8. EU ETS
Permits in the ETS are trading at prices well below the level thought
necessary to stimulate green investment and innovation.
The target was for the price to be €30/tCO2 in 2020 and rising.
Last week prices continued to fall and closed at €6.88/tCO2.
In response, the European Commission has announced that new permits will
be withheld, a short term measure that will help prop up the market.
"The EU ETS has a growing surplus of allowances built up over the last few years. It
is not wise to deliberately continue to flood a market that is already oversupplied"
(Connie Hedegaard, European Commission, August 2012)
Part of the steep learning curve and constant adjustment for this policy
innovation

9. European Emissions
Trading System
In 2005, the EU launched the Emissions Trading System (EU ETS), the first international carbon-
trading scheme in the world.
Following a three-year pilot period, Phase II of the EU ETS was launched in 2008. Across its 27
Member States, the EU ETS covers large plants from CO2-emission intensive industrial sectors,
namely power generation, mineral oil refineries, coke ovens, iron and steel and factories producing
cement, glass, lime, brick, ceramics, pulp and paper, and all combustion activities with a rated
thermal input exceeding above 20MWh.
Bulgaria and Romania joined the trading scheme in 2007, bringing the total number of installations to
11,300.
Next trading phase to start this year (2013)
EU flagship policy on decarbonisation and promotion of green/clean industrial innovation
Successful…but would a carbon tax have worked better to incentivise decarbonisation?
Or a higher floor price for carbon?

10. Other EU drivers
Lisbon Strategy: “The European Union should become
the most competitive knowledge-based economy of the world
with sustainable economic growth and more and better
employment opportunities and greater social cohesion.”
Sustainable Development Strategy: “break the link
between economic growth, the use of resources and the
generation of waste”. Decoupling
EU Commission (2011): Roadmap for moving to a
competitive low carbon economy in 2050

11. UK context
 UK Climate Change Act (2008)
Improve carbon management and help towards a
low carbon economy in the UK
Demonstrate strong UK leadership internationally-
„Green deal‟
Investment in renewables (and nuclear)

12. The dash for gas
Current gas prices in UK reflect not current gas supply-demand
 Oversupply due to massive investments based on demand projection prior to the
economic crisis
 Oversupply due to the closure of US market (Shale/Unconventionals)
 Demand collapse due to economic crisis
 Yet prices rocketed – due to predictions of cobweb-style future supply
shortages?
„Fracking‟

13. Austerity
Resilience of „green growth‟ and low carbon sectors and initiatives?
“The evidence we have seems to suggest that, on the expenditure
side, objectives such as promoting green growth are being shielded
from austerity: spending cuts in environmental protection tend to be
mentioned only rarely and to constitute a low share in the overall
packages. At the same time, a number of countries have taken steps
to combine the need for additional government revenue with
ecological policy goals by raising or introducing various ecological
taxes, as well as other measures….In the UK, energy and the
environment spending will buck the trend to severe cuts, raising
spending in real terms”.
(European Trade Union Institute, „Withdrawal symptoms: an
assessment of the austerity packages in Europe‟, 2011, pp.26-27)
But jobless investment?

14. „Green New Deal‟
approach
Counter-cyclical investment strategy – energy,
housing – to create /sustain jobs in low carbon
infrastructure
Finance – from pension funds, green bonds (local
authorities), green investment bank
Not simply a „tax and spend‟ policy – also need to
reduce carbon subsidies – politically difficult

15. Conclusions