Bros said that the situation we were in was not a market failure, but a regulatory one. Bros has been involved in the process of liberalizing the French market and integrating into the European domestic energy market. The liberalization process needs to take place, after which control will be given to a completely independent governing entity. For now, countries are left to their own devices, which can make different decisions about their energy integrity, as long as they roughly follow European guidelines. “If you start getting confused with the concept, you end up where we are,” he said.
Some countries prefer cheaper gas over a variety of gas types — The EU Energy Directive states that each country should have at least three separate gas supplies, with the idea that countries try to split their supplies as evenly as possible, but some countries, including Germany, rely on Russia as the their main supplier because of its cheap energy. Bros believes the decision was made knowing that if things didn’t go as planned, the delay would be unanimously supported by European countries. “It’s not liberalization if it’s a concept where people can do whatever they want,” Bros said.
There is also the problem that what should be a united front is often not all harmonious. Nord Stream 2, an extension to the original Nord Stream pipeline carrying gas from Russia to mainland Europe – landing in Germany – is supported by Germany and Austria. But it was opposed by other European countries, including Poland, Ukraineand Baltic States. The plan was eventually shelved, but only after Russia launched its invasion of Ukraine.
Of course, one of the problems seems inevitable: It doesn’t account for any disruptions outside of Europe. “It includes everything inside,” says Gladkykh. “It doesn’t include all external factors that are sometimes unpredictable.” That includes an illegal Russian invasion of a sovereign country, Ukraine, and the consequent economic sanctions and backlash caused by the war. “In particular, Germany has promoted this idea that trade will encourage change in Russia,” she said. “That looks naive from today’s perspective.”
Part of the problem with the European domestic market in ensuring supply security is that it predicts a faster transition to renewable energy than it actually does. “There is a chronic underinvestment and capacity installation is too slow,” she said.
Gladkykh, who worked for the Ukrainian government when Russia cut off gas supplies to Ukraine in 2014, is not sure if there is a market structure that would insulate Europe from the external shocks that the past six months have experienced. create or not. But the market structure we have means that countries facing severe supply shortages are forced to let gas pass through them in order for gas to go further up the supply chain, even when they really need it. It is a blessing at the group level — no country is completely cut off from energy — but a curse at the country-state level, because countries are expected to give a little to ensure Everyone has some, even if it’s not enough. Thousands of gas pipelines across Europe, connecting its countries and siphoning off gas as it reaches the continent. “When you have an interconnected domestic market, the more links there are, the better the ability to secure supply because other countries can help each other,” says Imsirovic.
It’s not clear whether this philanthropic practice will survive the difficult winter to come. Germany’s predicament is an example of “bad decision-making, fundamentally,” Gladkykh said, but they are not alone. The cold is coming for all of Europe, and the idea that all countries are in the same region will probably vanish when the situation gets tough. “I think this crisis will stop liberalization and integration, and we will go back to each state looking at the safety of its own energy and supply markets,” he said. “I think this is the end of the theory of a single gas market in Europe. Vladimir Putin is playing exactly this game”.
