The evolving geopolitical situation at our eastern border – with a hyperactive and expansive Russia – has not yet been enough to convince Europe to end its energy dependency on a single external supplier. That is why I salute the energy council's decision to speed up the implementation of the crucial projects of common interest (PCI) on the north-south and southern gas corridors. I believe that central and eastern European member states should take advantage of this new strategy of developing liquefied natural gas (LNG) hubs in southern Europe and reorient their PCI lists in order to have their grids interconnected to the new hubs. By doing this, they can immediately lift their dependence on the existing Russian pipelines and gain access to the global markets.
"Access to the global energy market and new supply routes are key to long-term competitiveness for our industry"
The solution to the present state of play is therefore not confrontation, but reorientation. At this juncture, the EU's energy supply finds itself deeply dependent on routes crossing its eastern borders. The unidirectional east-west flow, insufficient interconnectors as well as monopolised national markets, are dangerous for both security and economic reasons. The more the EU looks to the east, the greater the dependence on Russia and the less it will be able to profit from global value chains. As the world continues to shrink, Europe must turn more decisively towards its natural gateway to the global economy.
Access to the global energy market and new supply routes are key to long-term competitiveness for our industry. That is why I believe in an extended deal on energy trade within the transatlantic trade and investment partnership agreement. European consumers should benefit from the deep discontinuities in price between the American and European markets which are, for example, set today at a three to one ratio for gas.
Besides committing to completing this groundbreaking trade deal, Europe must also restart long-term energy infrastructure financing. This is currently blocked due to the continuing financial crisis and the accelerated growth of sovereign debt levels, which has discouraged financial institutions from supporting companies and projects.
Nevertheless, funding is available on the global markets. According to HSBC, investible assets of up to €68.7 trillion are available from long-term institutional investors such as pension and insurance funds. As much as €3 trillion are globally targeted at infrastructure investments. Therefore, Europe must strengthen its competitiveness on the global equity and debt market and provide the necessary credentials for investors.
"According to HSBC, investible assets of up to €68.7 trillion are available from long-term institutional investors such as pension and insurance funds"
The connecting Europe facility – on which I was parliament's rapporteur – is the first step, but the extent of the infrastructure demand requires a global approach on long-term infrastructure funding. Therefore, I congratulate commission president Jean-Claude Juncker's intention to mobilise €300bn towards private and public investment, and we should make sure that it is targeted on key infrastructure investments. A European long-term investment fund, co-sponsored by private investors, the European investment bank and national governments and banks, can provide the momentum for unlocking the huge capital reserves that lie with institutional investors.
If we want to cover €1 trillion investment needs for EU energy, we need to be pragmatic and therefore decide to put the internal energy market at the top of our priority list. Market based financial instruments will leverage each public euro that is spent 10 to 15 times. This is why money must be directed to those projects of EU added value, which are facing suboptimal investment conditions, in order to facilitate private involvement through equity and debt instruments. Grants must be limited, to address only those projects which lack any business case but contribute to the integration of the market.
Commissioner for climate action and energy Miguel Arias Cañete has already presented the outline of Juncker's immediate investment plan, with a clear commitment to include energy infrastructure investment among the key priorities. I would say this is excellent news for the energy market as a whole, but it also represents a kickstart for the planned energy union. With a true energy union, Europe can be a stronger actor on the global scene and can drive down supply costs for the manufacturing industry and for citizens alike. Nevertheless, this energy union will be have to rely on private investments in infrastructure and we policymakers will have to ensure an effective legislative environment to attract investors. That is why I believe that a Europe that needs more energy is actually a Europe in need for a larger market.