Kadri Simson on forging a new energy path

Kadri Simson, the EU Commissioner for Energy, says she had to fight back tears at the end of the emotional address delivered by Ukrainian President Volodymyr Zelenskyy in the plenary of the European Parliament.

The Ukrainian leader was in Brussels on 9 February for the last leg of a trip which began in London and Paris and then continued to Warsaw, almost a full year into Russia’s war on his country. Standing at the podium before the EU’s lawmakers, Zelenskyy greeted the room with the now-familiar “Slava Ukraïni!” (Glory to Ukraine!), to which the audience responded with the customary answer, “Herojam Slava!” (Glory to the heroes!).

Simson was seated on the right side of the hemicycle, together with her colleagues from the College of Commissioners. “We have been part of a historic moment – it was impressive,” she tells The Parliament just a few hours later, speaking at her office on the eighth floor of the Berlaymont.

With Zelenskyy still answering questions from the Brussels press corps across the street and helicopters circling over Schuman roundabout amidst the ongoing extraordinary European Council, the summit of the EU’s heads of state and governments, it was a potent moment to sit down for an interview with the bloc’s chief energy officer.

An Estonian national, the 46-year-old Kadri Simson holds a degree in history from the University of Tartu, the oldest and largest higher education institution in the country, and a master’s degree in political science from University College London. Like many others in the Brussels EU quarter, she’s donned a blue and yellow ribbon on her jacket since the start of the Russian offensive against Ukraine.

“We do understand what it means for a nation to fight for its independence. This was our past, and today it is the terrible present of Ukraine”

The Baltic countries have long warned about the risk of military escalation by Moscow, a concern often brushed off by their peers in the EU. “We knew that this could have happened,” Simson admits.

“I guess we were not vocal enough back then,” she adds. “In a way, due to our history, a few leaders [outside the Baltics] may have thought that for us this was about some sort of national trauma, and that never, ever could a 20th-century type of war return to European soil, with foreign troops targeting innocent civilians.”

“We do understand what it means for a nation to fight for its independence. This was our past, and today it is the terrible present of Ukraine.”

Estonia has largely managed to bury the last remnants of its Soviet past while turning itself into a digital haven and an incubator of start-up success stories (“I was definitely ready when we turned to fully remote work!” Simson says with a smile).

She recalls her adolescence before the small country gained independence from the Soviet Union: “Before that, in the 80s, almost every family had relatives who had been deported by the Soviets, and others living abroad, trying to keep the attention high on the occupation. This is the reason why none of us from the Baltic region questions the unwavering support towards Ukraine. There is no possibility that we will feel exhaustion after one year of war.”

Since Russia began its full-scale invasion, she says, the European Commission “has had close cooperation with Ukraine on energy matters. Not only have we helped Kyiv restore damages done by Russia to [Ukraine’s] national infrastructure, but just four hours before the start of the invasion, we managed to help Ukraine disconnect from the Russian-operated electricity grid and synchronise with ours [the Continental European Electricity Grid].” Without this switchover, she argues, the Russian attacks against the energy infrastructure would have led to lasting blackouts in Ukraine.

The EU showed determination to sever bridges with the Kremlin and sanction Russia, its biggest supplier of fossil fuels, in an attempt to decrease the country’s revenue and hamper its ability to finance the war. Moscow, meanwhile, turned to the weaponisation of energy flows, with the aim of driving prices high across a wide range of commodities.

In what is often called an age of permacrisis for the EU, Simson found herself responsible for a hot-button issue and dealing with an external actor – Russia – she knows well thanks to her national background.

In December 2019, when Simson was appointed Commissioner for Energy in the executive chaired by European Commission President Ursula von der Leyen, the portfolio she oversaw was considered delicate but not exactly top-notch – at least not on paper.

Then, when the pandemic began to ease, “the energy crisis brought all my files into the limelight,” she recalls. Discreetly in the shadow of the Commission’s Executive Vice-President and Green Deal and Climate czar Frans Timmermans up to that point, the start of the energy crunch in the bloc between 2021 and 2022 changed everything. Simson emerged as a key figure shaping the EU’s policymaking and emergency responses.

This is Simson’s first gig at a top EU job after many years in domestic politics, where she has been a prominent figure in the Estonian Centre Party, which is a member of ALDE, the European family of liberal democrats. She represented her party in the Riigikogu, Estonia’s parliament, between 2007 and 2016. In 2016, she took up the responsibility of Minister for Economic Affairs and Infrastructure in the government led by her fellow party member Jüri Ratas, until she was sent to Brussels as the country’s nominee for the new Commission.

“Although it was my first time in EU politics, I felt I was well prepared,” she tells The Parliament. During her country’s semester at the helm of the rotating Presidency of the Council of the EU, between July and December 2017, Simson was the chair of three different Council configurations, responsible for both the meetings of the Energy and Transport ministers in the Transport, Telecommunications and Energy Council (TTE), as well as those of Industry ministers in the EU Competitiveness Council (COMPET).

“It was a busy time, full of trilogues and with many general approaches to be adopted,” she recalls.

This did not spare her the most classic of all shocks experienced by national politicians arriving in Brussels: “Of course, in Estonia you can make decisions very fast. The processes of the EU institutions, instead, tend to be slow. With the pandemic, however, we learnt that the decision-making process could be made significantly speedier.” At times, this meant sidelining the European Parliament – a move which must still be limited to extraordinary cases when it’s truly necessary, says Simson.

The past months have led to some historic energy decisions ranging from consumption reduction measures to a revenue cap for energy firms, and from moves for EU countries to jointly purchase natural gas to the famous price cap on gas designed to halt market speculation. As when facing the Covid-19 outbreak, “Member States showed an unprecedented unity and ability to agree on common measures”, Simson comments. “Everyone has been playing their part.”

The record-breaking 12 Energy Council ministerial meetings convened in 2022, the Estonian argues, “helped us to deliver temporary emergency proposals” both in the interest of Europeans and “to help Ukrainians prevail”.

While the pace of meetings might have slowed down, she will never forget the tour de force conducted by Czech Minister of Industry and Trade Jozef Síkela during his country’s Presidency semester in the second half of last year. A particularly memorable moment was when he handed Simson a white sweatshirt emblazoned with the words “We will convene as many Energy Councils as necessary.”

Simson knows that next winter will likely be more difficult than the previous one. However, she points to numbers indicating that the EU’s overall strategy was the right one to pursue: “In January this year, the natural gas prices were down to pre-war levels even though Russia had cut pipeline gas supplies to Europe by 87 per cent,” she says. “In the first week of February, our underground storage was 70 per cent full, [which is] twice [as full as it was] one year earlier.”

There is over a year to go before a new European Commission will be sworn in, but Simson believes that “we can already say that one of the main legacies of this term is the fact that we managed to show solidarity as Europeans and to free ourselves from the dangerous dependence on Russian fossil fuels. Not only this, but it is also important to remind people that we are not replacing every single gas molecule we lost to Russia with new gas supplies, either seaborne or via alternative pipelines.

“On the contrary, we are committed to substitute it with renewables and only partially with gas of other origins,” she adds, hinting at the bloc’s CO2 emission reduction efforts.

Part of the unprecedented energy package is a temporary market correction mechanism, a rather technical regulation which formally entered into force on 15 February, after having been agreed at the end of last December.

The mechanism is automatically activated if prices exceed €180 per megawatt hour for three days on the Dutch Title Transfer Facility (TTF), the main European gas exchange. Although not formally a price cap in name, that is what the measure achieves in practice.

But the cap is only triggered if another condition is met: during the same period, the TTF price must be €35 higher than an average global reference price for liquified natural gas. With these dual requirements, the mechanism hopes to keep surging energy prices in check while also preserving security of supply (some Member States feared a cap that wasn’t tied to global price trends would drive energy suppliers to buyers outside the bloc, particularly in Asia).

The proposal was adopted following 10 months of talks between Brussels and the EU capitals. Over the course of the negotiations, the TTF saw record-high prices after Russia shut down the Nord Stream 1 pipeline last August, when companies were buying more to fill their storage tanks ahead of winter.

However, in Simson’s view, the EU did not act too late. On the contrary, the market correction mechanism sent “a clear message to the traders of the virtual platforms, who are now aware that there is a limit to how much Europe is willing to pay for gas supplies. At the same time, we must continue our efforts to cut both industrial and private demand, and to work with our international partners.”

Just days before sitting down with The Parliament, Simson was in Baku, where she was co-chairing a meeting of the Southern Gas Corridor Advisory Council, an EU-Azeri initiative that aims to forge natural gas supply routes from the Caspian basin.

In the past months, the EU’s energy chief has been travelling widely, from Azerbaijan to the United States, from Norway to Egypt, from Algeria to Qatar, primarily to increase alternative gas flows to Europe from these various countries.

In several of these cases, however, this means strengthening partnerships with authoritarian governments which might become the Russia of tomorrow. The Commissioner is aware of the risk.

“Before the war, Moscow had 40 per cent of our market share. We will never return to a situation in which one single supplier will have such numbers. In addition, we want to extend the cooperation with our trusted partners beyond natural gas, as we are committed to achieve climate neutrality.”

That means encouraging third countries to set limits on their gas production and to deploy renewables to serve the EU as well as domestic demand.

Promoting energy efficiency and accelerating the deployment of clean tech remain key to the EU’s policy mix, she underlines. With the Green Deal, “we were the ones in 2019 to assert that breakthrough technologies would help us grow fast. The Americans only followed our path two and a half years later,” she says, pointing to major transatlantic tensions after the US unveiled its Inflation Reduction Act, which offers generous financial incentives to support the green transition.

But, the Commissioner signals, her work is far from over. Reform of the EU’s electricity market, the last major energy-related dossier ahead of the 2024 elections, is just getting started.

“So far, our market has served us well. Our objective, however, is to create conditions for consumers to predict price levels and give positive signals for investments on renewables – wind and solar for sure, but also hydrogen,” she explains. “We cannot afford anything that will bring us to a situation where we start consuming more gas.”

“We cannot afford anything that will bring us to a situation where we start consuming more gas”

Whether Simson will stay another term in the Berlaymont will depend on decisions made by the government in Tallinn during the summer of 2024. But, she says, “who will be the next Commission President” is another factor.

“You never know the spirit of the next team… but for sure I have experienced that von der Leyen is an inspirational leader,” she says, noting that the current Commission President is a sound negotiator, like the many female leaders who were at the frontline of both managing the pandemic and supporting Ukraine. “Women are better negotiators,” she adds.

For a short period of time, in 2021, her home country of Estonia was the only Member State with two democratically elected women at the helm. “We were just ready, after decades of male domination,” she says.

Gender balance is key, Simson thinks: “The one here at the Commission is the first experience, for me, in a workplace with half men and half women. This creates a wonderful working environment and provides ground for good discussions and thorough debates.”