| dc.description.abstract | Due to the limited availability of and high dependence on oil and gas resources in the European Union (EU), energy security has been one of the priorities of the legislative agenda since its beginnings. To this end, the European Commission (EC) has issued several policy instruments to counteract the risks associated with oil and gas disruptions that can have long lasting consequences on EU’s economy. However, no study has been conducted to determine whether or not the EC’s policy has helped increase energy security of oil and gas in the region. Thus, the purpose of this study was to assess the policy’s effectiveness by studying the evolution of oil and gas energy security in fifteen countries (EU15) from 1994 to 2016 by using five indicators: Liquidity in the oil and gas markets, oil vulnerability index (OVI), ESI price, share of zero carbon fuels (SOCZF) and supplier diversity. These indicators were chosen based on the methodology devised by the US Centre for Innovation and Impact, as well as by their characteristic to collectively cover all the elements provided in the definition of energy security (i.e. affordability, acceptability, accessibility and availability).
The results show that on a year to year basis (2016 vs 1994), the energy security in the EU15 has diminished meaning that their risk exposure to oil and gas disruptions has increased over time. The individual indicator results (2016 vs 1994) showed that: (i) The market liquidity of the oil and gas markets remained, for the most part unaltered (-0.4% in the oil market and -0.2% in the gas market) (ii) The OVI index increased 50%, which means that the EU15 increasingly allocate a bigger portion of their GDP to acquire oil in the international markets (iii) The ESI Price of Oil decreased 11.8% as a result of an increased reduction on the oil demand of the EU 15 Member States, diversification in oil suppliers and geopolitical stability in the supplying countries (iv) The ESI Price of gas increased 26.4% due to poor gas supplier diversification (v) The SOZCF increased 37.5% due to increased inclusion of renewable energy which means (according to this indicator) that oil and gas have become less socially acceptable (vi) The supplier diversity of oil has increased due to the inclusion of more oil suppliers but also due to a better distribution of the import shares among the supplying countries (vii) The gas supplier diversification has decreased 5.7% due to increased import dependency from the EU15 on Norway, the Netherlands and UK. To understand the underlying reasons why the policies have proven ineffective, the study was complemented by a high level analysis of the content of the policies using a governance theory framework devised by Easton (1965). The results showed that only one out of the seven policies analysed (Regulation 994/2010), deals directly with energy security and establishes legally binding consequences for non-compliant countries, which limits the impact of these policies on energy security indicators. This lack of stringency is the result of the diverse interests present in the EU which ultimately leads to suboptimal policy outputs. Furthermore, it is difficult to establish causality between the indicator results and the measures embedded in the policies in question due to all the external factors that affect the international markets of oil and gas.
Going forward, the EC should continue its long term strategy to mitigate the risks associated to oil and gas disruptions through the strengthening of the internal energy market and the deployment of renewable energy capacity. Lastly, while this study showed that the policies issued by the EC did not seem to have an impact on the indicator results, there has been some progress in the field of energy security in the EU. Examples of this are the dissolution of energy conglomerates that hinder competition or the international cooperation mechanisms that have been implemented to counteract oil and gas disruptions. Thus, the role of the EC as an energy governance body should not be undermined. | |
