The European Union's Energy Security Challenges

Publication Date: January 2008

Publisher: Library of Congress. Congressional Research Service

Author(s):

Research Area: Energy

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Abstract:

Recent increases in energy prices and a steady escalation in world energy demand that is expected to rise by nearly 60% over the next twenty years has led U.S. policy-makers to engage in a wide ranging debate over how best to address this nation's future energy requirements. Similarly, the European Union, along with its member states, is also engaged in an intense discussion of Europe's future energy challenges.

The United States and the European Union, together, represent the world's largest energy market. Today, the United States and the EU produce approximately 23% of the world's energy but consume almost 40% of the world's supply of energy. The EU consumes approximately 18% of global oil consumption and 19% of gas produced.

In 2005, the EU imported approximately 50% of its energy needs. That figure is expected to rise to 70% by 2030. Almost 50% of the EU's imported energy in the form of oil and natural gas comes from Russia. Europe's growing dependency on Russian energy supplies has led some observers to express their concern that Moscow could use the "energy weapon" to try to influence future foreign or economic policy in Europe.

In March 2006, the European Commission released a "Green Paper" outlining policy options which could lead to a common European strategy for energy security. By the end of 2006, the Commission will issue a "Strategic Energy Review" designed to set out specific policy actions that both the EU and its member states could take in order to begin to implement an effective and coordinated energy policy.

The United States and the European Union have steadily increased the transatlantic energy dialogue on issues such as energy efficiency and alternative energy sources. Both want to explore ways in which the U.S. and EU can cooperate in the world energy market (such as liquified natural gas) and how to deal with Russia and other politically unstable regions where large energy supplies are located.

At the conclusion of the US-EU Summit held in Vienna, Austria in June, 2006, both sides issued a joint statement which declared that the United States and the EU recognized the strategic role of security of supply, competitiveness and sustainability in the energy sector. In this connection, both sides reaffirmed their commitment to energy security and to cooperate to ensure sufficient, reliable and environmentally responsible supplies of energy.

This report examines some of Europe's critical energy challenges and how the EU is attempting to address those challenges through an effort to coordinate a European energy strategy. It also includes an overview of broader transatlantic energy security cooperation. This report may be updated as needed. For additional information, see CRS Report RS22378, Russia's Cutoff of Natural Gas to Ukraine: Context and Implications, by Jim Nichol, Steven Woehrel, and Bernard Gelb and CRS Report RS22409, NATO and Energy Security, by Paul Gallis.