Oettinger on the Energy Summit: EU Commissioner Wants to Fund Super Grid with Euro Bonds

EU leaders meeting in Brussels are discussing the conditions for expanding Europe's internal electricity market. In an interview, European Energy Commissioner Günther Oettinger of Germany discusses his vision for Europe and proposes what might be a surprising method for financing the ambitious project.

A satellite image of Europe by night: Massive investments are needed to ensure energy supplies for the future. Zoom
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A satellite image of Europe by night: Massive investments are needed to ensure energy supplies for the future.

Europe is a global economic power. When it comes to energy, though, it is by no means any trailblazer. For one thing, there aren't enough resources to cover the need for electricity, heat and fuel. On top of that, the few resources that are available are used wastefully.

The European Union wants things to be different. Officials and leaders are attempting to create a European energy market. Under the vision, countries would produce energy for all of Europe, rather than just for themselves. Competition should be stimulated, prices should fall and Europe's industries must become more competitive.

The EU has been making efforts in this direction for quite a while, but without much success. Back in 2006, the new era of European energy policy was heralded, yet today Europe's energy market is still a patchwork. The development of a cross-border electricity grid has foundered, as have the plans for increasing the use of renewable energy. Originally, the plan had been that, by 2010, renewables would make up 21 percent of total EU-wide energy consumption, yet it currently only comprises 18 percent. The share of wind energy grew by 10 percent less in 2010 than it had the previous year.

In Brussels, EU leaders are meeting Friday for an energy summit aimed at coordinating a common energy policy. EU Energy Commissioner Günther Oettinger, former governor of the southwestern German state of Baden-Württemberg, is playing an important role. In an interview with SPIEGEL ONLINE, Oettinger outlined his ambitions proposals.

SPIEGEL ONLINE: Mr. Oettinger, the energy summit is your big test as EU commissioner. Are you nervous?

Günther Oettinger: No, everything is good. I am well prepared.

SPIEGEL ONLINE: You are facing high expectations. The EU energy policy has made hardly any progress in 10 years. Is that a lost decade?

Oettinger: It's true that the tempo was too slow. The Europeanization of the electricity and gas markets will be a mammoth task.

SPIEGEL ONLINE: And now it is your task. What are you doing better than your predecessor?

Oettinger: In the last six months, I have met with the EU commission presidents, with government leaders and with the energy ministers in each country. The response to my policy is very positive. The decisions that we are now taking will give us tailwind for the rest of the year.

SPIEGEL ONLINE: Really? The draft final communiqué for the summit comes across as pretty meager. There is little sign of an accelerator for the European energy market.

Oettinger: What do you not like about it?

SPIEGEL ONLINE: For example, you have withdrawn your demand for a Europe-wide system for promoting green electricity. That should lead to a situation where solar energy is promoted in places where the sun shines most and wind energy is promoted where it blows more. Why is this point now missing?

Oettinger: The energy plan that we envisage is a compromise. It is my task to make the maximum demands on Europe, even if in the process I injure the national pride of some countries. Furthermore, the only criticism of these suggestions has come from within Germany and from nowhere else.

SPIEGEL ONLINE: From the Green Party, for example. They accuse you of being under the control of German electric utility companies -- such as E.on, RWE and the like -- and of wanting to kill off subsidies to German green energy.

Oettinger: It's not about promoting it less but, rather, more efficiently. We have to keep an eye on the costs. It is absurd to plaster Germany with solar panels, if one can produce far more solar energy for the same amount of money in Spain and North Africa. That doesn't make business sense, and it is holding Europe back. In any case, the expansion of the EU energy market will bring with it an EU-wide promotion in the medium-term. The Germans will not want to subsidize wind energy if it then flows across the border to other countries.

SPIEGEL ONLINE: With regards the expansion of the grid: This is an area where Europe has long failed spectacularly. Around 80 cross-border transmission capacities have not been laid for the transport of electricity between states, never mind the power lines. Thousands of kilometers of cables will have to be moved in Germany alone.

Oettinger: We are working on it. For the first time, we will oblige network providers to present a concrete 10-year plan for the development of their infrastructure.

SPIEGEL ONLINE: Some providers would like to build but are annoyed by the bureaucracy. The authorization procedure in the EU can take up to 15 years.

Oettinger: We will work on ensuring that these processes only take a few years. With its development of (formerly communist eastern Germany), Germany has proved that it is possible to create infrastructure at record speeds without violating ownership rights or environmental regulations. The same things should happen when it comes to developing Europe's infrastructure.

SPIEGEL: In Stuttgart, where you served as governor, the construction of a new train station has provoked a real mass revolt. And electricity lines and wind turbines are also regarded by many citizens as something they want, but not in their backyard. How will you win Europe over to your energy vision?

Oettinger: What I would say to Europeans is that we wouldn't need to build any more dirty coal-fired plants if we could transport wind energy from the North Sea to Düsseldorf. And that electricity will get cheaper if there are mains that can transport energy without losses from Morocco to Germany.

SPIEGEL ONLINE: The costs of expanding the grid are exorbitant for the EU, as well, because when it comes to part of the mains, companies will not lay them voluntarily. That's why the EU is now planning to fund them to the tune of €1 billion a year starting in 2014. Where is that money supposed to come from?

Oettigner: As this is an infrastructure project -- that is, an investment in the future -- I believe it could be possible to finance it through Euro bonds. Commission President Barroso also shares the view that this should be part of the draft budget.

SPIEGEL ONLINE: When it comes to energy efficiency, Europe has fallen behind its own goals. Although environmental organizations would like the EU to oblige countries to improve efficiency, your plan doesn't include such provisions.

Oettinger: We are going to give the member states another two to three years to react on their own. Then we will prescribe binding goals.

SPIEGEL ONLINE: You are a vehement defender of the Desertec project, which would direct mass amounts of electricity generated from solar cells in North Africa to the EU. In light of current situation, do you still consider Tunisia and Egypt to be reliable potential energy suppliers?

Oettinger: Yes, because the project is highly relevant to the North African states in terms of regional economic policy. Regardless of who governs these countries in the future, it will be in their vested interest to create security for investors. Later, when the first plants are connected to the grid, there will be just as little interest in disrupting the flow of electricity to Europe. After all, by doing so, the governments would be cutting off their own flow of money.

Interview conducted by Stefan Schultz

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About Günther Oettinger
Günther Oettinger has served as the European Commisioner for Energy since February 2010. From 2005 to 2010, he held the office of governor of the southern German state of Baden-Württemburg as a member of Chancellor Angela Merkel's conservative Christian Democratic Union party. At this week's European Union summit in Brussels, he is pushing for the expansion of the EU's internal energy market.

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