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US-EU energy relations must strengthen to face security concerns: report


Collaboration urged to diversify gas supply

Joint effort to counter China's new energy dominance

Carbon border tax talks should start immediately

  • Author
  • Henry Edwardes-Evans
  • Editor
  • Norazlina Jumaat
  • Commodity
  • Coal Electric Power LNG Natural Gas

London — The United States and the EU should "reinvigorate" the US-EU Energy Council to address a range of energy security concerns, notably the ability of Russia to use natural gas as a political lever, The Atlantic Council said Thursday.

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In a new report, titled European Energy Security and the Critical Role of Transatlantic Energy Cooperation, the council says European regions with limited natural gas infrastructure will need public and private transatlantic investment to diversify their supply.

"As long as Nord Stream, TurkStream, and Russian LNG exporters operate within the EU's Third Energy Package market rules and European countries have alternative options for supply, Russia's ability to use gas as a political lever will be diminished," it said.

Nevertheless the US and the EU "must work together to establish new, competitive supply chains and reduce dependence on single suppliers," it said.

Founded in 1961, the Atlantic Council is an independent organisation that promotes US leadership and engagement in the world in partnership with allies and partners.

Donors include the British Foreign and Commonwealth Office, the Embassy of the United Arab Emirates to the US, Facebook, the US Department of State, and a large number of large philanthropic foundations and commercial companies, including S&P Global.

Among other recommendations, the council calls for greater US-EU collaboration on clean energy generation, to reduce carbon emissions and improve supply security, while countering China's dominance as a source of raw materials and equipment like solar panels and batteries.

It also calls for a coordinated transatlantic financing strategy; investment in resilient, smart-technology grids; and implementation of the EU's Green Deal.

"The energy transition, energy security, and social demands and expectations will have to be managed collectively in order for the United States and the EU to meet climate goals, while satisfying growing energy demand," the council said.

A balance between necessary emissions reductions and a consistent supply of affordable energy would need to address certain barriers, the council said, such as a carbon border adjustment mechanism.

A carbon border tax is a key part of the European Green Deal, targeting imports from countries with weaker carbon emission policies. Details of the tax are to be proposed by 2021 at the earliest.

"Consultations with the US should begin immediately," the report said.

"The carbon border tax should only be levied on import categories where objective carbon emissions data is available. For example, US LNG, Russian piped gas, and Russian LNG imports should be compared fairly on their products' lifecycle carbon emissions," it said.

Global LNG suppliers and piped gas importers with the least methane emissions may end up having a competitive advantage if the tax is levied fairly, it said.

"The United States and other LNG suppliers should be assessed accurately on their carbon emissions. Suppliers with poor carbon emissions transparency, like Russia, should be mandated to improve their tracking and verification practices if they are to be compared accurately to other natural gas exporters," it said.

If EU energy importers are not subject to consistent tracking and verification, "natural gas and oil producers with quality data on emissions will be penalized for transparency, and polluters with unreliable data will benefit under the new tax," it said.

To have credibility in working on these issues, the US must rejoin the Paris Agreement and reengage with the United Nations Framework Convention on Climate Change, the council said.