EUROPEAN THINK-TANK REVIEW – II

Written by | Monday, November 25th, 2013
European Values

An End to Support for Renewables? The Wrong Battle to Fight
Fabio Genoese (The Centre for European Policy Studies)
The directors of the ten energy companies that own half of Europe’s energy production capacity warned that Europe’s energy infrastructure is at risk. The conventional power plants will soon need to be closed for good because they are, due to current market conditions, unprofitable. As a result, each winter the power grid can face severe power outages. These days, the market conditions are unfavorable to conventional power plants, because of the subsidies from the European Union that support green power and therefore reduce the electricity prices.
Most directors are requesting termination of the support of “green power” technologies mainly because these technologies that convert solar and wind into energy are already fully developed and need no further subsidies. Building massive power plants for renewable energy was a political decision and a part of the EU energy package of 2007 /2008. It is unlikely that the European leaders will give up plans for mandatory reductions of carbon emissions, which necessarily involve obtaining energy from renewable sources.
But that causes excess renewable energy sources. The demand for electricity has not yet overcome the decline from 2009, which was caused by the economic crisis. Over the past few years, the demand for energy from coal and gas power plants was overvalued and very large investments have been made to the production capacities of coal and gas power plants. These plants currently over-produce electricity, which means that the market prices for energy do not offer the desired reward.
The author, however, sees the problem not only in funding, but also in the lack of market integration. He proposes that only such an amount of energy should be produced that will be enough to meet the demand. The renewable resources should stop producing energy at the moment of saturation of demand in order to avoid adverse developments in market prices for energy. The “green power” plants should contribute to the stability of the power system by making careful planning and forecasting developments.
Conventional power plants should consider a new business model „system of payments for service reliability”. It would be possible to introduce different price categories according to the degree of reliability of supply, from which the customers could choose. In this system, 100 % reliability would be guaranteed during the basic network load, but not in the time of demand peaks. This could reduce the need for the amount of energy produced, and thus reduce its overall cost. The author adds that it would be ideal to harmonize this policy at the European level.

EU-GCC Trade and Investment Relations: What Prospect of an FTA between the Two Regions?
Rym Ayadi and Salim Gadi (Istituto Affari Internazionali)
The Cooperation Council for the Arab States of the Gulf (GCC) is a regional grouping that is known for the production of hydrocarbons. The cooperation between the EU and the GCC has taken place in different sectors, whereby each of them was of different intensity. On the one hand, it was almost impossible to agree on political issues or on issues of technical cooperation, on the other hand, the cooperation led to the investment and business relations.
European exports to GCC countries meant primarily the supply of knowledge-based goods. Although the EU affected by crisis reduced demand for hydrocarbons, the demand for goods from the region remained stable. The export of services of GCC countries was not significant; in fact, much of the import of services was claimed by the EU. The reason why export of intensive goods or services from the Gulf countries is so low is the insufficient level of human capital – only 6 % of the population has completed tertiary education. Foreign direct investment (FDI) accounts for a significant portion of investments flows between these two regions. GCC countries use FDI as an opportunity to diversify their economic surpluses of income and use these to buy the EU assets.
At the end of the 1980s, the free trade agreement between the EU and the GCC was about to come into force. While this would have been the first interregional agreement of this kind, in the end, the agreement never came into force. Due to geopolitical factors, the EU remains interested in improving relations with the Gulf countries, which could improve its political leverage in the region.  Cooperation between these regions is beneficial to both parties if only because the EU needs natural resources and GCC cannot do without European technological know-how.

The Balance of Power in the Current European Parliament is Crucial for Understanding the Issues at Stake in the 2014 European Election
Doru Frantescu (The London School of Economics and Political Science)
The date for the next elections to the European parliament is approaching fast and, from May 2014, the European Parliament (EP) will have new composition that will shape the direction of the EU for the next five years. In his article, Doru Frantescu analyzes the European Parliament in the aftermath of the Lisbon Treaty and introduces to the reader those issues that are likely to be discussed during the election of 2014.
The most important question of all is: Who has the real power in the European Parliament? What party/parties can seriously influence the outcome of negotiations over the legislations that pass through the European Parliament? If it was only according to the number of seats in the EP, the European People’s Party (EPP) would be the strongest party, followed by a progressive alliance of Socialists and Democrats (S & D). In the last election, the EPP won with of 89 % of the votes, obtaining clear majority.
Since there is no stable opposition in the European Parliament, there is no party with an absolute majority either. At the same time, the larger parties are the most „disciplined“and their members are the most loyal. However, this coherence differs significantly depending on the areas of policy. For example, the EPP is more coherent than S & D when voting on agricultural issues, but less consistent when it comes to the voting on civil liberties. For the future parliamentary election, it is expected that more seats will be gained by parties with euroskeptic program and radical parties. Although they can have a smaller representation, these parties can gain – with proper negotiations – more influence in Parliament than it might now appear.
So how do you make sense of the work of the European Parliament and determine which party to vote for? An independent organization, the VoteWatch, which has been following the work of the European Parliament and the EU Council of Ministers closely, provides access to an extensive database containing all roll-call votes at the plenary session of the European Parliament. Thanks to the VoteWatch, the EU citizens can predict what direction will be the EU legislation taken, even if still unapproved.
To make the European Parliamentary elections more approachable to the young generation, the project Myvote2014 was launched as well. On Myvote2014.eu website, everyone can try to vote on 15 specified matters on which Parliament voted in the past five years (unification of educational systems, employment, immigration or controversial ACTA). The site enables you to compare your vote with a vote of MEPs, and to determine which one of them has the closest view to yours. The authors of the project expect more people to understand the activities of the European Parliament, and by that they will become more interested in the 2014 elections.

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