Energy: Italy´s Chance for Leadership

04.05.14 Publication:

In July, Italy will have an opportunity
that is also a responsibility. It is an opportunity to show
leadership in Europe, an opportunity to launch something that could
be remembered as an important and popular phase of the European
project. It is also an opportunity to launch—or, more strictly,
relaunch—something that would help Italian industry and Italian
households, and is the only serious and substantial response that
Europe can make to Vladimir Putin’s actions in Ukraine.

That “something” is what could be
called an “Energy Union” in Europe. The opportunity is Italy’s
turn holding the presidency of the European Council of Ministers,
which it will do for six months, starting on July 1st.

These six-month presidencies usually
begin with announcements and declarations of grand intentions,
especially towards the country’s domestic media, which imply that
the role is significant. They are then quickly forgotten amid a
morass of boring summits, bland communiqués and snail-like progress.
Right now, Italy’s six-month presidency looks like following this
traditional pattern.

But it does not need to. Italy’s six
months as president, during which it will have a major role in
setting Europe’s agenda, will begin in the aftermath of European
parliamentary elections of May 22-25. Those election results, if
opinion polls are to be believed, may well look quite good for Matteo
Renzi, but will look quite bad for the European Union as a whole,
with anti-EU parties such as France’s Front National, Britain’s
UK Independence Party and Holland’s Freedom Party grabbing the
headlines and a shockingly large share of the seats in the
Parliament. If so, that will set Europe’s mood, and risks also
affecting its agenda.

Those anti-EU votes will reflect the
long economic recession and high unemployment above all. But they
will also reflect a disillusionment with the European Union that has
been building up for a decade or more. Many people now seem to feel
that the European Union is at best aimless and incapable of achieving
any real progress that improves ordinary people’s lives, or at
worst that it is positively damaging, a process that serves the
interests of an elite of politicians, bankers and big corporations,
at the expense of ordinary people.

Before events in the Ukraine turned
ominous, with Russian troops massing on its border and Russian
special forces operating inside the country, it was common to say,
with a tinge of sadness, that it was tragically ironic that so many
Europeans were falling out of love with the EU at just the time when
so many Ukrainians were showing in their protests in Kiev that they
were in love with the ideas and values that the EU represents.

Since then, as Crimea fell into
Russian hands and as the rebellion in eastern Ukraine grew, the
European Union has looked more and more impotent. Its threats count
for nothing. Its businesses don’t want to lose their contracts in
Russia. And altogether we are too dependent on Russia for our
supplies of energy to want to risk a serious rupture in relations.

So what can Italy do about this,
during its six months chairing all those European summits? It cannot
make miracles. But it could begin a process that would improve
Italy’s image in Europe and, in the long term, strengthen Italy’s

Energy has always been an obvious
candidate for European co-operation and integration. We share the
need for secure supplies of energy at as cheap a price as possible.
Since we also share a desire to cut carbon-dioxide emissions for the
sake of the climate and to produce more of our electricity using
clean, renewable energy sources, we also share a need to make our
electricity grids as efficient as possible while building the
capacity to supply electricity even when the wind doesn’t blow or
the sun doesn’t shine.

A single market, competition, the
scale provided by a pan-European network, the legal power to prevent
national subsidies from competing with each other: these are all the
classic tools of European Union co-operation, used in the coal and
steel community in the 1950s, the anti-subsidy drive of the 1980s,
the single market of the 1990s, the aviation “open skies” policy
of the 1990s. As the European Commission has said repeatedly, energy
should have been one of the great strides forward for the EU during
the past decade.

But it hasn’t been. Essentially,
there are three reasons for the failure. One is that energy
investments are expensive. But a bigger reason is that national
energy companies are powerful and politically well connected, so that
they have blocked progress. And a third reason is that the drive for
renewable energy has led to national subsidy regimes that divide our
markets rather than uniting them, just as subsidies once did for cars
or steel, and have made the energy companies even keener to block a
common EU energy market.

Now, however, comes Italy’s
opportunity and responsibility. The opportunity is to use the crisis
over Ukraine to build the political agreement necessary to start
clearing away these obstacles. Italy’s own energy giants, ENI and
ENEL, have been as obstructive as have the energy giants in Germany
and other countries. So if Italy were to make a big effort to
relaunch the idea of energy union, it would help to remedy a
widespread impression that the government is unwilling to upset
either ENI or Russia for craven commercial reasons.

It is a responsibility because Europe
badly needs to make progress on energy. Dependence on Russia for
one-third of our supplies of natural gas is a serious weakness. And
despite being surrounded by suppliers of coal, gas and oil, our
electricity prices are typically double or treble those paid in
America. Italy’s electricity prices are the highest in the
34-nation club of rich industrial countries, the OECD.

It is a responsibility, above all,
because Europe badly needs leadership, and it needs that leadership
to show its citizens that the European Union can bring them
political, social and economic advantages. Cheaper, secure supplies
of energy, in a single, competitive market, connected by a
super-smart grid through which electricity can be supplied by
companies all over Europe: that would be an excellent and powerful
example of what the EU can achieve.

however, needs to shout for it, to relaunch it, to pressure Germany
and other powerful countries to get serious about an energy union. In
July, it will be Italy’s chance to do exactly that.