Summary: Energy policies in

Europe and North America are

in a transition period. They may
appear divergent, since North
America focuses on energy
production and European coun-
tries, such as Germany, focus on
energy imports, but these poli-
cies also refect greater coopera-
tion between transatlantic part-
ners. The situation in Ukraine
has once more raised energy
security concerns in Europe and
should motivate North American
and European partners toward
further energy and political cohe-
sion.
Transatlantic Security Task Force Series
Policy Brief
Bridging Energy Gaps for Greater
Transatlantic Cooperation
by Kristine Berzina
German Marshall Fund of the
United States-Paris
71 Boulevard Raspail
75006 Paris
T: +33 1 47 23 47 18
E: infoparis@gmfus.org
October 2014
Introduction
Energy policies in the United States
and Europe ofen appear to be at
odds, but these conficts are over-
blown. In spite of their diferences,
the United States and Europe are both
transforming their energy policies to
improve the security of their energy
supplies. Te confict in Ukraine has
instigated unprecedented closeness
across the Atlantic, and the crisis is
helping to lay the foundation for more
formal transatlantic energy security
cooperation. A close transatlantic
energy relationship will be crucial for
addressing energy security challenges
in the coming decades. As Russia
builds its infrastructure and markets
eastward, and China and Indias vora-
cious energy needs set global trends
and prices, Western leaders will need
to band together to maintain geopo-
litical signifcance and to continue
setting the global energy agenda.
Te big questions that have defned
energy security over the last decades
are losing their salience. For decades,
the threat of Russia cutting of gas to
Ukraine has shaped European energy
conversations. In 2006 and 2009,
gas shutofs to Ukraine led to cold
radiators in European capitals. But
political and technical solutions have
put Europe in a more secure situa-
tion than ever before. Tis summers
natural gas pricing dispute between
Russia and Ukraine has again stopped
deliveries of natural gas to Ukraine.
But this time, Europe is better
prepared to manage any interrup-
tion to its own supplies and can help
Ukraine not only diplomatically and
economically, but also by sending
European natural gas eastward.
Te situation in Ukraine has brought
about closer cooperation on energy
issues. Trough the G7, the transat-
lantic community has set a common
energy security agenda for the United
States, Canada, and European part-
ners. Regional cooperation, energy
source and route diversifcation,
energy efciency, and low carbon
solutions all play crucial roles in the
G7s plans for a more secure energy
future.
1
Moreover, the situation in
Ukraine has brought about greater
accord between Europeans and North
Americans on long-standing energy
disputes including the EUs Fuel
Quality Directive.
2

Such transatlantic cooperation on
energy may come as a surprise for
1 European Commission (2014), G7 Rome Energy
Ministerial Meeting, Rome G7 Energy Initiative for Energy
Security: Joint Statement, May 6, 2014, http://europa.
eu/rapid/press-release_IP-14-530_en.htm.
2 Stephen Ewart (2014), EU fuel wording could end
crude hurdles, Calgary Herald, June 7, 2014, http://
www.calgaryherald.com/business/Ewart+fuel+wording+
could+crude+hurdles/9916453/story.html.
Transatlantic Security Task Force Series
Policy Brief
2
Although gaps between North
American and European energy
policies remain, they are not
a stress test for transatlantic
security cooperation.
those who have focused on gaps between North Amer-
ican and European energy policies. Te two regions fuel
choices, import dependencies, economic power, and
vulnerabilities have appeared to be on diferent trajectories,
with the United States hoping to use cheap gas to solve its
energy needs and to fex its muscles abroad, and Europe
focusing on renewables without much regard to cost or its
own competitiveness.
Although gaps between North American and European
energy policies remain, they are not a stress test for transat-
lantic security cooperation. Te gaps in approaches provide
opportunities for complementarity and a formal coopera-
tion. Acting as a harmonious bloc will be important as both
regions address their waning importance over the coming
decades. Already, China and India dominate conversations
about growing energy demand and non-OECD countries
consume the majority of the worlds oil supplies.
3
Te
United States and Europe will need to band together on
research and trade to stay at the forefront of energy innova-
tion.
Transatlantic Energy Gaps
Europe and the United States have a common goal of
improving the security of their energy supplies, but the two
regions have approached this goal diferently. Te United
States has been blessed with geology and technological
innovation that has allowed U.S. companies to develop new
tight oil and shale gas resources. In Europe, geology and
political priorities have not led to a shale boom. Instead,
European energy transformations have focused largely on
increasing renewable energy saturation to meet energy self-
sufciency and climate change goals.
Te United States and Europe started out as both energy
producing and energy importing countries. As recently as
ten years ago, the United States planned to increase natural
gas imports, and many companies built liquefed natural
gas import terminals along the U.S. eastern seaboard. But
the shale gas boom changed this trajectory. Since 2009, the
United States has been the worlds top natural gas producer,
putting more than six times more natural gas on the market
than Saudi Arabia. In the European Union, the United
Kingdom (U.K.) had been the major natural gas producer.
But production has steadily decreased over the last decade.
3 BP (2014), BP Statistical Review of World Energy, June 2014, http://www.bp.com/
content/dam/bp/pdf/Energy-economics/statistical-review-2014/BP-statistical-review-of-
world-energy-2014-full-report.pdf.
In 2013, the U.K. produced just 35 percent of the volume of
natural gas that it produced ten years earlier.
4

Households and industry in the United States have bene-
fted from the fossil fuel boom and low prices for natural
gas. In 2013, the price of natural gas in the United States
had fallen to one-third the price of European gas. Not only
has this kept household heating bills low, cheap natural
gas has rejuvenated energy intensive manufacturing in the
United States. Chemicals manufacturers, including Germa-
nys BASF, are opening new plants in the United States to
take advantage of the more competitive environment.
Meanwhile in Europe, many countries are undergoing
energy transformations of their own. Germany introduced
its Energiewende (energy transition) in 2011, pledging
to phase out nuclear power by 2022 and aiming to reach
80 percent renewable energy by 2050. Te policy has
been so popular that by 2013, Germany was home to
over 10 percent of the worlds renewable energy capacity
(not including hydroelectricity).
5
Tis success has come
at a high price to households and to energy-intensive
industry. Households fnance the energy transition through
surcharges on their electricity bills, and the boom in
renewables has made Germanys average household elec-
tricity bills the highest in Europe. Industry, which is largely
exempt from paying the renewable energy surcharges,
argues that their exemptions from surcharges are not
enough to keep German industry competitive. Between low
fuel prices in the United States and low labor costs in Asia,
Germany has been put at a disadvantage. One option that
analysts suggest will reduce Germanys costs developing
4 Ibid.
5 BP (2014).
Transatlantic Security Task Force Series
Policy Brief
3
In spite of how different the
trajectories appear, both the
North American shale gas boom
and Germanys Energiewende
aim to reduce dependence on
fossil fuel imports and to improve
economic competitiveness in the
long run.
shale gas resources of their own
6
has encountered strong
domestic resistance.
In spite of how diferent the trajectories appear, both the
North American shale gas boom and Germanys Ener-
giewende aim to reduce dependence on fossil fuel imports
and to improve economic competitiveness in the long run.
Both regions wish to share their experiences and technical
innovations around the world.
Te United States is moving quickly to achieve these goals.
Not only is the United States meeting its own demand for
cheap energy and cushioning itself against disruptions and
political conficts in supplier states, it is preparing to share
its reserves with buyers overseas. By the end of 2015, the
frst shipments of liquefed natural gas from Sabine Pass,
Louisiana, will be sent to buyers including Koreas Kogas,
the U.K.s BG Group, Spains Gas Natural Fenosa, Frances
Total, and Indias GAIL. Countries across the world are
looking for a direct line to cheaper U.S. natural gas and are
seeking to replicate the U.S. success story by developing
shale gas of their own.
Germany is playing a longer-term game. Te immediate
efects of the energy transformation have been increased
costs and higher coal consumption. Yet the strategic goals
of the transition could eventually overcome these hurdles.
6 IHS (2014), A More Competitive Energiewende: Securing Germanys Global Com-
petitiveness in a New Energy World, http://www.ihs.com/info/ecc/a/competitive-ener-
giewende.aspx?ocid=gcsv2:pressrls:01.
By becoming more energy self-sufcient, phasing out
expensive fossil fuel imports, and paying of new renew-
ables capacity quickly through feed in tarifs, Germany
could become an example for how to create a competitive,
resilient, low-carbon economy. Much as the United States
seeks to spread its shale story, Germany is also sharing
its experiences with European neighbors and emerging
economies alike. A recent study found that whereas Euro-
pean energy specialists focused on the Energiewendes cost
challenges, experts in Brazil, China, and South Africa were
favorably disposed to the Energiewende and its long-term
strategic goals.
7

Toward Complementarity and Cooperation
North American and European energy policies are growing
closer in both domestic and foreign policy aspects. Te
climate change versus fossil fuel argument once repre-
sented a gulf between the transatlantic partners, but today
the disagreements represent a small fssure between the
two sides. European policymakers are becoming more
open to pursuing new fossil fuel exploration. Te U.K. is
exploring its own shale gas and tight oil reserves, and the
European Union has developed recommendations for
unconventional oil and gas exploration that simplify the
development of new resources. Rather than mandating
strict impact assessments, the standards improve transpar-
ency and predictability for operators and communities.
8

Similarly, the EUs decision to ease the language of its Fuel
Quality Directive appears to be an olive branch to Canada
and the United States. Te directive, which aimed to label
oil sands and other unconventional fuels as dirty from
an emissions perspective, has been a source of confict
between the transatlantic partners since 2009.
Meanwhile, U.S. President Barack Obama is showing
leadership on climate change issues by pressing for more
serious emissions regulations for coal power plants. Tus
far, U.S. success in lowering emissions has been due to
markets not policy. Cheap natural gas pushed out coal
in electricity generation, causing a drop in U.S. carbon
7 Konrad Adenauer Stiftung (2013), The Perception of Germanys Energiewende in
Emerging Countries: Results of Qualitative Interviews on Germanys Transformation of
the Energy System in Brazil, China and South Africa, Berlin: Konrad-Adenauer-Stiftung
e.V, http://www.kas.de/wf/doc/kas_34940-544-2-30.pdf?140211180413.
8 European Commission (2014), Communication from the Commission to the Euro-
pean Parliament, the Council, the European Economic and Social Committee and the
Committee on the Regions on the exploration and production of hydrocarbons (such
as shale gas) using high volume hydraulic fracturing in the EU, Brussels, 17.3.2014
COM(2014) 23 fnal/2, eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52014
DC0023R(01)&from=EN.
Transatlantic Security Task Force Series
Policy Brief
4
Europe and North America would
better maintain their competitive
and innovative edge in the
global market by combining their
markets and learning from each
others best practices.
emissions. But in June, the U.S. Environmental Protection
Agency proposed a Clean Power Plan to regulate the emis-
sions of existing power plants.
9

In their energy policies, the United States and Europe are
working more closely than they have before. Te situa-
tion in Ukraine has prompted cooperation not only on
economic sanctions, but also on energy policies. In May,
the G7 initiated a new subgroup, Te Rome G7 Energy
Initiative for Energy Security, to work toward common
energy security objectives, including diversifying supplies.
Tis not only opens the door for more direct energy trade
between North America and Europe, but also stimulates
greater knowledge sharing across the Atlantic. Te United
States and Europe can learn from each others experi-
ences in developing new fossil fuel and renewable energy
resources.
Although policymakers on both sides of the ocean have
criticized their transatlantic partners ties with Russian
energy companies, this does not infuence the comple-
mentarity of transatlantic approaches. U.S. senators,
including John McCain (R-AZ), visited Bulgaria in June
and discussed the engagement of European countries
and companies in the Russian-led South Stream pipeline
project. Austrias OMV, for example, has been a leading
advocate of the project. Yet criticism of this nature can
equally be aimed at U.S. companies. In spite of the situa-
tion in Ukraine, ExxonMobil has maintained operations
in Russia. Te challenges of balancing foreign policy and
economic ties are equally relevant for all transatlantic
partners.
Future Challenges
Te present gaps between European and North American
energy supplies and energy policies do not constitute a
stress test for their energy or security cooperation. A stress
test would need to strain the ties between the two sides.
Te gaps that remain provide fertile ground for knowledge
sharing and strategic cooperation rather than for further
tension.
Te diferences between North America and Europe are
petty when compared to enormous gulfs between the
energy landscape in the West and in the rest of the world.
9 U.S. Federal Register (2014), Carbon Pollution Emission Guidelines for Existing
Stationary Sources: Electric Utility Generating Units, https://www.federalregister.gov/
articles/2014/06/18/2014-13726/carbon-pollution-emission-guidelines-for-existing-
stationary-sources-electric-utility-generating.
Te Western countries are accustomed to creating tech-
nologies frst for their own beneft and then sharing them
with the rest of the world. Yet the pace of growth in the
West cannot sustain this dynamic. Te Asia-Pacifc region
consumes nearly as much energy as North America,
Europe, and Eurasia combined. With energy demand
steadily falling in Europe and energy efciency goals fnally
taking hold in the United States,
10
the importance of the
transatlantic partners in global energy markets will wane.
China and Indias high consumption will allow them to
steer the direction of energy development across the world.
Europe and North America would better maintain their
competitive and innovative edge in the global market by
combining their markets and learning from each others
best practices. It remains to be seen whether the transat-
lantic partners will continue on their present path of coop-
eration. Te situation in Ukraine has given both sides of
the Atlantic a jolt of worry about energy security and moti-
vated mutual learning. At the moment, Europe is looking
more to North America for lessons on greater resilience.
In the coming decades, North America should be equally
open to learning from Europe.
North America should not be overconfdent in its global
position. Although the United States and Canada currently
have an advantage over Europe because of their high fossil
fuel production, they should not forget that the U.K. and
the Netherlands also once luxuriated in vast fossil fuel
resources. If the United States and Canada continue to
produce natural gas at the rate both did in 2013, their
proved reserves will be depleted in 14 years; Canada has
10 The Asia-Pacifc Region consumes 40.5 percent of global primary energy. North
America, Europe, and Eurasia consume 45.4 percent. BP (2014).
Transatlantic Security Task Force Series
Policy Brief
5
Te views expressed in GMF publications and commentary are the
views of the author alone.
About the Author
Kristine Berzina is a transatlantic fellow for energy & society at GMF,
where she is responsible for shaping energy programming in Europe
and contributing to GMFs work in the United States. Berzina is an
expert on transatlantic energy issues and has authored several publi-
cations about transatlantic energy trade fows, resource exploration
in the Arctic, European bioenergy policy, resource efciency, foreign
policy in the Baltic States, and international afairs more broadly.
About GMF
Te German Marshall Fund of the United States (GMF) strengthens
transatlantic cooperation on regional, national, and global challenges
and opportunities in the spirit of the Marshall Plan. GMF does this by
supporting individuals and institutions working in the transatlantic
sphere, by convening leaders and members of the policy and business
communities, by contributing research and analysis on transatlantic
topics, and by providing exchange opportunities to foster renewed
commitment to the transatlantic relationship. In addition, GMF
supports a number of initiatives to strengthen democracies. Founded
in 1972 as a non-partisan, non-proft organization through a gif from
Germany as a permanent memorial to Marshall Plan assistance, GMF
maintains a strong presence on both sides of the Atlantic. In addition
to its headquarters in Washington, DC, GMF has ofces in Berlin,
Paris, Brussels, Belgrade, Ankara, Bucharest, and Warsaw. GMF also
has smaller representations in Bratislava, Turin, and Stockholm.
Contact
Dr. Alexandra de Hoop Schefer
Director, Paris Ofce
German Marshall Fund of the United States
Tel: +33 1 47 23 47 18
Email: adehoopschefer@gmfus.org
over a century of oil supplies lef, but U.S. proved oil
reserves could be depleted in 12 years at the current pace
of production.
11
Tese statistics, of course, are subject to
change, and new supplies are constantly being discovered.
Still, North American policymakers should consider non-
fossil fuel options for their long-term strategies. Tey have
a lot to learn from their European partners when managing
such a transition.
11 BP (2014).