By: William Haynes
Photo Credit: European Commission
On February 25, 2015, the European Union (EU) announced its intent to establish an Energy Union aimed to create a unified energy market to strengthen Europe’s leverage in trade agreements, to integrate the energy market, and to support its 2020 target of increasing the use of renewables to curb climate change.[i] The US actively benefits from a realized Energy Union through stronger trade agreements. However, both the EU and the US must support investments in energy technology, infrastructure, and cyber security to mitigate associated threats and vulnerabilities to their respective energy sectors.
Addressing Energy Diversification and Integration
Russia uses natural gas as a geopolitical tool to exert pressure over its European neighbors. While Europe as a whole is currently less dependent on Russian gas than at any point in the last 15 years, some countries are still heavily dependent on gas in their energy mix and thus susceptible to supply disruption.[ii] The state-controlled Russian gas company Gazprom is the sole provider of Russian gas to Europe, and for some countries, the only source of gas.[iii] Russia has used this position as leverage to gain favorable trade agreements. For example, in 2009, Russia halted gas flows to Europe in the middle of winter over a price dispute with Ukraine, creating heating fuel shortages across Europe.[iv] Nearly two weeks later, Ukraine was forced to renegotiate the agreement with Russia to restore the gas flows.[v]
This situation has created an opportunity for the United States to take a greater role in supplying Europe’s energy needs to help Europe potentially avoid disruptions at the whims of Russia’s actions. The US is currently the world’s largest producer of natural gas, and liquefied natural gas (LNG) has the potential to bypass geographical constraints to Europe such as pipelines because it can be transported by cargo ship to LNG terminals.[vi] Currently, the US is set to double LNG exports to Europe.[vii] As a response, Russia has promised to undercut these exports by lowering Gazprom’s prices to below that of US LNG.[viii] However, the resulting US-Russian competition weakens Russia’s monopoly over natural gas supplies and Moscow’s ability to use gas as a geopolitical tool, ultimately enhancing Europe’s energy security.
The Energy Union is hindered by a lack of energy interconnections between EU member states and the reliance on traditional hydrocarbons. The European Union’s 2020 target aims to reduce greenhouse gas emissions by increasing the share of renewable energy to 20% in each of the 28 member countries.[ix] To date, the EU member states seem to be on track to meeting this goal.[x] However, certain countries lack the energy infrastructure connections needed to share energy supplies during times of disruption and that would support other countries that need time to transition to renewables.[xi] Further, these same countries that need time to transition are increasing the use of coal, the most carbon-intensive fossil fuel, due to its cheap price to help offset the costs of renewables.[xii] Inversely, the US has decreased its reliance on coal due to the low price and reserves of natural gas.[xiii] This position provides the US with more opportunities to invest in LNG terminals to diversify Europe’s energy mix and reduce the reliance on coal. There is also an opportunity for US energy producers to meet the European demands for investments in carbon capture technology.[xiv]
Strengthening and Supporting Cyber Security Measures
Cyber attacks on critical energy infrastructure pose one of the largest emerging threats to both EU and US energy security. In Ukraine, it is suspected that several massive blackouts were caused by cyber attacks on some of the nation’s power grids.[xv] The attacks were sophisticated and well planned, and potentially involved collaboration between different parties and nation-states.[xvi] It must be noted that critical energy infrastructure in the United States is less secure than that of Ukraine’s during the time of the attack and would take longer to be brought back online.[xvii]
Even more alarming is the potential for a cyber-physical attack on an industrial control system. In Germany, a steel mill’s blast furnace exploded after its industrial control system was hacked and operators were unable to shut the system down.[xviii] This is the second time a cyber-physical attack has occurred on an industrial control system, and it is unlikely to be the last.[xix] A report by the European Union found that Europe’s Information Sharing and Analysis Centres (ISACs), the intra-sector groups responsible for exchanging information on emerging cyber security threats and vulnerabilities, are not widely developed.[xx] Moreover, the report found that many of Europe’s Computer Security and Incident Response Teams (CSIRTs) did not focus on emergency cyber security situations in the energy sector.[xxi] The US energy sector faces similar cyber challenges. For example, the US energy sector is plagued by a lack of information sharing due to concerns about violating anti-trust laws and consumer rights.[xxii] Moreover, some energy companies do not view cyber security systems as a long-term investment, but as an immediate expense.[xxiii] The EU and US energy sectors must therefore support stronger cyber security measures and information sharing to help mitigate threats and vulnerabilities and enhance overall energy security.
The Energy Union is positioned to support the energy security of Europe if proper investments are made. Increasing the energy infrastructure connections between EU countries will ensure that the Energy Union is supported during times of disruption. The United States should work to increase its exports of LNG to Europe to reduce Russia’s gas monopoly, as well as invest in carbon capture technology to reduce the EU’s reliance on coal. A stronger information-sharing program between the United States and the EU Energy Union can help mitigate threats and vulnerabilities to increase the resiliency of critical energy infrastructure. Moreover, such a program will help develop and support best cyber security practices in the energy sector, such as anti-malware software, maintaining security patches, and deploying breach detection systems.[xxiv]
[i] The European Commission, “The Energy Union on Track to Deliver,” European Union, November 18, 2015, http://europa.eu/rapid/press-release_IP-15-6105_en.htm; Jean-François Fauconnier and Theodora Petroula, “Energy Union and Governance,” Climate Action Network Europe, http://www.caneurope.org/energy/energy-union-governance
[ii] Andrew Johnian, “Europe’s New Approach to Energy Security,” Georgetown Security Studies Review, February 15, 2017, http://georgetownsecuritystudiesreview.org/2017/02/15/europes-new-approach-to-energy-security/; Chi-Kong Chyong and Vessela Tcherneva, “Europe’s Vulnerability on Russian Gas,” European Council on Foreign Relations, March 17, 2015, http://www.ecfr.eu/article/commentary_europes_vulnerability_on_russian_gas
[iii] David Yanofsky, “The EU countries that depend the most on Gazprom’s Russian gas.” Quartz Media, April 22, 2015, https://qz.com/388148/the-eu-countries-that-depend-the-most-on-gazproms-russian-gas/
[iv] Andrew E. Kramer, “Russia Cuts Gas, and Europe Shivers,” The New York Times, January 06, 2009, http://www.nytimes.com/2009/01/07/world/europe/07gazprom.html?pagewanted=all
[v] Max Tkachenko and Michael Sefanov, “Russia to restore gas supply to Europe,” CNN, January 11, 2009, http://edition.cnn.com/2009/WORLD/europe/01/12/europe.russia.gas.ukraine/
[vi] “United States remains largest producer of petroleum and natural gas hydrocarbons.” U.S. Energy Information Administration, May 23, 2016, http://www.eia.gov/todayinenergy/detail.php?id=26352; Jude Clemente, “More Russian Natural Gas Exports Mandate U.S. LNG Support,” Forbes, August 21, 2016, http://www.forbes.com/sites/judeclemente/2016/08/21/more-russian-natural-gas-exports-mandate-u-s-lng-support/#251b4d181a1c
[vii]Naureen S. Malik, “America’s About to Double the Shale Gas it Sends Overseas.” Bloomberg, October 14, 2016, http://www.bloombergquint.com/business/2016/10/12/cheniere-cleared-to-export-lng-from-second-sabine-pass-plant
[viii] Nick Cunningham, “U.S. to undermine Russia’s gas monopoly in Europe,” Oil Price, April 22, 2016, http://oilprice.com/Energy/Energy-General/US-To-Undermine-Russias-Gas-Monopoly-In-Europe.html
[ix] “Taking Stock of the Europe 2020 strategy for smart, sustainable and inclusive growth,” The European Commission, March 19, 2014, http://ec.europa.eu/europe2020/pdf/europe2020stocktaking_annex_en.pdf
[x] “EU on Track for 2020 Renewable Goals,” International Centre for Trade and Development, February 02, 2017, http://www.ictsd.org/bridges-news/bridges/news/european-commission-eu-“on-track”-for-2020-renewables-goal
[xi] Brenda Shaffer, “The US, EU must prioritize energy security in policy discussions,” The Hill, February 10, 2017, http://thehill.com/blogs/pundits-blog/energy-environment/318898-us-eu-must-prioritize-energy-security-in-policy
[xii] Ibid.
[xiii] Ibid.
[xiv] Jess Shankleman and Ratkeem Katakey, “Big Oil to Invest $1 Billion in Carbon Capture Technology,” Bloomberg, November 4, 2016, https://www.bloomberg.com/news/articles/2016-11-04/big-oil-to-invest-1-billion-in-carbon-capture-technology; Anton Koller, “Can the Energy Union become a growth engine for Europe?” EurActiv, February 3, 2017
[xv] Pavel Polityuk, “Ukraine investigates suspected cyber attacks on Kiev power grid,” Reuters, December 20, 2016, http://www.reuters.com/article/us-ukraine-crisis-cyber-attacks-idUSKBN1491ZF; Kim Zetter, “Inside the Cunning, Unprecidented Hack of Ukraine’s Power Grid,” Wired, March 03, 2016, https://www.wired.com/2016/03/inside-cunning-unprecedented-hack-ukraines-power-grid/
[xvi] Kim Zetter, “Inside the Cunning, Unprecidented Hack of Ukraine’s Power Grid,”
[xvii] James Condliffe, “Ukraine’s Power Grid Gets Hacked Again, a Worrying Sign for Infrastructure Attacks,” MIT Technology Review, December 22, 2016, https://www.technologyreview.com/s/603262/ukraines-power-grid-gets-hacked-again-a-worrying-sign-for-infrastructure-attacks/
[xviii] Kim Zetter, “A Cyber Attack has Caused Confirmed Physical Damage for the Second Time Ever.” Wired, January 08, 2015, https://www.wired.com/2015/01/german-steel-mill-hack-destruction/
[xix] Ibid.
[xx] George R. Lynch, “As Cyberattacks on Critical Infrastructure Continue, European Cybersecurity Agency Issues Guidance to Energy Sector,” Bloomberg, February 7, 2017, https://www.bna.com/cyberattacks-critical-infrastructure-b57982083463/
[xxi] Ibid.
[xxii] Robert Walton, “After Fending off cyber attack, First Energy says government coordination is lacking.” Utility Dive, October 23, 2015, http://www.utilitydive.com/news/after-fending-off-cyber-attack-firstenergy-says-government-coordination-la/407878/
[xxiii] Cyril W. Draffin Jr., “Cybersecurity White Paper,” MIT Energy Initiative, December 15, 2016, https://energy.mit.edu/wp-content/uploads/2016/12/CybersecurityWhitePaper_MITUtilityofFuture_-2016-12-05_Draffin.pdf
[xxiv] Trend Micro, “Report on Cybersecurity and Critical Infrastructure in the Americas,” Organization of American States, 2015, https://www.trendmicro.de/cloud-content/us/pdfs/security-intelligence/reports/critical-infrastructures-west-hemisphere.pdf;