The Next Phase of U.S.–EU Energy Cooperation

The G7 Energy Ministers meeting taking place in Rome today provides a useful reminder of the importance of transatlantic cooperation on energy, a collaboration that has been of strong benefit to both sides for many years. From the creation of the International Energy Agency (IEA) in 1974, following the Arab oil embargo, to the establishment of the U.S.–EU Energy Council in 2009, following the cutoff of Russian natural gas to much of Europe, the transatlantic energy partnership has advanced our common energy security and economic interests. 

The benefits of this flourishing alliance can be seen in a burgeoning energy trade and investment relationship across the Atlantic, the diversification of Europe’s energy supplies, advances in nuclear safety, and technological progress in many areas of importance to a new energy economy including smart grids, carbon capture utilization and storage, and energy efficiency, among others. The EU was a strong proponent of lifting restrictions on exports of U.S. crude oil and natural gas and will be a key market for those U.S. products going forward.  Our partnership to support Ukrainian energy security and reform has been a major success, as has our common approach to sanctions on Russia that include the energy sector.

At a time of huge shifts in global energy markets and geopolitics, a robust U.S.–EU energy partnership remains a priority. Inter alia, the agenda for that cooperation could include:   

Energy Security

The EU has made excellent progress toward an energy union that will allow natural gas and electricity to flow more freely across the continent. This also increases the attractiveness of the European market for the U.S. Liquefied Natural Gas (LNG) industry whose exports are set to expand strongly in the coming years. An arrangement whereby the U.S. Export-Import Bank financed LNG import infrastructure gaps in Europe and United States. LNG exports to the continent would provide economic benefits to the United States and improved energy security to EU members. Ukraine will also need additional attention.

Energy Governance

While the future of the Transatlantic Trade and Investment Partnership is uncertain, the United States and EU could continue efforts to advance stronger trade and investment rules that promote global energy market transparency and facilitate access to energy infrastructure and resources. 

Electricity Grids 

The United States and European electricity markets are changing fast with the strong uptake of renewable energy and digitalization while improved cybersecurity is becoming of paramount importance to safeguard this critical infrastructure. Meanwhile China is investing heavily in its Super Grid, including long-distance ultra-high-voltage direct-current lines, where the United States and Europe are behind. Since EU companies are already major investors in U.S. utilities this is an area that is ripe for closer U.S.-EU industrial cooperation and joint research to improve resiliency, identify potential technical vulnerabilities, and protect our grids. One idea could be to launch a U.S.–EU Energy Business Council with a primary focus on the electricity sector.

Energy Technology 

Europe and the United States both have excellent energy labs and research networks. The effective collaboration underway on a variety of energy technologies should be continued and expanded where possible.

Sanctions 

Pressure is building in the United States to enact additional economic sanctions on Russia. Iran could also be targeted for more economic measures unrelated to the nuclear issue. While the main action on sanctions may take place in other channels, the U.S.-EU Energy Council should serve as a venue to review how any additional energy-related restrictions on these countries are shaped. 

Nuclear Power 

There is not much left of the once robust nuclear industry on both sides of the Atlantic. China and Russia are moving rapidly to fill the gap. This is a strategic issue with potential impacts on the global non-proliferation regime, in addition to the continued important role of nuclear as a source of reliable baseload power. The United States and EU could facilitate industrial partnerships to retain capacity and capabilities in this area while working together on R&D for the next generation of nuclear technology.

Climate  

Whatever the Trump Administration decides to do about the Paris Agreement, the climate agenda is not going away. Presidents Bush and Obama both found it useful to shape the international climate framework working with our European partners, despite our differences on approaches. Europe will want to keep the United States engaged on climate as much as possible, and it is not in the U.S. interest to be isolated on this issue. So despite our differences, there will be strong incentives for the United States and EU to work together on a structure that allows continued forward movement on global climate engagement. 

U.S.–EU energy cooperation has a win-win history. Many challenges remain, and opportunities to build business ties abound. We should seize them.