ENP-energy

Countries of the European Neighbourhood have received a boost to their energy sectors in the last decade, thanks in part to the prominent role played by the EU as a catalyst of both policy reforms and financing. This paper is the executive summary of an upcoming study that examines EU financing for the energy sector in 16 countries of the European Neighbourhood between 2007 and 2014.

This briefing (an executive summary of an upcoming report) looks at energy investments by the EU in the Southern Mediterranean region and the impacts on the social, economic and environmental rights of citizens and communities by highlighting the compliance of these activities with the values of democracy, human rights and economic development for Egypt, Morocco and Tunisia. It also assesses the type of the investments that would be beneficial both for host countries as well as for the EU.

Between 2007-2014, Ukraine received from EU public institutions over EUR 2.5 billion for 56 projects in the country’s energy sector. This is the highest amount of support for the energy sector among all countries of the European Neighbourhood Policy, both by volume and number of investments. Only 15 per cent of that support went to combating inefficient energy use or to developing local sustainable energy sources. The focus of EU financial support has remained on ‘traditional’ sources of energy.

Azerbaijan has been a part of the EU Neighbourhood Policy since 2004 and has enjoyed substantial support through investments in the energy sector. As a result of cooperation on energy projects, the EU is today Azerbaijan’s main trading partner, with bilateral trade amounting to more than EUR 16.7 billion in 2014. But while the European Commission's 2014 progress report on Azerbaijan stressed the good progress in the EU's partnership with Azerbaijan, problems for ordinary Azeris are increasing.

Since the early 1990s, the EU has actively sought the development of both the oil and gas sectors in former Soviet republics. Energy security, the cornerstone of the EU’s foreign policy became the driving force behind the European Neighbourhood Policy. Investments through the EU’s Neighbourhood Policy Instrument and public banks have supported the development of unsustainable energy systems in most Eastern Partnership (EaP) countries. Like in other countries, the EaP region received more for fossil fuels than renewable sources of energy.

The European Bank For Reconstruction and Development states that it is “supporting energy efficiency and the development of a sustainable energy sector” and “financing private enterprises, with a focus on SMEs” among its four priorities for Tunisia. In this briefing, the Tunisian Observatory of the Economy (OTE) argues in its assessment of EBRD activities during the period 2012-2014 that it is difficult to find EBRD investments in line with their stated strategy of focusing on SMEs and a sustainable energy sector.

The North Giza Power Plant II, 1500 MW natural gas-fired power plant, is one of several large gas power plants that the Egyptian government is developing since 2011 in an effort to cope with the electricity gap. The power plant uses Combined Cycle Gas Turbine technology and the project promoters claim it is energy efficient, eco-friendly and community inclusive. Both the local community and the findings from a field trip strongly dispute these claims.