Placing Emphasis on Renewables, Efficiency and Energy Diplomacy in Europe and Central Asia

3.1. Introduction

The European and Central Asian region is diverse and heterogeneous. It is home to predominately industrialised countries. European and Central Asian countries range from those with highly developed economies to those whose economies are in transition and heavily dependent on fossil fuels like Kazakhstan (MacGregor, 2017). Furthermore, the European region is considered as one of the most developed regions in the world. Europe is home to some of the most energy-intense regions in the world (Ringel, 2018) and cannot run away from the geopolitics of energy. While there is Russia and its dominance on gas, there is also Turkey located between the subcontinents with an increasing role as the natural gas corridor (Austvik & Rzayeva, 2017). While the availability of energy services is one of the main drivers of development, especially taking into account the process of globalisation and digitalisation, the use of energy can come at a very high cost, especially with regard to environmental pollution and human health. However, an overview of the social, economic and environmental situation in Central Asia points out that energy is only one aspect of development, and that despite abundant energy resources, countries can still face severe energy poverty.

European and Central Asian countries are facing numerous energy challenges. These challenges range from energy security and fossil fuel dependency to energy poverty. Energy security remains a real threat given the European Union’s (EU) dependency on Russia (Casier, 2011); this has resulted in calls for the EU to diversify its energy sources and suppliers (Kuzemko, 2014). Since the mid-2000s, the EU scenario has taken the block into the energy diplomacy space (Herranz-Surralles, 2016). In addition, given the continued pressure to reduce dependency on fossil fuels and commitments to the Paris agreement, the EU plans to fully de-carbonise its economy by 2050 (Ringel, 2018). Thus, while the challenges might seem to differ from the energy challenges in the other regions substantially, the mechanisms and/or principles of these challenges, such as inequality and poverty, remain the same. In the context of the implementation of the Sustainable Development Goals (SDGs), and particularly SDG 7 (United Nations, 2015), this means that the concept of universal access to sustainable, affordable and reliable energy refers to physical, social, economic and culturally appropriate access to sustainable energy by all.

This chapter is dedicated to the implementation of the SDG 7 in the European and Central Asian region. For the purpose of this chapter, the European region refers to 48 countries, while Central Asian region refers to four countries geographically located or considered to be located entirely or partially in the European and Asian continent. ¹ In addition to the regional analysis, the chapter also features examples of good practice or cases at the national, sub-regional, regional and international level. The chapter firstly provides a brief overview of the European and Central Asian region in order to provide a context to the analysis. This is followed by an examination of the universal access to electricity, energy efficiency, the share of renewables and use of clean fuels and technology for cooking. The chapter then turns to international cooperation, research and development and energy investments. However, given that European and Central Asian region is doing relatively well in terms of access to electricity and use of clean fuels and technology for cooking, considerable space will also be given to addressing the challenges in transitioning towards renewable energy and energy efficiency measures. Finally, the chapter concludes with a brief overview of the progress made and a set of recommendations for accelerating the implementation of the SDG 7 at national, regional and international levels.

3.2. Energy Sector in the European and Central Asian Region

One of the main characteristics of the European region, especially in the energy sector, is a strong trend of regionalisation. Nevertheless, within and among the countries in Europe, there are significant differences in the access to modern energy services, reliability and affordability. Therefore, making a distinction between sub-regional groups of countries within Europe is common, and it is aimed at addressing a common set of challenges that a sub-group of countries is facing. Several criteria could be employed to distinct sub-regional groupings of states in Europe. For the purpose of this chapter, and based on the membership criteria, countries in Europe will be classified as those belonging to the EU and non-EU countries, but also as those belonging to the Organisation for Economic Cooperation and Development (OECD) Europe and non-OECD Europe. Distinguishing the European countries based on their membership in the EU and OECD is vital from the perspective of tracking implementation of the SDG 7 targets related to research, technologies, international cooperation and development.

In the context of EU enlargement process, a number of countries, such as the countries of Western Balkans, are aligning their law and policy, including the ones in the energy sector, with the EU as reported by Albania (2018). It is important to note that in literature, Europe and Europe’s law and policies predominately refer to the ones of the EU and EU member states. Additionally, although Russian Federation geographically belongs to the European continent, at least with part of its territory, due to Russia’s unique energy settings and characteristics and abundance of natural resources, international organisations such as the International Energy Agency (IEA, 2019a) in its reports and analysis make a distinction between Europe and Russia. Finally, in the context of the United Nations (UN) regional commission and regional implementation of the SDG 7, the United Nations Economic Commission for Europe (UNECE) (2019) is the main forum for addressing regional, sub-regional and national opportunities and challenges in regards to the implementation of the Energy Goal. UNECE comprises 56 countries, and in addition to the European countries, it also includes countries from North America and Asia.

Fig. 3.1 presents a Composite Index from the four SDG 7 indicators under consideration. What emerges is that several countries in the region (Sachs, Schmidt-Traub, Kroll, Lafortune, & Fuller, 2019) have achieved SDG 7. These countries include Armenia, Bulgaria, Finland, Iceland, Monaco, Norway, San Marino, Slovenia, Sweden and Switzerland. The only country reported as facing major challenges is Luxembourg. The rest are either in the challenges remain or significant challenges’ categories.

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Fig. 3.1.

Europe and Central Asia Composite Index SDG 7.

Source: Authors, based on Sachs et al. (2019).

As highlighted in the introduction, the EU has become more active in Central Asia for the purposes of energy security. For the purposes of energy and other resources, the EU ‘has expanded its diplomatic presence, increased its development cooperation, and established cooperation mechanisms’ (Boonstra, Laruelle, Marazis, & Tsertsvadze, 2018, p. 4). Moving forward, there has been significant progress in establishing a common energy market in the Eurasian Economic Union after Russia and Belarus succeeded in resolving their differences (Pastukhova & Westphal, 2018). This re-orientation of the energy space cannot be ignored, and it will impact the EU as both Russia and Kazakhstan are major oil and gas suppliers. In fact, Erşena and Çelikpalab (2019) view the pipeline politics and diplomacy in the Eurasian gas system as bringing new dynamics in the energy space. The proposed pipeline network including Nord Stream 2, South Stream and Turkish Stream are ‘out of tune with the current traits of global political life, namely geopolitical ruptures, changing market fundamentals, fuel uncertainty, and the evolving politics and economics of natural gas’ (Proedrou, 2018, p. 409). Interestingly, the Central Asian oil and natural gas resources have brought in potential direct conflict between the USA and China (Choo, 2018). Bocse (2019) brings up the Russo–Ukrainian crisis, and how this has negatively impacted the EU gas supply route. This has also resulted in mistrust between the trading block and Russia as an energy supplier. This has forced the EU to develop its energy diplomatic relations with Azerbaijan and Iran through the Southern Gas Corridor gas pipeline (Siddi, 2019).

3.3. Universal Access to Affordable, Reliable and Modern Energy Services

Europe is one of the very few regions in the world with a 100% electrification rate (World Bank, 2019). In Central Asia, the electrification rate is also 100%, although it was reported that in 2014, 2,500 people in Kyrgyzstan and Tajikistan did not have access to electricity at all (UNECE, 2017a). The rate of electrification indicates the percent of the population with physical access to electricity, although there is no universal agreement on what constitutes access to electricity. However, access to electricity is critical for ensuring that basic needs are met and that essential services in society are provided, such as basic health and educational services. Universal access to electricity does not only depend on the physical access to electricity, but social, economic and cultural factors also determine it. In that regard, the IEA, UNDP and IRENA (2018) emphasise that the rate of electrification is not a guarantee for full access to electricity. The formulation of SDG 7 articulates that physical access to electricity, affordability and reliability of electricity supply are the three constitutive elements of the universal access to energy (United Nations, 2015). Furthermore, with the continuous increase in energy consumption in Europe, and also Europe’s energy transition to a low or carbon-neutral economy, affordability and reliability of the electricity supply are becoming a prominent policy concern in the region.

Fig. 3.2 presents general trends in access to electricity, use of clean fuel and technology for cooking and renewable energy. A 100% access to electricity has been achieved in the region. Similarly, there is also a very high uptake and use of clean fuel and technology for cooking; this was at 97.32% in 2016. With such figures coming through, the main challenge for the region remains in increasing renewables and also reducing energy intensity. Both matters pertaining to renewable energy and energy intensity will be given additional space for deliberation later in this chapter.

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Fig. 3.2.

Trends in Access to Electricity, Clean Fuels and Renewable Energy (1990–2016).

Source: Authors, data from WDI (2018).

The Voluntary National Reviews (VNRs) represent an essential source of information on the implementation of SDG 7, both at the national and regional level. For example, in 2018 VNRs, seven countries from the European region reported on access to electricity, five mentioned it, while two countries did not mention access to electricity at all (UNDESA, 2018). For instance, in its VNR, Albania reported on: (1) measures taken for ensuring that electricity is affordable and available to the most poor and marginalised citizens; (2) improvements of reliability of electricity supply, including reduction of outages and disruptions; and (3) challenges in ensuring sustainability and security of the electricity supply due to increase of the energy consumption and climatic conditions (Republic of Albania, 2018). While Switzerland did not make any references to access to electricity (Swiss Confederation, 2018), Hungary only alluded to it in the context of energy security concerns and the legal and policy framework (Government of Hungary, 2018). In 2019, two Central Asian countries submitted VNRs: Turkmenistan (2019) did not report on the implementation of SDG 7, although some aspects of SDG 7 have been reported as a part of the climate change goal; Kazakhstan (2019), on the other hand, reported on progress achieved with regards to SDG 7.

Affordability of access to electricity refers to the economic accessibility of electricity. Electricity is considered to be both a commodity and service, while energy poverty is recognised as one of the main obstacles in accessing electricity (UNECE, 2017a). It should be noted, however, that throughout Europe there have been measures to ensure the affordability of access to electricity to those individuals and households living in poverty or at risk of poverty as reported in the VNRs (UNDESA, 2018). A good example of such measures is the EU Electricity Directive, which sets out the obligation of states to provide affordable electricity to all. However, despite measures aimed at combating energy poverty, there is a high number of people affected by energy poverty in the EU (Šajn, 2016), so much so that, in 2018, the EU established the Energy Poverty Observatory (European Commission, 2019a). In non-EU countries, the situation is even more concerning as there are reports suggesting that the rate of energy poverty in countries such as Moldova has risen to as much as 52% (UNECE, 2017a, 2017b). In Central Asia, there is a high percentage of energy poverty; in countries such as Tajikistan households spend more than 60% of their income on energy (UNECE, 2017b).

When it comes to reliability of the electricity supply, in the EU member states ‘an average consumer faces one to two disruptions per year, each taking on average roughly 1–2 hours’ while on average in 2015 and 2016 more than 14,700 outages have been reported yearly (VVA, Copenhagen Economics, Neon, & Deloitte, 2018, p. 15). Unfortunately, there is not enough information about the adverse impact of disruption on households, the business sector or on the provision of basic services. Furthermore, countries such as Ireland, Malta, Poland and Romania reported that outages caused disruptions, while France, Italy and Poland reported disruptions caused by malicious attacks (VVA, Copenhagen Economics, Neon, & Deloitte, 2018). Such reports point out to the vulnerability of access to electricity to security threats and risks. Reliability of access to electricity is heavily influenced by changing climate and weather conditions. For instance, in January 2013, the wind storm in Portugal significantly impacted energy supply and prevented individuals, groups and organisations from accessing electricity (VVA, Copenhagen Economics, Neon, & Deloitte, 2018, p. 91). The IEA (2018a) reports that meteorological conditions and climate influence the increase in residential energy use in Europe. Harsh weather conditions also adversely impact the reliability of electricity. Since 2010, 14 out of the 20 most significant disruption events in the EU member states were due to weather conditions. In Central Asia, there are significant challenges in reliability of access to energy due to old and outdated electricity infrastructure (UNECE, 2017a). This is an element that requires the European and Central Asian region to put in place measures on climate resilience and adaptation.

When it comes to primary reliance on clean fuels and technology, the World Health Organisation estimates that about 97% of the population in Europe relies on clean fuels and technologies (WHO, 2018), and the IEA (2019b) reports access to clean cooking at 100%. On the other hand, UNECE (2017b) reports that access to clean cooking fuels and technologies is still a concerning issue for more than 15 million inhabitants in Europe and Central Asia. According to available data, in 2012, Bosnia and Herzegovina had 29% energy poverty rate, while only 40% of the population in 2014 used clean fuels and technologies for cooking, heating and lighting, and an overall 77% of country depends on solid fuels in order to meet their basic household energy needs (UNECE, 2017a). In 2016, Tajikistan had the lowest rate of access to clean cooking, notably 80%, while Turkmenistan had the highest percentage at 99% (World Bank, 2019). In the VNRs submitted in 2018, access to clean cooking was the most underreported issue, and only Albania and Ireland reported on the issue, while Armenia only mentioned it in its VNR (UNDESA, 2018). None of the Central Asian countries reported on clean cooking in their 2019 VNRs.

3.4. Renewable Energy

In 2012, the share of renewable energy in the total final energy consumption in Europe was 14%, while in 2017 it was 17%; it is expected that the proportion will be between 27% and 33% by 2030 (IEA, 2019c). The trend in electricity production from renewable sources excluding hydroelectric is increasing. Nevertheless, Russia and countries of Central Asia are significant net exporters of oil and gas with 2% share of renewables in the energy mix (UNECE, 2017b), which significantly influences shares of renewables in Europe and Central Asia.

In addition, Europe is considered a global leader in renewables. The EU was the third-largest market for power investments in 2018, with the most investments in wind, solar PV and other renewable energy generation (IEA, 2019a). Nevertheless, according to the IEA (2018a), Europe’s investing in power was reduced by almost 50% in 2018. Furthermore, investments in renewables in 2018 fell to its lowest level since 2007, while investments in transmission in the EU rose in 2018; Europe made the largest investments in grid-scale battery storage, and the second-largest investments in behind-the-meter storage (IEA, 2019a). Fig. 3.3 shows the overview across the countries.

From Fig. 3.3, it is clear that there are still significant challenges regarding the uptake of renewable energy. For example, 14 out of the 53 reported countries have renewable energy uptake of between 0% in Turkmenistan and 10% in Cyprus. Another 14 countries record uptake of between 11% and 20%, with the next block of 10 countries falling in the 21% and 30% category. Five countries record figures of 31%–40%, with four countries in the 41%–50% group. Three countries (Sweden, Norway and Liechtenstein) fall in the 51%–70% category, while Iceland has the highest uptake at a distance 77%.

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Fig. 3.3.

Renewable Energy Consumption (% of Total Final Energy Consumption 2015).

Source: Authors, data from WDI (2018).

However, there is a question of whether progress made is still enough to meet SDG 7 targets. The answer to this question is not straightforward. In 2016, the OECD Europe Total Primary Energy Supply (TPES) increased by 1.7% compared to 2015 (IEA, 2018a). There was also an increase in natural gas production in the region in 2017 (IEA, 2018a). Despite investment in renewables, Europe still has high fossil fuel dependency; in 2015, 49% of electricity production in Europe and Central Asia came from oil, gas and coal sources (World Bank, 2019). In addition, electricity production from nuclear sources, although reduced, constituted 16% (World Bank, 2019).

Analysis of progress in meeting renewables cannot be separated from climate change targets as the Paris Agreement (UNFCCC, 2015) is critical for the implementation of SDG 7, because it allows setting voluntary and nationally determined targets. Hence, the EU’s binding renewable energy target of at least 32% shares for renewable energy by 2030 (European Commission, 2018a). According to the IEA (2019c) scenario, this target seems to be reachable by 2030. Civil society organisations argue that the EU’s climate and energy targets are not compatible with the Paris Agreements and that the targets lack ambition (CAN Europe, 2018). The share of renewable energy by 2030 at the country level can be more ambitious than the EU’s overall targets. For instance, Lithuania sets a target of 45% share by 2030 (UNDESA, 2018), while Germany went even further and set 100% share by 2050 (Energiewende, 2019). Russia, on the other hand, aims to have about a 5% share of renewables in their total final energy consumption by 2030 (IRENA, 2017). The major challenge with renewables has been identified as a lack of appropriate storage technologies (Child, Bogdanow, & Breyer, 2018). Lucas, Pinnington, and Cabeza (2018) further bring in the notion of education and training gaps in the renewable energy space, a gap that is even more pronounced in developing countries.

3.5. Energy Efficiency

In Europe and Central Asia, there is an overall decline in energy intensity (UNECE, 2017a). In 2012, energy efficiency was 0.101 tonne of oil equivalent (toe)/1,000 USD, in 2017 toe/1,000 USD, while it is expected to be between 0.06 toe/1000 USD and 0.064 toe/1000 USD (IEA, 2019d) by 2030. According to the United Nations Development Programme (UNDP) (2019), Europe and Central Asia are one of the world’s most inefficient regions, although Kazakhstan (2019) reported its high-energy efficiency. Countries such as Kazakhstan are recipients of development cooperation resources for improving its energy efficiency (ICF, 2014).

Based on the 2018 Voluntary National Reports, it can be concluded that all European countries, except Switzerland and Slovakia, reported on the progress made in energy efficiency (UNDESA, 2018). According to UNECE (2017c), Europe has a high potential for energy efficiency investments, which generally remain untapped. Overall, there is steady progress in energy efficiency in the region (UNECE, 2017a, 2017b). Western Europe is the leading UNECE’s sub-region in energy efficiency due to its relatively effective regulatory framework in the area of energy efficiency, while the situation in other sub-regions can vary (UNECE, 2017c). Although Russia has a target of reducing the energy intensity of its economy between 2010 and 2020 by 40%, the country still has numerous opportunities for improving its energy efficiency (IRENA, 2017). Similarly, the EU set an energy efficiency target of at least 32.5% to be achieved by 2030 (European Commission, 2018a).

Shove (2018 p. 779) raises other pertinent arguments regarding energy efficiency. In her view,

at first sight the purpose of energy efficiency is plain: it is to reduce the amount of energy used and the carbon emissions associated with the design and operation of things like buildings, domestic appliances, and heating and cooling technologies.

Yet, the author warns that the policies put in place are inadequate. As such, if carbon emissions are to be significantly reduced, it is important to raise the bar. In many cases, energy efficiency programmes remain voluntary for the corporate sector (Cornelis, 2019), while governments do very little to their own buildings.

3.6. Energy Cooperation, Research and Technology

3.7. Sustainable Energy Investments

During 2018, the European market of energy investments was characterised by the rebalancing of the new and old energy systems (IEA, 2019a). Compared to 2015, in 2018, there was a 7% decline in energy investments in Europe, including a decrease in investment in thermal and renewable power, oil and gas, and an increase of investment in energy efficiency (IEA, 2019a). With just over 200 billion USD investment in energy, Europe, excluding Russia, was the third-largest market for total energy investment in 2018 (IEA, 2019a). The power sector received the most investment, followed by investment in energy efficiency and fossil fuel supply. The least investment in Europe, excluding Russia, was in renewables for transport and heat. Box 3.2 reflects Europe’s energy investment in 2018.

However, according to the IEA (2019a), Russia was the fifth largest market for total energy investment in 2018 with just over 100 billion USD of investment. Bearing in mind that 75 billion USD of energy investments in Russia were made in the fossil fuel supply sector, it can be concluded that Europe including Russia was, after the USA, the second-largest market in the world for total fossil fuel supply investment. In the context of the UNECE region, this means that this UN region is the region with the highest fossil fuel supply investment, which is concerning in the context of meeting not only targets on sustainable energy but also climate change targets. In addition to the energy legal and policy environment, climate and weather conditions in Europe influence trends in trade and investments, which is one of the reasons for the significant increase of sales of air conditioning in Europe since 2010 (IEA, 2019a).

3.8. Conclusion

Despite the progress made in the European and Central Asian region, substantial changes in the energy sector are required in order to meet SDG 7 targets by 2030, especially from the renewable energy and energy efficiency perspectives. In tracking progress on the implementation of SDG 7, two things should be noted: firstly, tracking progress can help identify opportunities for improvement; secondly, such tracking does not necessarily reveal the issues or causes for the lack of progress. Based on the available information, it can be concluded that the European and Central Asian region is lagging behind in implementing SDG 7 in as far as renewables and energy efficiency is concerned. Overall, the European region is facing two main sets of challenges with regard to SDG 7 implementation: the first set of challenges concern Europe’s fossil fuel dependency and Europe’s energy transition; the second relate to the regionalisation trend in the energy sector, which among other things includes the harmonisation and liberalisation of the energy market and energy infrastructure throughout the region. The EU and its member states are firmly focussed on the issue of energy security, energy efficiency, renewables, research and development and their interaction and interconnectedness. Therefore, to accelerate the implementation of SDG 7 in Europe and Central Asia, it is critical to create an enabling environment for relatively smooth energy transition and stimulate system innovations to reduce Europe’s fossil fuel dependency, but also to make more investment in partnership building in order to integrate regional energy and further the regional harmonisation and liberalisation of the energy market.