EU's Energy &Water Scarcity

8/6/2019 EU's Energy &Water Scarcity

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Topic A: Alternative Energy Technologies for a Cleaner and Safer European Union:

Decreasing External Energy Dependency

Nowadays, the EU has to confront with several challenges which can be managed by the strongcooperation of the member states. Thet Swedish government believes that the efficiency of thiscooperation strongly depends on the methods through which the European legislation can be

more effectively implemented into the national law of the Member States. As far as the climatechange and the decreasing external energy dependency are concerned, Council work during theSwedish presidency is devoted in large part to the Second Strategic Energy Review, an actionplan for energy security and energy solidarity. In addition to that, the concept of an eco-efficienteconomy will be a common theme at informal ministerial meetings on energy, environment andcompetitiveness. Sweden highlights the bioenergys importance due to the fact that it representsa sustainable resource for an efficient system approach. As a result of the fact that the climateissue is also a priority, the Swedish government wants the Union to accept ambitious goals fordecreased carbon dioxide emissions, increased use of renewable energy sources and a moreefficient use of energy.The larger share of natural gas which is imported from outside the European Union and declining

oil reserves in the North Sea have contributed to an energy dependency growth. In this context,Sweden recognizes the contribution of electricity from hydro, wind and solar energy which hasprogressively increased between 2000 and 2007. As an effective alternative energy technology,the Swedish government advocates for biofuels, a safer and cleaner energy source for transport.In Sweden, larger petrol stations have the obligation to sell the renewable motor fuel which hadthe effect of encouraging the sales of ethanol.Furthermore, in order to create a sustainable internal market for energy, Sweden highlights andstrongly sustains the importance of co-generation, also known as combined heat and powerwhich describes the production at the same time of both useful heat and electricity in oneprocess. This renewable energy source saves energy,reduces emissions and improves energyefficiency.

Sweden firmly believe that a reliable supply of electricity at a reasonable price is a maincondition for the international competitiveness of European industry and also energy policy hasto be structured in order to assure this. The Swedish government also includes within the EnergyPolicy measures which improves the efficiency of energy use, such as energy advisory services,technology procurement projects and the market introduction of energy effective technology.For Sweden,energy efficiency represents a vital issue particularly in view of ongoing

international climate negotiations, but its government emphasizes the fact that it is necessary towork together in order to decrease the problems which the EU are confronting with, problemsthat concern us all.

The European Unions

Energy Security ChallengesSummary(RE-wind,solar,biomass,hydro)In December 2005, the Government appointed a commission to draw up a comprehensiveprogramme to reduce Swedens dependence on oil and to mark out a path to strengthenSwedens competitiveness and take a substantialstep towards reducing emissions of greenhouse gases.ambitious objectives are as follows: Through more efficient use of fuel and new fuels, consumption of oil in road transport


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shall be reduced by 40-50 per cent. In principle no oil shall be used for heating residential and commercial buildings Industry shall reduce its consumption of oil by 25-40 per centThere is a great potential for Swedish raw materials asalternatives to oil. In the last thirty years Sweden has, for example, reduced its use of oil for

heating residentialand commercial buildings by seventy per cent. This has been achieved by replacing oil withbiofuel-fired district heating plants, direct electricity and electrically driven heat pumps and,not least, by better insulation of buildings.We will now continue to reduce our consumption of oil at the same time as we also utilisebiofuels in order to replace as far as possible direct electricity for heating buildings.We are technology optimists and want Sweden to be at the forefront in the gradual use ofnew, resource-efficient, renewable technology hybrid vehicles, solar cells, wave energy,fuel cell vehicles, new biofuels, and energy-saving IT solutions and also technology wecannot know anything about yet or can just divine.Climate change has occurred mainly because of human activities like industrialization ortransportation in which conventional energy sources producing harmful CO2 are used.Sustainable Development is a policy outcome of the recent economic developments thatindicate limited amounts of natural energy sources. Furthermore, the process ofglobalization increases inequalities among and within societies who are deprived ofeconomic and social benefits. As a result, energy lies at the heart of these problems.It is estimated that global energy demand will increase by two thirds between 2001- 2030(IEA, 2002a). And the main share will come from developing countries like China andIndia. Unfortunately, the expanding demand for energy will be on fossil fuels whichcreate potential risks for the environment and security of supply. The EU and Turkey aremainly dependent bodies in terms of conventional energy sources (more than 50% and70% of their energy demands are imported respectively).The concept of Renewable Energy (RE) is now at the heart of environmental and energy

debates. Especially after the crisis of the 1970s, it came to the agenda. One of mainadvantages of RE is that its sources can be found domestically and naturally in every partof the world depending on the geographical and geological conditions. And they areenvironmentally friendly energy sources. They can easily relieve the dependency problemof the countries on external energy sources. On the other hand, RE has serious politicaland economic barriers that prevent its development such as high investment costs, anunequal market structure and lack of public and political support.The role of RES comes out in that sense: as indigenoussource of energy they reduce the level of energy imports with positive implications fortrade and security. The scope of RES is defined as hydro power, biomass, wind, wave, tidal, solargeothermal, landfill gas, sewage treatment plant gas and biogases. The share of biomassis 3% of total inland energy consumption in the EU. Austria, Finland and Sweden are

seen as the best countries that use biomass(Biomass takes carbon out of the atmosphere while it isgrowing, and returns it as it is burned; The source of biomass energy is a form of plant-derived

material such as wood).full liberalization, will transform the market into a wide and highly competitivecapitalist market.Recent increases in energy prices and a steady escalation in global energydemand expected to rise by nearly 60% over the next 20 years have led U.S.policy-makers to engage in a wide ranging debate over how best to address the


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countrys future energy requirements. Similarly, energy security has become a policypriority for the European Union (EU) and its 27 member states. The EU importsabout 50% of its energy needs. Barring significant changes, the EuropeanCommission expects this figure to rise to 65% by 2030. About half of the EUsnatural gas imports and 30% of its imported oil come from Russia. Europes growing

dependence on Russian energy, and long-term energy agreements between Russianfirms and some European governments have fueled speculation that Moscow is usingthe energy weapon to try to influence European foreign and economic policy.The EU has traditionally exerted little if any influence over individual memberstate energy policy. However, in March 2007, in the face of increasing concern aboutEuropes reliance on Russian energy, and growing public pressure to address globalclimate change, EU member states agreed to forge an Energy Policy for Europe.They have agreed on a set of EU-wide targets some legally binding to increasethe use of renewable energy, and reduce carbon emissions. However, member statescontinue to pursue divergent external energy policies, particularly toward Russia, andsome European countries remain reluctant to cede national control over energy

markets.The United States and Europe have steadily broadened the transatlantic energydialogue to include joint promotion of collective energy security, energy efficiencyand alternative energy sources. At the April 2007 U.S.-EU summit, leaders on bothsides of the Atlantic agreed to advance cooperation to develop alternative andrenewable energy technologies. However, U.S. officials have expressed concern atsome European member states unwillingness to exert more pressure on Russia tocomply with EU market principles. On the other hand, European leaders appearincreasingly frustrated with U.S. reluctance to pursue binding multilateral regulatoryframeworks to reduce carbon emissions and promote energy efficiency.Members of Congress have expressed an interest in efforts to increase Europeanenergy security, particularly vis-a-vis Russia. In the first session of the 110thCongress, committees held hearings that touched on the issue of European energydependence on Russia, and on European efforts to increase energy efficiency andrenewable energy use. The second session of the 110th Congress may also holdhearings and pursue legislation on various aspects of EU energy policy.This report examines some of Europes critical energy security challenges andEU efforts to coordinate a common European energy strategy. It also includes anoverview of broader transatlantic energy security cooperation and will be updated asneeded. For additional information, see CRS Report RL34261,Russian EnergyPolicy Toward Neighboring Countries, by Steven Woehrel, and CRS ReportRS22409,NATO and Energy Security,by Paul Gallis.

The European UnionsEnergy Security ChallengesIntroduction1Although the European Unions (EU) 27 member states have ceded somenational sovereignty (or competency) to EU institutions in a variety of areas,including economic and trade policy, energy policy remains primarily theresponsibility of the member states. Decisions regarding long-term oil or gas


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purchases, the development and improvement of energy-related infrastructure, andthe use of particular fuels continue to be made at the national level by individualmember states.At their March 2007 summit, EU member states moved to boost Europeancoordination to help secure and diversify energy supplies, increase the development

and use of renewable and alternative energy resources within the EU, and reduceenergy demand and consumption. Although member state governments remainreluctant to cede national sovereignty over energy-security aspects of their foreignpolicies, they have set binding EU-wide targets for the use of renewable energies andbiofuels, and have agreed to ambitious but non-binding energy efficiency and carbonemission reduction targets for the year 2020. In addition, member states areconsidering potentially significant reforms to further liberalize energy markets.Nonetheless, most observers expect member states to continue to retain significantnational control over national energy markets and external relations with energyproducingcountries. EU heads of State are set to discuss specific policy proposalsin these areas at their spring 2008 summit.

Europes renewed interest in energy security has been influenced by bothinternal and external factors. Internally, steadily rising energy prices, decliningEuropean energy production and a fragmented internal energy market havecontributed to anxieties over Europes ability to meet future energy demand. Thestrain on global demand exerted by the emerging economies of countries such asChina and India, persistent instability in energy producing regions, the threat ofterrorist strikes against energy infrastructure, and Russias apparent willingness touse its energy power for political ends, are all raising concerns in Europe over howto address external influences that could affect future energy requirements.2 Recentcalls for EU-wide energy coordination have been driven by rising European concernabout the effects of energy production and consumption on global climate change.To this end, EU member states recent energy policy decisions center largely onpromoting energy efficiency, developing renewable energy and clean fuel sources,and reducing overall greenhouse gas emissions.As uncertainties surrounding global energy supply and demand persist, issuespertaining to U.S., European, and global energy security are may gain importance inthe second session of the 110th Congress. Members of both parties have introducedlegislation aimed at increasing energy independence and energy security and reducingcarbon emissions. Several of these proposals envision carbon trading schemessimilar to those in use in Europe.3 In several hearings during the first session of the110th Congress, Members of Congress voiced concern about Europes dependenceon Russian energy resources, and the potential for Russian manipulation of Europeanenergy markets. To this end, Senator Richard Lugar has raised the possibility of amore proactive role for NATO in guaranteeing energy security for Alliancemembers.

The Context of Europes Energy Security DebateBackgroundCollectively, EU member states import half of their energy needs. Barringsignificant policy changes, this figure is expected to rise to 65% by 2030.4 Today,oil, natural gas, and coal account for 80% of the energy consumed in the EU.


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Europes energy imports come primarily from Russia and the Middle East,where approximately 70% of global oil and gas supplies originate. Yet, the MiddleEast region is fraught with war, terrorism and politically unstable regimes. Iraqs oilproduction has not reached pre-war levels, and there is fear that terrorist groupscould target pipelines and production facilities throughout the region. Iran has

threatened to cut back oil production if forced to abandon its nuclear power program.With regard to Russia, recent political and economic behavior exhibited by Moscowhas raised the dual specter of reliability and energy politics.High demand has also raised questions regarding the future availability of globaloil and gas reserves. Although significant shortages are not projected for the nextseveral decades, uncertainties over future exploration and production in areas suchas Russia and the Middle East have also raised concerns about long-term supplyavailability. The International Energy Agency (IEA) estimates that close to $16CRS-3trillion in new investments may be needed over the next 30 years to meet futureglobal energy demand.5

European concern regarding the security of its energy supply was first promptedby the Arab oil embargo of the early 1970s. Specifically, the embargo highlightedthree main issues. First, it exposed a need for increased energy policy collaborationamong European countries and between Europe and the energy producing world.Second, it became clear that institutional mechanisms for increased coordination inthe event of future supply disruptions were essential. Third, consensus emerged thatEurope should prepare strategies to prevent it from becoming the victim of futureattempts by exporting nations to use energy as a political or economic weapon.6 The1974 creation of the International Energy Agency (IEA), which has become Europesprimary instrument for monitoring and analyzing world energy markets, was oneresponse to the embargo. In addition, European countries sought to developstrategies to diversify energy supply.After the embargo, European countries began to identify Russia and otherEurasian countries as potential energy suppliers. At the time, Soviet Russia wasbeginning to realize its energy producing potential but required major investmentsin its energy sector. The prospect of future cooperation in the energy field began toplay a key role in European perspectives on developing relations with the SovietUnion.In 1991, the European Union launched the Energy Charter Declaration, aninitiative intended to promote energy cooperation and diversify Europes energysupply.7 The Declaration gave way to the 1994 Energy Charter Treaty that enteredinto legal force in 1998 and established a framework of rules and agreements topromote international energy cooperation. To date, 51 countries and the EU havesigned or acceded to the Treaty.8 The Treaty seeks to create a level playing field ofrules regarding the promotion of foreign energy investments; free trade in energymaterials, products and equipment; freedom of energy transit through pipelines andgrids; promoting energy efficiency; and providing mechanisms for addressingdisputes.9Since the signing of the Energy Charter Treaty, the European Commission hasused its existing competency in competition and environment and consumer


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CRS-4protection policy to attempt to shape a European energy policy in a variety of ways.10These include promoting an internal gas and electricity market, encouraging thedevelopment of alternative energy supplies, and, in cooperation with the office of theHigh Representative for Common Foreign and Security Policy, pursuing a more

cooperative approach to external relations with current and future energy suppliers.An Energy Policy for Europe?Concern over Europes dependence on Russian energy resources hascorresponded with growing public calls for EU-wide action on climate change.European leaders have responded by renewing efforts to establish a more cohesiveEuropean energy policy. During their March 2007 summit, EU heads of stateadopted a series of European Commission proposals that they expect will form thefoundation of an Energy Policy for Europe. The adopted measures are among alarger group of recommendations the Commission laid out in a March 2006 GreenPaper and more detailed action plans unveiled in January 2007 and 2008.18 TheCommission proposals focus on three broad interconnected goals: increasing

European-wide energy security; enhancing sustainability; and fostering competitionin Europes internal energy market. Commission officials place particular emphasison the links between energy security, energy efficiency, and an EU-wide reductionin carbon emissions.In what some consider a reflection both of increasing public pressure to addressglobal climate change and continued member state reluctance to cede nationaleconomic and foreign policy making authority, the EUs proposed energy policyfocuses largely on enhancing sustainability. Member states have committed inprinciple to take some steps toward further liberalizing the EU-wide energy marketand have broadly endorsed increased foreign policy coordination on securing energysupplies. However, the EUs most far-reaching commitments focus on increasing

energy efficiency, decreasing greenhouse gas emissions, and promoting the use ofrenewable energy and alternative fuels and associated technologies.Specifically, EU member states have committed to reducing total EU-widecarbon emissions by 20% compared with 1990 levels by 2020. They have alsopledged to seek international agreement on a 30% reduction target by 2020 in a post-Kyoto Protocol international carbon emissions reduction treaty.19 In addition, the EUseeks a 20% increase in Europe-wide energy efficiency by 2020 and has mandatedthat 20% of all EU energy consumption come from renewable sources and 10% oftransport fuel from biofuels by 2020. The Commission hopes that EU heads of statewill agree on proposed country-specific targets to achieve their goals during thespring of 2008.

European Commission president Jose Manuel Barroso estimates that achievingthese targets could cost or up to $87.7 billion, or 0.5% of EU member statescombined annual GDP. However, he has argued that this approximately $4.50 (3euros) per week per European citizen represents far less than the cost of inaction.20CRS-820 (...continued)Ma n u e l Ba r r o s o , J a n u a r y 23, 2 0 0 8 . Av a i l a b l e at[http://ec.europa.eu/commission_barroso/president/index_en.htm].


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21 EUs 2020 Energy Goals to Cost over 1 Trillion,EU Observer, March 28, 2007.

According to a March 2007 study by the global consulting firm McKinsey andCompany, EU member states will need to invest approximately $1.5 trillion (1.1trillion Euros) in new technologies over the next 14 years in order to achieve theirtargets. In preparation for the new push toward alternative and renewable energy

sources, the European Investment Bank has announced plans to earmark slightly over$1 billion (800 million Euros) for loans for renewable energy projects from 2007-2010.21 In addition, the Commission envisions a 50% increase in EU-spending oncarbon technology over the next seven years. Although the EU approach appears tobe focused largely on developing new and alternative technologies, the McKinseystudy suggests it may be more cost efficient for the EU to focus more of its effortson reducing energy use than on developing and promoting alternative and renewableenergy sources.The Russia-Ukraine and Russia-Belarus oil and gas crises have also ignitedcalls from the European Commission and several EU member states to increaseforeign policy coordination to secure and diversify energy supply. To this end, EUmember states have agreed to begin cooperating to form an external policy centeredon expanding political partnerships with, and increasing pipeline and energyinfrastructure investment in, producer and transit countries. European states havespecifically singled out Central Asia and the Caspian and Black Sea areas as focalpoints for such activities. In addition, the EU has called for the formation of aEuropean energy dialogue with African countries of strategic importance. The EUsflagship project in the Central Asia and the Caspian region is the Nabucco gaspipeline. The proposed pipeline, which is backed by a promise of $7 billion (5billion euros) in European Commission funding, would bring Central Asian andCaspian gas to Europe, without passing through Russia. However, as discussedbelow, the potential construction start-date has been pushed back several years, andsome observers question the projects viability.With regard to Russia, some member states hope to institutionalize a commoncommitment to market principles as outlined in the Energy Charter Treaty throughan EU-Russia Energy Dialogue and in a new EU-Russia Partnership and CooperationAgreement. However, bilateral energy agreements between some member states,notably Germany, Italy, and Bulgaria, and Russian firms, illuminate continueddisagreement within the EU on how best to deal with Moscow. In the face of suchdiscord, the European Commission is seeking to strengthen multilateral mechanisms,including the Energy Charter, to better coordinate global energy policy amongconsumer, transit, and producer nations.Many observers consider the European Commissions call to increasecompetition within and among traditionally protected European energy markets to beits most controversial. The Commission has advanced proposals to reduce the powerof state-owned energy companies by forcing them to split up ownership of generationand distribution businesses. In the face of opposition from countries such asCRS-922 Interviews of German and EU officials, January-March 2007.

Germany, France, and Spain, the Commission could seek backing for a compromiseproposal that would allow national energy industries to continue to operate bothgeneration and distribution facilities, but would subject them to oversight from an


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independent European regulatory body. European leaders are expected to agree ona solution during the first half of 2008.Although European leaders increasingly pay lip-service to the need for enhancedenergy cooperation, the success of an EU energy strategy will likely depend on theability of member states to overcome differences in addressing three fundamental

challenges. First, how to develop strong partnerships with energy producing andtransit regions; second, how to use and further develop indigenous and alternativeenergy sources while seeking to curb overall consumption; and third, how to establishan internal system to provide dependable and secure energy supplies to all of Europe.

Challenge 1: An External Policy for Energy SecurityGrowing energy demand within the EUs 27 member states is mirrored inregions throughout the world. Growth in China and India has added considerably toglobal demand, as has rising population growth and economic modernization in LatinAmerica, Africa, and even the energy-rich Middle East. In the face of this strain onlimited supplies, Europeans must compete for existing and new energy sources.Projections for European energy consumption indicate that one of the most important

energy security challenges facing the EU over the next 20 years will be Europesability to diversify the sources and modes of transit of its energy imports.The bulk of the worlds energy resources, located in Russia, the Caspian Searegion, the Middle East and North Africa, are all well within geographic reach of theEuropean Union. In fact, Europe already receives energy supplies from each of theseregions. However, Europes growing dependence on Russia and Russias apparentwillingness to use its energy resources for political purposes have spurred calls fromsome member states and the United States for a more cohesive EU-wide strategy tofurther diversify supply. The key for Europe may be to determine the equilibriumpoint for supply from each region and how to best manage relations with thegovernments in those regions. By strengthening political relations with these

governments, the EU opens additional options for its external energy strategy.According to some, the EU strategy in this regard differs from the stated aim of manyU.S. politicians and Administration officials in that Europeans acknowledge they cannever gain complete energy independence and therefore seek to better manage theirenergy dependence rather than achieve outright energy independence.22EU member states have collectively endorsed the Commissions calls to developa collective international energy policy. Nonetheless, while acknowledging that theEU may at times be in a better position to determine what leverage could be used toadvance the collective interests of the Union as a whole, member states have beencareful not to sacrifice their individual rights to independently pursue externalrelations to secure energy supplies. Europes energy relations with Russia best

elucidate the tension between calls for a collective external energy policy and supportCRS-10for individual member state policies. Some of the EUs newer member states inCentral and Eastern Europe appear skeptical of Russias reliability as an energypartner, and therefore call on EU member states work collectively to prevent Russiafrom exploiting long-term dependencies for political purposes. At the same time,other member states continue to pursue long-term bilateral supply contracts withRussias state-run energy companies, increasing both their energy and, according to


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some, their political dependence on Russia.The European Response. EU member states have established two primaryinstitutional mechanisms with which to collectively address energy relations withRussia: the Energy Charter Treaty and the EU-Russia Energy Dialogue. As outlinedabove, the Energy Charter Treaty, which Russia has signed but not ratified, would

oblige Russia to adopt a legal framework governing investment, transit, and trade inenergy resources. Some analysts contend that European leaders should make Russianimplementation of the Treaty a requirement of any future EU-Russia Partnership andCooperation Agreement. Such calls have contributed to delays in currentnegotiations of such an agreement and have hindered progress on the EU-RussiaEnergy Dialogue.Even as EU leadership in Brussels moves forward with its ideas on a commonexternal energy strategy, many question how far individual member states will agreeto push Russia (and Gazprom) to adopt the EUs principles of competition, open itsenergy sector to outside investment, and ratify the Energy Charter. Some believe thatwithout such Russian concessions, Europe will ultimately find its energy security

largely under Russian control. Indeed, several member states have pursued bilateralenergy deals with Russia that will increase their dependence on Russia for years tocome. Both Germany and Italy, the largest importers of Russian gas, have negotiatedlong-term deals with Russia to lock in future gas supplies. For Germany and a fewothers, Russias role as a key supplier of oil and gas makes Putin a vital strategicpartner who cannot be ignored or antagonized.33 Such deals are not limited to themajor energy consumers. Slovenia and Belgium have entered into negotiations withGazprom to build a pipeline across the former and to enter the gas distribution marketin the latter. Hungarys oil and gas company, Mol, has joined with Gazprom toextend Gazproms Blue Stream pipeline across the Black Sea through the Balkansinto Hungary. In January 2008, Bulgaria signed a deal with Gazprom to join theproposed South Stream project.These examples of individual member states dealing with Russia bilaterallyhave drawn harsh criticism from other member states, such as Poland and the Balticstates. They have warned their European colleagues not to make energy deals thatwill give Russia an undue and possibly dangerous amount of political influence overEuropean decision-making. Many of these nations understand that Europesdependence on Russian energy is likely to last no matter what alternatives areincluded in an EU energy policy. But they also feel Europe does not gain real securityby becoming more dependent on Russia. In fact, the growing presence of Gazpromthroughout the European energy market has led many to worry about the EUs abilityto develop an energy policy insulated from Gazproms influence.34 In a July 2006CRS-13speech, Romanias President Basescu went so far as to warn that Europesdependence on Russian gas monopoly Gazprom ... could be the biggest threat to theregion since the former Soviet Unions army.35Initial efforts to institutionalize an EU-Russia energy dialogue came to fruitionin 2000 with the creation of the EU-Russia Energy Dialogue. However, results of theDialogue have reportedly been mixed at best. Despite continued Russian reluctanceto allow European investment in its energy sector and adopt energy market and


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transportation principles laid out in the Energy Charter, several European nationscontinue to enable increased Russian influence in their energy sectors. On the otherhand, 2006 negotiations on a renewed Russia-EU partnership agreement werederailed due to Polish and other member state concerns regarding Russianintransigence in several areas, including energy cooperation. In the face of internal

discord, the EU appears to have agreed to focus on achieving its energy goals withregard to enhancing sustainability, while Russia has shown few signs of deviatingfrom its recent policies.The energy situation with Russia is not yet dire. Russia will continue to beEuropes primary energy supplier for the long-term, and healthy Russian-Europeanrelations remain a priority on both sides. If a common external EU energy securitypolicy is to emerge, two options may be considered. First, Europe may move to curbits dependence on Russian energy by increasing its diversification to other regionswithout threatening Russias own market security in Europe. In doing so, Europemight ask if there is a point at which Russia could decide that the EUs commitmentto diversification no longer makes it financially attractive for Russia to continue to

invest in new supplies destined for the European market. Second, the EU mayattempt to regulate the behavior and practices of Gazprom as it becomes more of adominant energy player in Europe. Thus far, few European countries havedemonstrated restraint in seeking bilateral deals with the Russian monopoly thatwould do just that. If this continues, Europe could risk having Gazprom interferemore and more in its internal political decision-making. To avoid this, the EuropeanUnion will likely continue to apply pressure on Gazprom to play by Europes ruleson competition and work to change Gazproms corporate mentality by allowingEuropean firms to invest in Russias gas industry.According to some analysts, however, internal discord on how to approachRussia is preventing the EU from applying this kind of pressure. These critics arguethat the EU could collectively pressure Russia by enforcing existing EU competitionlaws and even using Russias prospective World Trade Organization (WTO)membership as leverage to open Russias domestic energy sector to outsideinvestment.36 On the other hand, countries such as Germany appear reluctant to takeany concerted action that may antagonize Russia, citing the need for a healthyCRS-14strategic partnership, given Euro-Russian mutual dependencies and the importanceof Russian cooperation in addressing other issues of global concern, such as theIranian nuclear program and the future status of Kosovo.37Middle East/North Africa. EU efforts to diversify European energy suppliesand decrease dependence on Russia have heightened calls within Europe for strongerpolitical and economic engagement in the Middle East and North Africa. However,political instability in the region and strong competition for its energy resources fromcountries in Asia and North America present challenges to European efforts.The Persian Gulf countries (Bahrain, Iran, Iraq, Kuwait, Qatar, Saudi Arabia,and the United Arab Emirates) alone hold over half (57%) of the worlds oil reserves,and the Middle East Region produces about 31% of the worlds oil.47 In addition,Libya is estimated to hold 40bb and Algeria 12bb. The Persian Gulf region alsoholds an estimated 2,400 trillion cubic feet (tcf) of natural gas reserves, representing


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45% of the worlds total gas. Algeria is estimated to hold (161tcf), and LibyaEurope already depends on the Middle East/North Africa region for close to30% of its oil imports and approximately 15% of its piped gas. In 2005, Europeimported approximately 3.1million b/day of oil from the region. The largest portionof that oil comes from Saudi Arabia, followed by Libya and Iran.49 Europes primary

supplier of natural gas has been Algeria, via two pipelines that enter Europe throughItaly and Spain. A smaller amount comes from Libya via pipelines to Italy. Twoadditional gas pipelines from Algeria to Spain and Italy are under construction.Perhaps the most important development for Europe in this region has been thegrowing availability of liquified natural gas (LNG). Today, Europe accounts forapproximately 8% of the worlds total consumption of LNG, and in 2005, LNGrepresented 15% of European gas imports a 21% increase from 2004.50 Spain,where 65% of gas imports are LNG, leads Europe in LNG imports, followed byPortugal (39%) and France (27%). The principal suppliers of LNG to Europe includeAlgeria, Egypt, Oman and Qatar. Algeria is the worlds third largest exporter ofLNG, with almost all of its gas (25b cubic meters) going to Europe. In 2006, the

Algerian national oil company, Sonatrach, signed a 20-year LNG supply contractwith the Spanish power company Endessa.51LNG has also become a major factor in the development of gas exports from thePersian Gulf. Although nations such as Qatar, Oman and the United Arab Emeriteshave produced LNG for the Asian market, European energy companies have begunto express more of an interest in purchasing LNG from the Gulf as well. With vastamounts of gas reserves the Gulf states are positioned to meet a portion of Europesfuture demand.European relations with the states of the Persian Gulf and North Africa havesteadily improved over the years. EU relations with North Africa were formalized in1995 with the creation of the Euro-Mediterranean Energy Partnership. The EU hasalso created the EU-Gulf Cooperation Council (GCC) Dialogue with the states of thePersian Gulf and has initiated a formal dialogue with the nations of OPEC. Europeanenergy companies have also become more involved in the Middle East. On the otherhand, observers note that these forums have been slow to evolve, and that countrieslike Algeria have at times been reluctant to agree to European-proposed terms. Forexample, in September 2007, Algeria revoked a gas contract with Spanish companiesreportedly worth upwards of $7 billion (5 billion euros).52The potential for growth in Europes energy diversification strategy with respectto the Middle East and North Africa is significant. However, European competitionwith Asia and North America and long-term political instability throughout theregion will likely temper the degree to which Europe seeks to increase its reliance onthe region. Nevertheless, as with the Caspian region, if the EU is serious aboutlowering its dependency on any one source, it must turn more and more to the MiddleCRS-19East and North Africa. Parenthetically, Europes growing interest in energy resourcesin North Africa has not gone unnoticed by Russia and Gazprom. Just as in theCaspian region, Russia appears to be bolstering its efforts to influence Europesenergy plans. In March 2006, President Putin, along with Gazprom officials, traveledto Algeria to discuss Russian participation in Algerias future oil and gas projects,


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including its LNG export markets. Some contend that because Russia intends tomake Europe a major market for LNG produced from its Shtockman gas field in theBarents Sea, Russia is seeking to position itself to influence Algerias future role asa major supplier of energy to Europe.External Strategy Conclusion. Establishing a diversified network of secure

energy suppliers has become one of the foremost challenges facing the nations ofEurope and its Union. In one sense, Europe is fortunate to have such large sourcesof available energy within a relatively small geographical space. However, like othercountries, Europe faces the fact that for the foreseeable future, those energyproducing nations pose different levels of risk, ranging from outright politicalinstability to more subtle questions of political reliability and long term intentions.The EU can continue to use its Common Foreign and Security Policy (CFSP)and collective trade policy to promote political stability and security in countriesproviding the bulk of Europes energy supply. However, perspectives on energysecurity policy differ among the 27 member states themselves, and between the statesand the European Commission. Long-term bilateral energy agreements such as the

Baltic pipeline agreement between Russia and Germany, the South Stream pipelinecontracts between Italy and Bulgaria and Gazprom, and LNG contracts signedbetween Spain and France and Algeria demonstrate that member states continue toview energy security primarily as a national policy issue. Such bilateral agreementsmay or may not take broader Union security into account. However, they couldbecome more commonplace unless member states agree that a continued reluctanceto coordinate may threaten the long-term energy security to the Union, especially ifthe states gravitate to single energy suppliers. For many, the European Commissionscall for a common European energy policy makes sense. Nonetheless, progresstowards a common external energy security strategy tied to the EUs CFSP appearsto require greater coordination than has been demonstrated heretofore.

Challenge 2: PromotingIndigenous Energy SupplyWhile efforts to develop a coherent external energy policy remain a top priority

for the European Commission and some member states, there is broad Europeanagreement that the EU should also look inward to determine how its dependence canbe mitigated by indigenous energy supply. Specifically, the EU has taken steps toincrease Europe-wide production and use of alternative and renewable energy sourcesand to invest in clean coal technology. These efforts are aimed both at increasingEuropean energy independence and addressing growing public and political concernwith the effects of energy consumption on global climate change. Accordingly,current initiatives are focused on the two sectors that together account for asignificant majority of the EUs total carbon-dioxide emissions: power and heat

generation (35% of total carbon emissions) and transport (27%).56

Energyconsumption in the transport sector is overwhelmingly fueled by imported oil. AboutCRS-21a third of Europes power generation comes from coal burning plants, and anotherthird from nuclear plants. Figure 2 illustrates the breakdown of power generation byfuel.Source: IEA.

The mix of energy supply in EU member states continues to be determined


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largely by national governments or energy companies. As a result, energy mix varieswidely across the EU, influenced by a number of factors ranging from resource costand availability to political factors, such as legislation curbing nuclear energyproduction. In France, for instance, nuclear power accounts for over 70% of allelectrical generation, while Germany and Spain have enacted laws to phase out the

use of nuclear power; in Poland and the Czech Republic coal is the dominant fuel.Nonetheless, decisions regarding national energy mix are increasinglyinfluenced by EU and international agreements to reduce greenhouse gas and carbonemissions. Under the 1997 Kyoto Protocol, the EU is obligated to reduce its carbonemissions by 8% of 1990 levels by 2012. In order to achieve this collective target,member states have agreed to individual National Action Plans. The more heavilycoal-reliant and less economically developed member states such as Poland have lessstringent targets than countries with more developed renewable energy portfolios.Member states are expected to take a similar approach to realizing the EUs mostrecent goals of reducing emissions by 20% of 1990 levels by 2020.The EUs ability to reduce its import dependence while mitigating negative

environmental effects will depend largely on individual member state decisionsregarding energy mix. European efforts are expected to focus on promotingrenewable energy and cleaner burning fuels, developing clean coal technology, andincreasing energy efficiency and reducing overall consumption. Because nuclearpower generation does not directly produce carbon emissions, some experts andgovernment officials advocate an increase in nuclear power generation. Others, onthe other hand, cite safety and proliferation concerns in opposing a rise in nuclearpower generation.Renewable Energy. Hydro, wind, solar and bio-mass energy currentlyaccount for just under 7% of Europes total energy consumption and 15% of itselectricity generation. In March 2007, EU member states agreed to a legally bindingtarget mandating that 20% of total European energy consumption be fueled byrenewable energy sources by 2020. In January 2008, the European Commissionproposed individual national renewable energy targets intended to realize the EUwidegoal. Under the Commission proposal, countries with advanced renewableenergy sectors like Austria, Sweden, and Denmark would be expected to achievesignificantly more ambitious targets than newer member states in Central and EasternEurope. Member states would also be given the option to invest in renewable energyprojects in other EU countries. Individual heads of states are expected to considerthe proposed national targets at their spring 2008 summit.Although EU-wide support for renewable energy is strong, individual memberstates renewable energy portfolios vary. For instance, Austria and Latvia promotehydro power, while the Czech Republic and Portugal have committed financialsupport to large solar energy facilities. Germany, Sweden and the UK are home tomajor wind farms off their coasts. Bio-mass and biofuel programs are becoming moreattractive. Given that Europes oil-dependent transport sector accounts for roughlya quarter of the EUs total carbon emissions, the EU has mandated that biofuels makeup a 10% share of all European transport fuel by 2020.Whether the EU meets its renewable energy targets will likely depend on costof production and the extent to which member states are willing to subsidize their


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development on a large scale. As noted earlier, a March 2007 McKinsey andCompany report estimates that EU member states will need to invest approximately$1.5 trillion (1.1 trillion Euros) in new technologies over the next 14 years in orderto achieve their carbon emissions and accompanying renewable and energy efficiencytargets. It appears that the Commission, the European Investment Bank, and

individual member states are poised to substantially increase their investment in thesesectors, although specific amounts are difficult to estimate. Some member stateshave announced programs to subsidize and provide low-interest loans to fundresearch and development on renewable energies, with countries like Germanyhoping to create the industrial capacity to supply what German officials believe willbecome an increasingly lucrative global market for renewable energy.59CRS-24

Challenge 3: Providing Energy Security throughAn Internal Energy MarketThe European Commission has long argued that member states couldsubstantially increase energy supply security and network and cost efficiency by

integrating national gas and electricity markets into the EUs single Europeanmarket.60 However, despite reforms to liberalize markets in some member states,national energy markets remain largely under state control. As energy securityconsiderations have risen to the forefront of the EU agenda, debate over energymarket liberalization has increased. The Commission and some member statescontend that market integration and liberalization will increase energy security byforging network connectivity and EU-wide interdependence and diversifying supplysources, while others argue that continued national protection is important toguarantee stable and secure supply and distribution and pto rotect consumers fromfluctuations in an unpredictable free market.61 Commission proposals to develop aEurope-wide internal market for gas and electricity transmission and distribution

continue to stoke debate, and analysts do not expect member states to take concertedaction in this area before mid-2008.The Commission launched its efforts to create a competitive EU-wide gas andelectricity market began in the mid-to-late 1990s by issuing a series of Directivesfocused on four primary objectives: (1) to implement the single market for energy bypromoting competition and efficiency in the production and delivery of electricityand gas; (2) to lower prices and give all EU customers the opportunity to choose theirenergy supplier by 2007; (3) to help improve the environment; and (4) to enhanceenergy security. However, most member states appear to regard energy policy as tooimportant to their own economic development to cede national controls, arguing thatin Europe, nationalized industries have, for the most part, provided stability in the

energy market. In fact, the dominant position of energy industries in some countrieshas led some national governments to take measures to protect their industries, evenwhile ostensibly subscribing to the theory of open market competition.62Over the past year, the Commission has increased efforts to promote EUguidelines to determine ownership and access to electricity grids, pipelines, andemergency energy storage facilities. The Commissions most recent and controversialproposal would reduce the power of state-owned energy companies by obligatingthem to split up ownership of generation and distribution networks (unbundling).


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The Commission contends that dual ownership blocks competition and allows forprice manipulation. However, opposition to unbundling from Germany, France, andCRS-2563 See Third way for energy competition,EuropeanVoice.com, January 24, 2008.

Spain has led the Commission to seek to negotiate alternative proposals. These

countries are expected to present such proposals in early 2008.63

Network Interconnection. As progress toward a liberalized Europeanenergy market continues, discussion on energy security is expected to focus on theinternal markets ability to deliver energy supplies through interconnected pipelinesand electricity grids and to provide infrastructure security and emergency supply.The European power transmission grid is divided into seven regional poolsthat, according to the Commission, are only weakly connected. Cross-border energyexchanges have increased recently. For example, in July 2006, the French electricitysector purchased additional power from Germany to offset the demand in Francebrought on by a heat wave. However, in 2005, only about 10% of the currentlyinstalled electrical generation capacity of Europe could be delivered across nationalborders. Although there are examples of successful cross-border cooperation,especially in regions such as the Nordic pool, many contend that a wave of blackoutsin 2005 and 2006 were caused by weak links between Europes power grids, poorcoordination between national and regional power markets, and insufficientgeneration capacity. As a result, the EU has increased efforts to encourageinvestment in the construction of cross-border electricity grid connection andextending this kind of activity to gas, oil, and new LNG distribution systems.

AssessmentMost EU member states have long held that energy policy should remain theprimary responsibility of the states themselves. However, European countries havebegun to re-think energy not only as an element of individual national security but

as an element of the EUs Common Foreign and Security Policy (CFSP).Furthermore, growing European public and political concern regarding global climatechange appears to have spurred European action to mitigate its energy dependenceby seeking to increase efficiency and reduce carbon emissions within Europe.Indeed, of the three focal points of current EU energy security policy externalrelations, indigenous energy supply, and the internal energy market efforts topromote a cleaner and more efficient indigenous energy supply have gained the mostmember state support.Some skeptics doubt the ability of EU member states to ultimately come toagreement on a host of energy-related issues, particularly in managing externalrelations and creating an internal market. There continues to be strong disagreementon how to deal with Russia and on an appropriate diversification strategy, and mostdecisions regarding foreign supply sources and contract terms will likely remain inthe hands of individual member states and their energy sectors. Open andcompetitive energy markets are desired, but protection of national energy industriesstill prevails in several key nations, including Germany, France and Spain. Somecountries that have reluctantly agreed to open their energy sectors to morecompetition appear unenthusiastic about turning regulatory decisions over toCommission bureaucrats in Brussels.


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On the other hand, the EU is increasing its role in coordinating and financingthe development of renewable energy and the storage and use of emergency energysupplies. Although member states and their energy industries appear likely to retainabsolute authority in determining which energy mix makes the most sense forindividual countries, the EU has set binding EU-wide targets in some areas and may

continue this trend. The EU also stands to play a larger role in determining powergrid interconnection arrangements and energy infrastructure investment levels. Withregard to foreign policy, efforts to advance energy dialogues with Russia and otherenergy producing and transit regions are being pursued in a more open andcoordinated manner between the EUs Office of the High Representative forCommon Foreign and Security Policy and the individual member states, and theCommission has outlined specific foreign policy goals with regard to multilateraltreaties and an expansion of the EUs Neighborhood Policy. Nonetheless, foreignpolicy continues, first and foremost, to be determined by national governments.

Energy Security In The Transatlantic ContextOver the past 55 years, relations between the United States and the EU have

steadily broadened and deepened so that the two are inextricably linked. Nowherehas transatlantic integration manifested itself more than in the economic sphere. TheU.S-EU economic partnership has been described by many as the single mostimportant influence on global economic growth, prosperity and trade.64 Within thedeepening transatlantic economic relationship, energy security policy is becoming ahigher priority for both the United States and the EU. Together, the United States andthe European Union represent the worlds largest energy market. The United Statesand the EU produce approximately 23% of the worlds energy but combine foralmost 40% of global energy consumption.65 Combined, the United States and the EUaccount for almost 40% of the worlds total carbon emissions.66At the 2006 and 2007 U.S.-EU Summits, the parties agreed to increase

cooperation on energy security, climate change, and sustainable development issues.Three institutional mechanisms to facilitate this cooperation were established: anannual strategic review of U.S.-EU energy cooperation; a U.S.-EU High LevelDialogue on Climate Change, Clean Energy and Sustainable Development; and aU.S.-EU Energy CEO Forum. None of these forums has convened more than twice,however, and at the April 2007 U.S.-EU Summit in Washington, D.C., the UnitedStates Administration reportedly rejected European calls for a commitment to pursueCRS-27binding international global emissions and energy efficiency targets.67 Specifically,European officials have urged U.S. support for an international treaty regulatinggreenhouse gas emissions after 2012, when the U.N. Kyoto Protocol is set to expire,

and for an international market-based carbon emissions credit trading system.European officials appear encouraged by what they perceive as an increasingU.S. willingness to acknowledge climate change as a problem with serious globalramifications, and to link energy and climate change policy. However, they arereportedly frustrated by U.S. reluctance to commit to binding international emissionsand energy efficiency targets. The United States is not party to the Kyoto Protocol,and the Administration reportedly views global regulation to address climate changeskeptically; instead, U.S. officials advocate transatlantic and international


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cooperation to develop alternative and renewable energy sources and liberalizeinternational energy markets. To this end, the United States and EU used their 2007Summit to launch a series of initiatives jointly promoting technological advances inclean coal and carbon capture and storage, biofuels, energy efficiency, and methanerecovery. U.S. officials argue that such technological innovation is proving more

effective in reducing emissions than global regulation and that such regulation mayactually impede the economic growth necessary to sustain further technologicaladvances. To support their claims, Administration officials point out that, despite EUparticipation in the Kyoto Protocol, carbon dioxide emissions increased at a fasterrate in the EU than in the United States from 2000-2004. During the same period,they add, U.S. economic growth outpaced economic growth in the EU.68Just as EU member states have expressed concern regarding a perceived U.S.reluctance to link transatlantic energy security to pursuit of a global climate changetreaty, U.S. Administration officials and analysts point to a potential long-term threatto transatlantic relations arising from European dependence on Russian energy andGazproms growing influence in large segments of Europes energy infrastructure.69

To this end, the Administration has been supportive of efforts to build pipelines anddevelop other transportation routes from Central Asia and the Caspian Region toEurope that bypass Russia. In addition, U.S. critics of EU policy toward Russiaargue that the EU should strengthen its resolve in requiring Russia to ratify theEnergy Charter Treaty and to accept standard open market business practices,competition, and foreign investment in its energy sector. Some Europeans, andparticularly Germans, on the other hand, appear reluctant to take concerted actiontoward Russia that may be viewed as antagonizing a country they view as an essentialstrategic partner on a variety of important issues beyond energy.70CRS-2871 For additional information see CRS Report RS22409,NATO and Energy Security, by PaulGallis.

Lastly, transatlantic discussion of energy supply security also includes energycrisis management and infrastructure protection. In this regard, some have called forNATO involvement in energy security issues, including in securing supply sources,distribution routes, and storage facilities. In 2006, Poland circulated a proposal fora so-called Energy NATO, calling on an increased role for NATO in guaranteeingthe protection of member state energy supplies. In a similar vein, in an address atNATOs November 2006 Summit in Riga, Latvia, Senator Lugar proposed theextension of NATOs collective defense clause, Article 5, to cases where a memberstates energy security is threatened. Other EU member states, notably Germany andFrance, have greeted such proposals skeptically, preferring to advocate an enhancedEU role in energy security matters.

However, still others assert that NATOs role in energy security could becomplementary to the EUs effort to strengthen market forces and interdependencein the international energy sector by offering assistance for the protection of pipelinesor sea lanes during times of political unrest or conflict. NATO Partnership for Peacecountries, such as Kazakhstan and Turkmenistan, which are important energyproducers are seeking ways to associate themselves more closely with NATO, in partto diminish Russian influence and in part to develop reliable partners in an unstableregion.


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Topic B: Water Management: Prevention of Hydro-Conflicts in the Neighbor Regions to

Europe

Nowadays, many states are inable to satisfy the food demand of its the population as a result ofthe physical water shortage. This background will affect the EU Member States which willhave to confront with migration waves, o population growth and intensified agriculture.

Due to the fact that the climate induced changes in water resources have an undoubtedly potential to trigger conflicts, the climate, represents a main issue within the Swedishgovernment. It has been obvious to Sweden that the most viable options include regionalcooperation as a minimum prerequisite. As a result, Sweden is deeply involved in tackling thedifficult political issues of water rights and allocations; therefore, the Swedish EU MemberState advocates for enhancement of water data, water management practices,enhancement ofwater supply and concepts for regional cooperation and management. In other words, therecand be taken measures such as water wells,rain catchment systems, the retention of pollutingwater forms, developing sustainable water sources. In this context,the Swedish governmentsingled out his own country as having a long tradition of giving priority to water within theframework of its foreign aid budget. In addition to that, Sweden has continued to provide

strong support to the UN Development Programme, the UN Environment Programme and theGlobal Environmental Facility, three important actors in the international fields of water andsanitation. Moreover, the Swedish government has also given specific support to platformswhere the water issue can be discussed and where actors can meet to change points of views orshare scientific results. Besides the physical water scarcity, Sweden points the fact that manydeveloping coutries have to face the economic water shortage; in other words, there arecountries where there is water, but there has not been enough investment to deliver it to whereit is needed. In addition to that, the government aims to develop a policy model for securityagainst hydro-climatic hazards applicable to the EU member States. In order to create asustainable policy development, Sweden points out the importance of a suitable framework tointegrate security, climate change adaptation and water management issues at the national levelof the EU Member States.All in all, it is strongly emphasized by the Swedish government the fact that cooperation andsolidarity is vital for the regions that are most exposed to floods and droughts:TheMediterranean and Middle East.

Policy action 2. Fight poverty by improving access to agricultural water and its use. Targetlivelihood gains of smallholder farmers by securing water access through water rights andinvestments in water storage and delivery infrastructure where needed, improving valueobtained by water use through pro-poor technologies, and investing in roads and markets.Multiple-use systemsoperated for domestic use, crop production, aquaculture, agroforestry,and livestockcan improve water productivity and reduce poverty. Policy action 3. Manage agriculture to enhance ecosystem services. Good agriculturalpractice can enhance other ecosystem services. In agroecosystems there is scope to promoteservices beyond the production of food, fiber, and animal protein. Agricultural productiondoes not have to be at the expense of other services that water provides in rivers andwetlands. But because of increased water and land use, and intensification, some ecosystemchange is unavoidable, and difficult choices are necessary.


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Thinking differently about water is essential for achieving our triple goal of ensuring foodsecurity, reducing poverty, and conserving ecosystems.

Policy action 4. Increase the productivity of water. Gaining more yield and value from lesswater can reduce future demand for water, limiting environmental degradation and easingcompetition for water. A 35% increase in water productivity could reduce additional cropwater consumption from 80% to 20%. More food can be produced per unit of water in alltypes of farming systems, with livestock systems deserving attention. But this optimismshould be met with caution because in areas of high productivity only small gains arepossible. Larger potential exists in getting more value per unit of water, especially throughintegrated systems and higher value production systems and through reductions in social andenvironmental costs. With careful targeting, the poor can benefit from water productivitygains in crop, fishery, livestock, and mixed systems.

Policy action 5. Upgrade rainfed systemsa little water can go a long way. Rainfed agricultureis upgraded by improving soil moisture conservation and, where feasible, providingsupplemental irrigation. These techniques hold underexploited potential for quickly lifting thegreatest number of people out of poverty and for increasing water productivity, especially in

Sub-Saharan Africa and parts of Asia. Mixed crop and livestock systems hold good potential,with the increased demand for livestock products and the scope for improving the productivity ofthese systems.

Economic scarcityEconomic scarcity is caused by a lack of investment in water or a lack of human capacity tosatisfy the demand for water. Much of the scarcity is due to how institutions function, favoringone group over another and not hearing the voices of various groups, especially women.

Symptoms of economic water scarcity include scant infrastructure development, either smallor large scale, so that people have trouble getting enough water for agriculture or drinking. Andeven where infrastructure exists, the distribution of water may be inequitable. Much of Sub-

Saharan Africa is characterized by economic scarcity, so further water development could domuch to reduce poverty.

Physical scarcity

Physical scarcity occurs when there is not enough water to meet all demands, includingenvironmental flows. Arid regions are most often associated with physical water scarcity,Physical water scarcity Approaching physical water scarcity Economic water scarcity Little or nowater scarcity Not estimated Definitions and indicators Little or no water scarcity. Abundantwater resources relative to use, with less than 25% of water from rivers withdrawn for humanpurposes. Physical water scarcity (water resources development is approaching or hasexceeded sustainable limits). More than 75% of river _ows are withdrawn for agriculture,industry, and domestic purposes (accounting for recycling of return _ows). This de_nitionrelating water availability to water demandimplies that dry areas are not necessarily waterscarce. Approaching physical water scarcity. More than 60% of river _ows are withdrawn.These basins will experience physical water scarcity in the near future. Economic waterscarcity (human, institutional, and financial capital limit access to water even though water in

nature is available locally to meet human demands). Water resources are abundant relative towater use, with less than 25% of water from rivers withdrawn for human purposes, butmalnutrition exists. Source: International Water Management Institute analysis done for the


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Comprehensive Assessment of Water Management in Agriculture using the Watersim model;chapter 2.

Areas of physical and economic water scarcitybut water scarcity also appears where water is apparently abundant, when water resources areovercommitted to various users due to overdevelopment of hydraulic infrastructure, most often

for irrigation. In such cases there simply is not enough water to meet both human demands andenvironmental flow needs. Symptoms of physical water scarcity are severe environmentaldegradation, declining groundwater, and water allocations that favor some groups over others.As a result of the increased frequency of drought events over recent years, it was agreed atthe informal meeting of Water Directors of the European Union (EU) held in Roma (Italy)in November 2003, to take an initiative on water scarcity issues. Two Mediterranean Focal Points wereinvited to joint the EU group on the same issue, Egypt and Tunisia.definitely confirm this trend and the urgent need for the implementation of commonstrategies to face the problem, which involve the whole European Community and not onlyMediterranean countries.The 2005 drought in Spain, Portugal, and parts of France was caused by a low precipitationrate on all the territory in 2004; in Spain the annual average precipitation has been lower

than the minimum measured in the historical series from 1947 to 2003. This extremereduction of rainfall (from 650 mm to 400 mm) resulted in significant impacts on waterstored in reservoirs, drinking water availability, hydropower potential, water quality,environmental stress, and fire risk. This situation called for the execution of special plansfor situations of alert and eventual drought, implementing respective management measuressuch as irrigation restrictions, and setting emergency measures. Drought severity and frequency haveincreased in some of the Earths regions in conjunction with climate change.Today, water conservation has many meanings. It means storing, saving, reducing or

recycling water. In detail it denotes:

for farmers who irrigate

- improving application practices via surge valves, special nozzles on

sprinkler systems, soil moisture and crop water needs sensors

- increasing uniformity of application, thereby allowing less water tobe used

- using meteorological data to balance water applications with

available soil moisture and crop water needs

- lining diversion canals and ditches to minimize seepage and leaks

- irrigating with recycled water rather than freshwater that could be

used after treatment for potable water

for municipalities

- encouraging residents to install and use high efficiency plumbing

fixtures and educate them about water-saving habits

- reducing peak demands to avoid the extra-costs of investing in

additional pumping and treatment plants

- metering water (customers pay for what they use)- substituting recycled water for non potable application for urban

irrigation of sports facilities and parks

- increasing water storage through aquifer recharge and recovery so

that excess water in the winter can be stored for summer use.

Documents

EU's Energy &Water Scarcity