Trade and energy – looking beyond hydrocarbons

November 24, 2015

The Transatlantic Trade and Investment Partnership (TTIP) is a proposed free-trade agreement (FTA) between the European Union (EU) and the United States (US) that, if completed, would be the largest bilateral FTA in the world, and transform transatlantic commerce.

Trade volumes between the EU and US are very high, energy remains an important exception, largely due to the US ban or limit on crude oil and liquefied natural gas (LNG) exports. Unsurprisingly the focus of EU negotiators is to end these limitations, but if the hope of cheap energy is one side of the coin, there is another: cheaper fossil energy means higher carbon emissions from increased consumption while crowding out renewable sources, all of which runs counter to the EU’s ‘40/27/27’ climate and energy targets for 2030.

The ‘old style’ energy trade liberalisation that is being proposed in TTIP, will be hugely detrimental to the environment, because the only forms of energy that are realistically traded across the Atlantic are the equally ‘old style’ carbon-intensives ones: coal, oil and gas, as well as biomass/fuel. Renewable energy – by far the energy carrier with the highest sustainability share and potential – cannot be traded across the pond. Global leadership has been a key part of the TTIP debate; if taken seriously, this should include the responsibility to create a forward-looking energy chapter.

As the chapter is still being drafted, both the EU and the US can seize the opportunity to develop a ‘new style’ energy chapter that not only supports the EU’s 2030 energy objectives but promotes global decarbonisation at UNFCCC COP in Paris this year. TTIP should create a sustainable energy market that tackles energy security and diversification with renewable technologies and energy efficiency. Since TTIP would increase CO2 emissions from transatlantic shipping and aviation, it also has a special responsibility to address these emissions. TTIP should include transatlantic agreement for serious policies to reduce emissions from these sectors; these should include putting a price on the carbon they emit.

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