Climate Justice • 23 Aug 2016
Why the Southern Gas Corridor is the wrong fix for Europe’s future
By Xavier Sol, originally published on Public Finance International.Back to overview
A mega project to pipe gas from Azerbaijan to Europe both rewards an autocratic regime and promotes a misleading energy model
While the international consensus over the Nord Stream 2 pipeline has been shaken again after the Polish anti-monopoly watchdog halted the joint venture between Russia’s Gazprom and its partners, a much bigger megaproject has been silently rising to the top of the Energy Union’s priority list.
The Southern Gas Corridor is a system of pipelines designed to bring gas from the Shah Deniz field in Azerbaijan to Europe. Maroš Šefčovič, the EU’s “Energy Union” commissioner, recently labelled it “the biggest construction project of our time”. Yet despite civil society’s efforts to shed light on the scheme’s risky implications, there has been little debate around its merits and potentially harmful impacts.
The picture appears quite different when it comes to the investment appetite of lending giants such as the European Investment Bank (EIB), the European Bank for Reconstruction and Development (EBRD) and the World Bank. According to their announcements, these institutions are all keen on financing the different sections of the project through staggeringly large loans ranging from €1bn to €2bn. Indeed, the EIB and EBRD would make the biggest loans in their history to the Southern Gas Corridor project.
Such a generous public support reflects the strong political will behind this project, backed by the European Commission, which sees it as the cornerstone of the EU’s future energy security. But, ironically, while Europe tries to free itself from imports fuel from Russia, it is unwisely stepping into the poisonous coils of an equally worrisome partner: Azerbaijan.
Energy security vs. European values?
In recent months, Azerbaijan president Ilham Aliyev has amassed quite a thick collection of photographs with some of the most influential world leaders, who appear to be setting aside any qualms they may have about his ruthless rule.
Azerbaijan’s appalling human rights record is a known fact. During the authoritarian rule of President Aliyev dozens of journalists, bloggers, peace activists, human rights defenders and lawyers who dared to speak out against the regime have been arrested and jailed. While some of them have recently been released, many remain behind the bars.
This crackdown on dissenting opinions was denounced in 2015 by Human Rights Watch, and acknowledged through strong positions by the European Parliament, the Council of Europe and the Organisation for Security and Cooperation in Europe (OSCE) all of whom declared the human rights situation of the country unacceptable. Their strong call for Europe to keep its distance from the regime does not represent the best basis to inaugurate a multi-billion deal.
The scenario was further complicated in April, with the revival of tensions in the disputed Nagorno-Karabakh region. Such political instability, together with a deteriorating economic situation in Azerbaijan (the currency was devalued at the end of 2015), adds to the list of reasons that should discourage Europe from embarking with the country on a massive project like the Southern Gas Corridor.
But autocratic regimes seem not to deter the EU from business priorities. As if the partnership with Azerbaijan wasn’t dreadful enough, the European Commission has lately started negotiating with Turkmenistan to expand the Southern Gas Corridor through the Caspian Sea and build the Trans Caspian Pipeline. Ranked 154 out of 167 countries in the 2015 Corruption Perception Index of Transparency International, Turkmenistan can hardly be portrayed as an ideal partner.
By opening up what Šefčovič has recently called “a highly strategic region”, while ignoring major democracy and human rights issues, Europe is de facto going against the values and principles promoted in its treaties and by the European Charter of Fundamental Rights.
Is that gas needed at all?
Meanwhile, the assumption that this mega pipeline will be the ideal solution to Europe’s energy problems lies on very unstable ground.
Gas demand has already dropped for a decade and future projections don’t look any brighter for fossil fuel supporters. Gas imports are likely to considerably decrease in the next 35 years, even according to the already inflated European Commission estimates, which were criticised by the European Court of Auditors. If more gas is not needed then more gas import infrastructure is even less necessary, especially given the current underutilisation of gas infrastructure all over Europe. Viewed in this light, the mega pipeline is nothing but an immense waste of public money and a soon-to-be stranded asset.
With the climate targets the EU has committed to in Paris, this is not time for fossil fuels overestimation. In fact, the 2° goal can only be attained by a complete decarbonisation of Europe. This means fostering investment in renewable, high efficiency energy sources such as wind or solar power, as pointed out in the EU’s 2050 Energy Roadmap. Those are the real energy security measures needed for Europe. At the same time, more and more scientific studies, including those by the International Energy Agency, prove that for our planet’s health most fossil fuel reserves should be left in the ground. That is the only way that could set us on the right path to containing the dramatic effects of the current climate crisis.
The Southern Gas Corridor clearly does not fit in such a picture. The European Commission and its financial institutions are deliberately ignoring that building such pipeline would indeed mean locking in the use of fossil fuels in Europe for decades to come.
Filling the pockets of an autocratic regime and promoting a misleading energy model, the Southern Gas Corridor looks nothing like the sustainable future that the Energy Union was supposed to bring. With construction works starting and public loans about to be disbursed, there’s not much time left to try and build a different tomorrow.