ESG and energy diplomacy

Last Updated on Thursday, 13 April, 2023 at 9:27 am by Andre Camilleri

Yesterday, I was invited to participate in a panel discussion relating to ESG and offshore renewable energy. The idea of exploring offshore renewable energy is an interesting concept. It is part of the EU’s vision to increase the production of cleaner energy, and to eventually decarbonise the European continent.

When I read about the idea it occurred to me that the designated area, where the offshore floating solar energy needs to be placed, must be a shallow zone. True, technology improved, and so did research in the area of offshore solar energy. However, my understanding is that the offshore solar energy structure must be placed floating in an area within the perimeter of Hurd’s Bank. Surely, if that is the case, a few topics come to mind when exploring Hurd’s Bank not least security. Certainly, security would need to be provided by the state, and I assume that the maintenance including the cleaning of the solar energy structures is foreseen to be provided by the private sector.  

Recently, I learnt that the EU is exploring the idea of tapping into a mega project in the Sahara Desert. The project is linked to concentrating solar-thermal power in Tunisia. For those not familiar with the concept, concentrating solar-thermal power, known by its acronym CSP technology, utilises mirrors to reflect and concentrate sunlight onto a receiver. Subsequently, the heat converts fluid at high temperatures that is able to spin a turbine or power a different engine and thereby generating electricity. Tunisia seems to be the perfect candidate for this project. The idea is to export energy from Tunisia to Italy through a submarine cable, which then distributes cleaner energy to other EU countries. There has been extensive research and temperature monitoring over the past years, so the development might materialise any time soon.

The EU is trying to create green jobs and invest in third countries, as part of its Global Gateway initiative, primarily to narrow the global investment gap, and to counter China’s Belt and Road Initiative. Absolutely, investing in third countries fosters relationships and creates additional leverage when it comes to diplomacy. Obviously, diplomacy is not just attending official meetings in Brussels, Geneva, or New York. It involves years of close relationships, trust, investments, as well as respect towards the sovereignty and culture of other states.

Clearly, an archipelago like ours, is more prone to risks relative to mainland Europe. Therefore, energy security must be prioritised at all times. On the other hand, climate change might affect the areas designated for offshore solar farms, as more frequent cyclones might occur in the future. Hence, when designing such projects, we must factor in climate security, as this might subsequently affect the security of energy supply. Undoubtedly, any allocated funds designated to offshore solar energy must factor in the long-term benefits including positive externalities.

During the last Foreign Affairs Council, the second item on the agenda discussed the worrying situation in Tunisia. As I already outlined in my preceding opinion pieces, Tunisia is a close partner of the EU. A destabilised Tunisia is tantamount to additional migration flows as well as instability and insecurity in the MENA and Mediterranean region. Clearly, it is crucial for the EU to retain the economic stability of Tunisia and avoid social tensions. Needless to say, a stabilised Tunisia can offer benefits for the EU. Indeed, if the CPS energy project occurs it would help the EU wean itself off other energy dependencies including hydrocarbons, and it would also contribute towards optimising clean and renewable energy.

The HRVP gave a clear direction and asked two of the members of the Foreign Affairs Council to travel immediately to Tunisia and take stock of the situation. Meanwhile, the EU published its critical raw materials act, as it needs to re-establish a level playing field when it comes to rare earth materials. As the EU is trying to wean itself off Russian gas, they must be careful not to exchange one type of dependence to another. Certainly, for the smooth transition of its green economy, the EU is dependent on imports of critical raw materials for a large number of technologies. Therefore, the transition is not as easy as it was planned back in 2017.

Over the years, China managed to position itself dominantly in the sphere of critical raw material, also through its engagement of foreign direct investment in third countries, as well as heavy subsidies. Hence, the EU is clearly dependent on China. Last week, President Emmanuel Macron, visited China for an official meeting with President Xi Jinping. The former was accompanied by the President of the European Commission, who recently calmed down on her tone when voicing her disapproval of Russia’s invasion of Ukraine, as well as China’s competitive position. Surely, trained diplomats must refrain from projecting a divisive narrative, especially at a President level. And it is a gross mistake to show your opponents what you think of them.  

Conversely, the EU seems tempted to court China for the progress of its green transition. However, China already signalled strong support for Moscow. Therefore, the EU is caught in a difficult situation. The United States is clear on its policy versus China. By the time of writing this opinion piece, President Emmanuel Macron stated that the EU should not become a “vassal” and must avoid being dragged into any conflict between the US and China over Taiwan. Meanwhile, the President of the European Commission sat down for an interview with the Economist. Media reported that what President Macron said went down poorly in America. Obviously, the US did not reason the same way on Ukraine and did not tell the EU that the US must not be dragged into any conflict between the EU and Russia over Ukraine. Anyway, the US will clearly tell the EU that they cannot run with the hare and hunt with the hounds. These are clear and agreed principles for the US.

Unquestionably, economically, it was completely mishandled. Hitherto, the Russian economy did not collapse. Definitely, the sanctions will have a long-term effect on Russia. However, as times goes by, unless sanctions are universally applied, they might lose their intended effect because the Russian economy will adjust overtime. In the meantime, Russia is pursuing a different political trajectory in trying to build alliances with other countries. And, at the same time the EU needs China for the importation of some of the critical raw materials. Certainly, it is not auguring well!

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