Addressing the Russian Energy Challenge: Why Regulation Trumps Geopolitics

Europe’s dependence on Russian gas has raised security concerns, especially in response to Russia’s aggression against Ukraine. But this threat is overestimated. The truth is that the EU market, a large market with relatively high prices, is
very important for Gazprom. What is more, Europe’s regulatory apparatus is well-equipped to deal with market power and discriminatory pricing, which is at the core of the real problem Russian gas poses to Europe.
Making necessary infrastructure investments to connect still partitioned national gas markets, completing the single market for energy in order to enhance resilience against external shocks, and further empowering the Commission — the EU’s competition watchdog — to comprehensively govern the EU energy market will alleviate the valid security concerns and force Russia to play by European rules. This needs to take priority in the proposed Energy Union. Because the EU is much better at regulatory politics than at playing geopolitics, it should push the former and abstain from the
latter, particularly in the case of Russian gas.