A grand bargain to steer through the European Union’s energy crisis. Bruegel Policy Contribution Issue n˚14/22 | September 2022.

Europe’s energy system faces unprecedented physical and institutional stress. The policy response so far has been excessively nationally focussed and could undermine the goals of calming energy markets over the next 18 months and achieving ambitious decarbonisation targets. At the basis of the crisis is a post-COVID-19 global energy imbalance. While demand bounced back quickly as economies re-opened, supply did not. A particular challenge is that the reducing supply of fossil fuels in line with climate targets has not been matched by a commensurate reduction of fossil-fuel demand. Russian manipulation of European natural gas markets since summer 2021, exploiting its significant market power, has deepened the crisis. Finally, events including weak French nuclear output and the ongoing drought, which has cut hydropower generation, have further escalated the situation. In response to high and volatile prices and forced demand reduction, European governments have tended to opt for narrow and uncoordinated measures that prioritise national security of supply and affordability over an integrated European approach. Subsidising energy consumption instead of demand reduction has been a common and misguided approach. Governments run the risk that energy consumption subsidies become unsustainable, eroding trust in energy markets, slowing action in sanctioning Russia and increasing the cost of the net-zero transition. An integrated European approach and a coordinated plan is essential to address the crisis. European Union leaders must strike a grand energy bargain based on four broad principles: (i) all countries bringing forward every available supply-side flexibility, (ii) all countries making comprehensive efforts to reduce demand, (iii) a political committing to maintain energy markets and cross-border flows, (iv) compensation for the most vulnerable consumers. This grand bargain can be the first step on a new course towards united energy policy at EU level

How to make the EU Energy Platform an effective emergency tool. Policy Contribution Issue n˚10/22 | June 2022.

Uncertainty about the supply of Russian natural gas is causing extremely high and volatile European gas and electricity prices. European Union countries may struggle to import sufficient volumes of natural gas at reasonable prices. During the summer, the imperatives are to fill storage sites sufficiently in a coordinated manner and to organise sufficient import volumes to replace a substantial share of gas that might no longer come from Russia. Coordination is essential to ensure that disruptions during difficult winter months do not lead to a break-up of the EU internal gas market with potentially serious political repercussions. One part of the EU response is establishment of an EU Energy Platform for the purchase of gas, LNG and hydrogen. This aims to pool demand to leverage the bloc’s economic clout, international outreach to reliable partners and efficient use of existing infrastructure. EU leaders have backed the plan but it has not yet been translated into a feasible scheme. The platform should be developed into an effective emergency tool to safeguard gas supply in case Russian flows stop. We detail two complementary proposals to achieve this. First, there should be EU-wide auctioning of remuneration for filling storage sites in specific regions. Companies would remain responsible for all stages of the value chain, benefitting from remuneration and in return offering the market operator some control over how this gas is released during winter months. Second, EU demand for additional LNG quantities, and the sourcing of this on international markets, should be coordinated through a platform, creating a transparent market for these volumes. These mechanisms would resolve the prevention paradox and prevent free-riding. If EU countries buy gas jointly, they will find it much easier to let markets allocate scarce volumes across borders in case of a complete stop to Russian supplies. . This would reduce the risk of energy market fragmentation, as well as the subsequent energy security, economic and political impacts of a shock that would hit member states very differently

What is holding back artificial intelligence adoption in Europe? Bruegel Policy Contribution Issue n ̊24/21 | November 2021.

Artificial intelligence (AI) is considered a key driver of future economic development, expected to increase labour productivity and economic growth worldwide. To realise these gains, AI technologies need to be adopted by companies and integrated into their operations. However, it is unclear what the current level of AI adoption by European firms actually is. Estimates vary widely because of uneven data collection and lack of a standard definition and taxonomy of AI. What is clear is that AI adoption in Europe is low and likely running behind other parts of the world. Discussions on the barriers to AI advancement often mix up different stages of innovation – research, development and adoption. Each stage is constrained by the availability of skills, data and financing in the European market, but there are nuances in how these barriers arise in each of the three stages. This policy contribution focuses on the final stage, AI adoption. We discuss theoretical and empirical evidence of the drivers of AI adoption. We outline the relevant barriers to adoption for European firms in terms of human capital, data availability and funding, and make international comparisons where possible. To accelerate the roll-out of AI technology across the European Union, policymakers should alleviate constraints to adoption faced by firms, both in the environmental context – labour market, financial market and regulation – and in the technological context – data availability, basic digitisation of businesses and technological uncertainty

The Belgian Recovery and Resilience Plan: A fresh impetus to prepare the skills of tomorrow’s workforce? Egmont Commentary 17 May 2021.

In the context of a fast recovery, training policy is one of the labour market instruments with the most positive effect on employment, but it is also a very expensive one. On 30 April 2021, the European Commission received the consolidated version of the Belgian Recovery and Resilience Plan (RRP), with €950.64 million dedicated to up- and reskilling. Whilst trends such as digital automation, accentuated by the COVID-19 crisis, will profoundly reshape the future of work, the Belgian RRP could contribute to a successful transition towards new occupations, hence acting as a counter-cycled economic measure by mitigating broader social consequences. The success of this operation will be tributary to its magnitude, its promptness of response, and its capacity to target the most vulnerable persons

Crying wolf will not help Taiwan. Egmont Commentary 7 May 2021.

It is a strange spectacle. The president of Taiwan, Tsai Ing-wen, speaks out to “assure everyone that our government is fully capable of managing all potential risks and protecting our country from danger”. Meanwhile, others, from American admirals to the cover of the Economist, continue to paint a picture of imminent war. Why this insistence to impose a narrative that goes against the perception of the Taiwanese themselves

Digitalisation in Germany: an overview and what lies behind the delays. OSW Commentary Number 417 22.11.2021.

The adaptation of the economy and the state to new information technologies – next to the energy transformation (Energiewende) – is viewed as one of the greatest civilisational challenges Germany is currently facing. However, progress in this area is lagging behind expectations: it fails to match the level of GDP per capita in relation to Germany’s competitors in the EU, the country’s export-oriented economy or its ambition to be Europe’s economic and political leader. The problems with digitalisation are not due to financial constraints. Their causes are much deeper: the approach to innovation, the lack of specialists on the labour market, Germans’ sense of unease towards new technologies, as well as previous mistakes made during the development of the transmission infrastructure

Submission on EirGrid's consultation on `Shaping Our Electricity Future'. ESRI Submission May 2021.

Developers of renewable energy infrastructure, as well as transmission grid infrastructure, often face public opposition to new projects. Scenario analysis of generation and transmission system investment show that many future pathways are feasible but alternatives are not without impacts on system costs and electricity prices [1–5]. As the power system expands with greater generation and transmission capacity required over the coming decade, system costs and electricity prices could dramatically escalate if there is a sharp deterioration in the public’s acceptance of new energy infrastructure [4]. The implication for the electricity sector and society in general is that community and stakeholder engagement on new energy infrastructure projects should continue to be a key priority. Public acceptance of energy infrastructure is often characterised as a local issue where the new infrastructure is to be located. Both developer and public policy initiatives exist to encourage acceptance of new infrastructure in local communities, often conceptualised in terms of willingness to accept costs. But the impact on the power system’s costs and(implicit) electricity prices are neither necessarily local to the area of potential new infrastructure nor uniform across the network. For example, impacts can occur on opposite sides of the country in terms of unserved power or higher system costs, es-pecially in the Dublin region where network congestion is most acute [4]. The estimates by Koecklin et al.[4] of implicit (or shadow) regional electricity prices conditional on varying levels of public acceptance of electricity infrastructure are a metric of both system-wide and regional network values of development of new infrastructure necessary to maintain electricity supply security and achieve renewable electricity targets

Future market design options for electricity markets with high RES-E: Lessons from the Irish Single Electricity Market. ESRI Working Paper No. 702 May 2021.

Variable renewable electricity generation presents challenges for traditional power markets. The island of Ireland has high levels of renewable generation by international standards with even higher levels envisaged and so must address these challenges. Market design is informed and constrained by EU policy and progress to date has been mixed. A qualitative review finds that market redesign is advised to address price cannibalisation, reveal consumer preferences for security and protect vulnerable households. Options for market design are presented and recommendations for short and medium term policy action are made

NATO 2030: towards a new strategy. OSW Commentary Number 398 23.06.2021.

The NATO summit held in Brussels on 14 June was intended to show a return to transatlantic unity after four years of the Trump administration. The new President Joe Biden wanted to demonstrate that the United States is resuming its leadership role in the transatlantic community; that NATO is still an important alliance for the US; and Washington is committed to the principles of Article 5. The Alliance is also adapting to changes in the security environment by adopting the NATO 2030 agenda and deciding to develop a new strategic concept. However, the parameters of this adaptation will be subject to further negotiations between the allies, particularly with regard to strengthening deterrence and defence on the eastern flank, and with regard to how and to what extent the Alliance should engage in containing China. At the same time, as NATO adjusts its course to focus on deterrence and defence, other formats for security cooperation between the US & Europe and among the European countries are being developed

A comparative assessment of minimum wage employment in Europe. ESRI Research Series 123 April 2021.

Using data for 2017 and 2018, this report provides a comparative analysis of minimum wage employment in Ireland, relative to a selection of other European countries with a statutory minimum wage. We estimate that just under 10 per cent of employees in Ireland were on the minimum wage during this time. This compares to an average incidence of 10.5 per cent among the countries studied, ranging from a high of almost 16 per cent in Portugal, to just 2 per cent in Belgium