european council conclusions on 2030 climate and energy

NEWS-VIEWS-DOCUMENTS
safe energy for the future
REPORT
1
No 8(24), October 2014
www.ceep.be
A POSITION PAPER CONCERNING THE AGENDA FOR THE EUROPEAN
COUNCIL MEETING ON THE 23RD - 24TH OF OCTOBER, 2014
THE BALL IS STILL ROLLING
>3
WELCOME NEW MEMBERS
>4
PLENTY OF CLEAN ENERGY
>5
TOTAL ENERGY SUPPORT FOR
THE 28 MEMBER STATES FOR >8
THE PERIOD: 2008-2012
THE SOUTHERN GAS CORRIDOR: A STRUGGLE BETWEEN >10
EU CO-OPERATION AND
CHINESE DOMINANCE
ENERGY DIALOGUE AT
THE REICHSTAG
>15
POLAND’S LARGEST
PHOTO-VOLTAIC FARM
LAUNCHED IN GDANSK
>16
Central Europe Energy
Partners (CEEP)
By Janusz Luks
The meeting is
to be convened
at a very intensive
political
time when a
new European
Parliament
has just been
Janusz Luks
formed and a
new European
Commission, presided over by Jean-Claude
Juncker, is expected to start its activities,
hopefully from the 1st of November, 2014.
We should have new recipes on how to solve
a lot of problems which the EU is facing, such
as: no visible positive results concerning re-
Published by: Central Europe Energy Partners
Editor-in-Chief: Tadeusz Jacewicz
Produced by: SIGMA Int.
Contact to the publisher: +32 28 80 72 97
industrialisation policies, which are closely
related with very high unemployment, especially for the young generation; a decrease
in the EU’s industrial competiveness when
set against external, non-EU economies; an
increase of dependency on fossil fuel imports whilst, at the same time, not exploiting enough our own indigenous sources of
energy; very high energy prices (around two
times more) than external economies; still
very high carbon leakage; huge economic disproportions between old and new EU member states, etc. Also, still a lot of questions remain with regard to energy security and the
Internal Energy Market?
The key question is: what are the EU’s priorities?
From CEEP’s perspective, the above points
should be on the agenda of the European
Council Meeting in October, and then relayed
to the newly established European Commission, as well as the Parliament to set the priorities for the future of the EU.
We know that the agenda will not be changed
and that climate issues will be discussed without the possibility for Mr. Juncker to prepare
the new Commission’s position on climate
and emissions issues. The interrelationship
of the problems listed above should be considered, so that we know, to what extent, climate issues have a detrimental impact on the
development of the EU. Mr. Juncker should
be given half a year to prepare the Commission’s necessary position, especially when the
EU does not need to be in a hurry as concerns
the climate.
>>>
REPORT
2
A POSITION PAPER CONCERNING THE AGENDA FOR THE EUROPEAN COUNCIL MEETING ON THE 23RD - 24TH OF OCTOBER, 2014
Central Europe Energy Partners (CEEP)
>>> CONTINUATION from p.2
The EU is leading in the industrial world in
terms of emissions per capita, and is emitting at least two times less per capita than
the other industrialised countries. Our total emissions constitute around 11% of the
world’s total emissions. Knowing the programmes concerning emissions of the nonEU industrialised countries up to 2030, we
can confidently say that not doing anything
in the EU in that time period, would still
keep us in first place.
Why is this so? It is because those countries,
which are progressing in a CO2 decrease of
emissions, have some limits, as they do not
want to kill their industries and they want to
both create new workplaces and keep the
price of energy relatively low. What is very
interesting is that they have perceived the
idea of an EU ETS as detrimental to the development of their economies.
What does the ETS mean for the EU? We
can cite the EUROFER position of the 4th
of September, 2014, connected with the
European Council’s agenda (23rd - 24th of
October, 2014), which states that if the price
of one ton of CO2 amounts to 30-40 Euros,
then: ”In the period from 2020 to 2030, the
EU steel sector as a
whole is expected
to have shortages
of over 2 billion allowances and costs
of up to 70-100 billion Euros. None
of our competitors
outside the EU have
to bear such costs”.
A very similar situation can be seen
in the chemical industry and other
energy-intensive
sectors. Take, for
example, the very
serious situation in the refinery industry
which exists thanks to the carbon leakage
concept, despite it being modern and pro-
gressive in the world. Already competition
from outside the EU has led to many closures of the EU’s refineries.
decide if it supports them or industry. Industralised countries outside the EU support
their industries.
As a matter of fact,
the ETS concept
was strictly connected with high
prices for allowances. Luckily, it has
not happened and
prices are relatively
low, but thanks to
the
deployment
of new technologies, emissions decreased, and it is
expected that targets for 2020 of 20%
will be achieved.
Our industries do
not need the ETS
at all, instead they need new technologies.
The ETS is needed by the players in the stock
markets, so the European Council should
CONCLUSIONS:
CEEP strongly supports development of the
EU’s industries, a decrease in unemployment, increased EU competiveness, an increase in the usage of indigenous sources of
energy, and an affordable decrease in CO2
emissions, bearing in mind the position of
our external competitors.
CEEP strongly believes that investing in new
technologies will decrease CO2 emissions,
‘eo ipso’. One recent example is this year’s
Nobel Prize for blue diode, which gives us
1250% more light in comparison to a normal
bulb when using 1 watt.
Janusz Luks
Chief Executive Officer
Central Europe Energy Partners, AISBL
REPORT
3
EUROPEAN COUNCIL CONCLUSIONS ON 2030 CLIMATE AND ENERGY POLICY FRAMEWORK
The ball is still rolling
Federica Gagliardi
By Federica Gagliardi
The EU Council Conclusions on 2030 Climate and Energy
Policy Framework were delivered shortly after midnight, adopted and they seem to be encouraging for European industrial competitiveness and Energy Security.
All depends how these decisions will be understood
and implemented in the future.
CLIMATE AND ENERGY
The targets for Climate and Energy 2030 are very ambitious: a reduction of CO2 emissions of 40% (compared
to 1990), at least, and a reduction of 43%, and 30%. respectively, in ETS and non-ETS, by 2030 (compared to
2005).
An annual decrease of CO2 emissions of 2.2.% after 2020
is accepted as well. One can say that nothing has been
changed in comparison to the original proposal. This is
not so. Officially, the ambitious figures are still the same,
but as a matter of fact, there are a lot of exceptions. At
this stage, some of them should be mentioned;
4. At least, it was noticed that some countries which are
not as rich as others should have different treatment
and relatively more funds should be directed to them
to help them in their investments, especially Member
States with GDP per capita at 60% below the EU average.
1. Free allocations of CO2 for coal- fired power plants .
We do not know which coal power plants they concern.
As is always the case ’the devil is in the detail’ and we
should observe how the EU will adopt the Conclusions
and to what extent the compromises meant what the
Prime Ministers had in mind. We can say with a certain
degree of satisfaction that many of the concerns expressed by CEEP (see CEEP’s Position Paper) on behalf
of our members, as well as proposals and possible solutions to improve the competitiveness of the EU energy
and energy-intensive sectors have been reflected to
some extent in the Council’s decisions.
2. Extension of the carbon leakage concept after 2020.
This is very encouraging . but we do not know what
principles will be applied, who has a chance to be on
the list (e.g. steel, chemical,refinery or other industries)
and for how long.
3. Acknowledging that each sector of the industry has
to have its own benchmark for an emissions decrease,
means that the concept of the same figure for different
industrial sectors is no longer valid. We wait for detailed
guidance.
5. Industrial innovation will be encouraged.
6. Underlining the role of the internal energy market
and energy security.
This is not a full list, but it shows that compromises have
been achieved.
Federica Gagliardi
specialist, Central Europe Energy Partners
REPORT
4
Welcome new members
We would like to inform you that from the 2nd of October, 2014, the Board of Directors of CEEP has accepted 3 new Members into our association. PERN
‘Przyjaźń S.A., Sumy Frunze, and Clifford Chance, with the last two now being Affiliated Members. We wish to briefly describe below, their activities.
The PERN Group is a national and regional
leader in petroleum logistics. Established
in 1959, it was designed to transport crude
oil from the former Soviet Union to Poland
and Eastern Germany. It was in 1999, that
the enterprise was transformed into a fully state-owned joint-stock company. PERN
'Przyjaźń' is also active on the logistic
market through its subsidiary OLPP Sp. z
o.o., on loading capacities of crude oil and
refinery products through its subsidiaries NAFTOPORT Sp. z o.o. (a company which
is an exclusive owner of four handling jetties with a capacity of 40 million tonnes
annually), CDRiA Sp. z o.o., PETROMOR
Sp. z o.o. and Siarkopol Gdańsk S.A.
Sumy Frunze NPO is a Ukrainian leader specialising in the production of
equipment for companies from the
energy sector, as well as for intensiveenergy industries (such as the chemical industry), for power plants including nuclear ones, as well as for logistic
companies that transport gas and oil
by pipelines. Sumy Frunze NPO is integrated into the Industrial-Finance
Group 'Energy Standard Group S.A'.
Frunze’s experience in industrial engineering and production dates back
to 1896.
Clifford Chance, Poland, represents
one of the world's pre-eminent law
firm networks. Clifford Chance’s highly-experienced lawyers provide innovative legal advice, among others,
within the following sectors: power
and renewables, oil and gas, not to
mention mining and metals. Clifford
Chance's Warsaw office, together
with other Clifford Chance offices
located in Bucharest, Prague, Kiev,
and Istanbul, has built up a top-level
"dominant firm in the CE energy and
infrastructure market".
REPORT
5
TEXT OF SPEECH BY LORD HOWELL OF GUILDFORD, CHAIRMAN OF THE WINDSOR ENERGY GROUP,
TO THE WEG TOKYO ROUNDTABLE, BLOOMBERG OFFICE, TOKYO, THURSDAY 23RD OCTOBER 2014
PLENTY OF CLEAN ENERGY
Wrong and bad energy policies
By Lord Howell of Guildford
If there was any doubt the
plunging world crude oil price
confirms it. There is a global
abundance of primary energy
and energy sources. There
is plenty of energy. Unfortunately there are plenty of
politicians as well, and plenty
of political turmoil, instability
and violent regional disruption across the planet.
Hence an area that should be
Lord Howell of Guildford
almost free of problems - the
energy supply sector - is full of problems.
THE TRILEMMA TURNS INTO ‘TRIFAILURE’
In Europe I can report to you that these emerge in the form
of an immense trilemma – not a dilemma, but a TRIlemma – a
triple challenge to energy policy-makers which they are failing
to meet on all three counts. What is this ‘trilemma’? It is that
energy and climate policy makershave set themselves the triple goal of delivering affordable – if possible cheap – energy
to consumers, that they have promised reliable supplies – no
power cuts and black-outs – and that they want to see rapid
decarbonisation and the replacement of fossil fuels with low
carbon energy sources wherever possible. On all three fronts
they are failing spectacularly. In fact things are going the opposite way - backwards.
AFFORDABILITY ABANDONED
Affordability goals have been brushed aside. Indeed, energy
costs are scarcely mentioned in latest EU policy documents.
Yet the energy price issue is at the heart of the EU’ economic
future and recovery. For Poland, and not just for Poland, the
huge extra costs being imposed on industry by the subsidies
to expensive renewable energy are no longer bearable. The
threat is to veto EU proposals for the target of 40 percent reduction in emissions by 2030. It would, say the Polish leaders
‘destroy half of Europe’s industry’.
For the domestic consumer there has been real pain. In Britain
gas and electricity prices have risen, after inflation, by more
than 50 percent in the last ten years. Meeting the European
Union targets for reducing carbon emission – 80 percent by
2050 – would involve equally large future increases to raise
the funds to pay for the gigantic subsidies to renewable energy – notably wind – required.
The EU target would mean covering an impossibly large area
of Europe with turbines at a cost of 3.2 trillion Euros – most
of it to be squeezed from consumers. And all this while the
actual cost of primary energy supplies – gas, oil and coal – are
actually falling!
BUT EMISSIONS ARE RISING
All this would be tolerable if these policies were the essential way to guarantee reliable electricity supplies, to cut the
growth of carbon emissions and perform a worthwhile role in
combatting climate change globally.
BUT THEY ARE DOING NO SUCH THING
As old coal-fired stations in Europe are closed they are being
replaced not by reliable generating sources – such as gas turbines, or new nuclear stations, but by intermittent sources
such as wind, which themselves require new gas fired plant
>>>
REPORT
6
PLENTY OF CLEAN ENERGY
Wrong and bad energy policies
>>> CONTINUATION from p.5
to back them up when the wind does not blow, or blows too
hard. But the investment in new gas capacity is not going
ahead, because the Government–imposed penalties on gas
burning make it unprofitable. In Britain some quite new gas
turbines are being shut down.
And meanwhile new nuclear stations are far too expensive. In
Germany they are being closed down altogether. In Britain a
new station, Hinckley Point C, has been cajoled into being by
hideously high guaranteed price promises for years to come,
penalising future generations – although it will anyway take a
decade to build.
Meanwhile the spare generating capacity to meet crises or
times of extra heavy power demand has dwindled to a waferthin margin, and may well lead to black-outs.
The final irony is that in an effort to counteract this chaos new
coal stations are being built in Europe and much more cheap
coal being imported – from Russia, America and elsewhere.
The net effect of all these policy blunders is that carbon emissions are rising, not falling - in Germany dramatically so. Even
if carbon emissions from production and electric power have
fallen with recession in Europe, carbon consumption per head
has soared as carbon-intensive imports pour into European
markets.
There is not the slightest chance that carbon reduction targets
in Europe will be achieved. . So while the threat to our global
environment is not being met, the costs of these ineffective
policies are rising exponentially.
EFFECTIVE CLEAN ENERGY POLICIES REJECTED
Common sense tells us how to reverse these trends and help
rather than damage our environment. In theory it should be
easy. Burning gas emits at least 40 percent less carbon than
oil or coal, as the American example of switching from coal to
gas demonstrates. It has been estimated by BP that a switch
of one percent of global power generation from coal to gas,
would produce carbon emission savings the equivalent of increasing renewables by 11%.
And if only nuclear power construction costs could be reduced
that would really set us on the path to curbing CO2 growth.
But in practice energy policy in Europe is taking us directly the
other way.
GAS is being taxed and its global trade impeded. New gas
developments – e.g. fracking – are big resisted or forbidden.
Nuclear power progress is being stymied by politics. Renewables, instead of benefitting from new technology, are sucking
up subsidies and enriching the powerful at the expense of the
weak. Oil is full of dangers from the Middle East, and from re>>>
REPORT
7
PLENTY OF CLEAN ENERGY
Wrong and bad energy policies
>>> CONTINUATION from p.6
finery and transport challenges. Coal is getting a free rein and
is expanding its grip on world energy production.
Those of us who are deeply concerned about potential resumption of global warming – after the present pause of the
past eighteen years – have a right to be furious at these appalling policy failures. The entire process has rightly been called
by some ‘insane’.
REVERSAL. SOME PRACTICAL SOLUTIONS NOW
But what are the practical solutions? How do we counter massive incompetence and misunderstanding, starting from here?
1. The whole attitude to gas production, transmission and use
has to be transformed, and gas seen not as an enemy of a
greener world, but as its most powerful friend- the best pathway to the future.
2. Huge efforts MUST be made to design and build cheaper
and safer nuclear power plants, maybe building on a much
smaller scale. No more Hinckley Cs!
all out efforts to make greener energy CHEAPER, not far more
expensive. It is the sheer forces of ingenuity and competition
that must be allowed to do the job. Solar power is already benefitting – slowly. Wind power must respond in the same way.
5. Technology must be allowed to deliver to the producer, the
transmitter and the end consumer of fuel and power the enormous efficiency gains that are just around the corner. Final demand can be held flat even with a growing world population,
and even with the full development needs of the awakening
giants like China and India being recognised and respected.
THE LESSONS THAT MUST NOW BE LEARNT
The LESSONs of the present disasters and backward steps are;
1. That bracketing ALL fossil fuels together as anti-environmental undermines far the best environmental and greenway forward. It causes great pain and suffering to the world’s
poorest and slows growth.
3. Coal-burning can be met half-way not by banning it but by
super-efficient new methods, super-critical boiler technology,
more efficient transmission and a host of other improvements.
2. It has inevitably produced a major and angry reaction from
consumers the world over, and especially throughout Europe.
Sensible and constructive green policies have been destroyed
by blind zealotry
4. Resources now going to subsidise inefficient and costly renewables, such as offshore wind, should now be diverted to
3. If policy-makers and politicians will disengage and stop distorting markets and investment, new technology and compe-
tition, and the world-wide urge to have cheaper, cleaner and
green power, now almost universal, will deliver strong results
and our planet will survive and prosper.
AT LAST
There are, to repeat, plentiful supplies of all kinds of cleaner,
greener energy available to all the world’s peoples, rich and
poor. It is the present blind and perverse policies of too many
politicians, and too many misguided lobbies, which are stopping them having it. Our world is indeed being endangered,
and much harm being done to our environment and to future
generations, through the energy and failed climate policies being that have been pursued – both in Britain, in most of Europe
and in some other nations as well, although thankfully not all.
At last some people are beginning to speak up. At last what
some have been warning about for a decade past is beginning
to prompt changed thoughts and a better new direction –
both for the planet and all its peoples.
David Howell
titled the Right Honourable Lord Howell of Guildford, was the
Minister of State at the Foreign and Commonwealth Office for
International Energy Policy in the UK between 2010 and 2012. He
also served in Margaret Thatcher’s government as Minister of
State at the Department of Energy in 1974.
REPORT
8
Total Energy Support for the 28 Member
States for the period: 2008-2012
By Peter Whiley
The EC published on
the 13th of October
an independent study,
commissioned
by
them, which provides
the first full data set on
energy costs and subsidies for the 28 Member
States across the different power generation
technologies.
It also reveals that the
largest share of public
Peter Whiley
intervention in the energy sector has been in
favour of solar and on-shore wind energy. The EC’s spokesperson, Marlene Holzner, declared that the report “put an end
to the ‘ideological dispute’ on which energy sectors attracted
the most subsidies.”
In terms of support for countries, and allocated funds, the
traditional EU Western Member States easily, and appallingly,
draw ‘the lion’s share’. Countries from Central Europe compare very poorly, as the table below indicates:
COUNTRY
2012 (Millions – Euro)
Germany 25,470
UK 13,280
Spain 10,430
Italy 10,360
France 7,250
Belgium 3,280
Netherlands 2,740
Sweden 2,690
******************************
Czech Republic 1,600
Poland 970
Romania 680
Hungary 620
Slovenia 590
Bulgaria 410
Lithuania 330
Latvia 220
Estonia 150
Slovakia 100
Croatia 30
Main elements of EU level interventions are the EU’s structural and cohesion funds, along with the European Energy programme for the Recovery
and RD&D funding.
In 2012, interventions to support renewable energy sources have the highest value: 41 billion EUR (c.f. p. 51 of the report), with solar receiving (14.7
bn.); on-shore wind (10.1 bn.); biomass (8.3 bn.); and hydropower (5.2 bn.).
>>>
REPORT
9
Total Energy Support for the
28 Member States for the period:
2008-2012
ENERGY-ECHO
>>> CONTINUATION from p.8
Of the conventional
power generation technologies, coal received
(10.1 bn.); nuclear (7
bn.); and natural gas
(5.2 bn.). The figures
do not reflect the free
allocation of emission
certificates, nor the
tax support for energy
consumption.
For the full report, go
to: http://ec.europa.
eu/energy/studies/
doc/20141013_subsidies_costs_eu_energy.
pdf
“The level of investment in the EU dropped by
just under EUR 500 billion, or 20%, after its latest peak in 2007. We are facing an investment
gap. We have to bridge that gap.”
“Europe can make this happen. As you know,
I intend to present an ambitious EUR 300 billion investment package for Jobs, Growth and
Competitiveness.”
“If you give us your support today, we will present the Package before Christmas. This is not
a promise, it is an affirmation.”
Extracts from the speech of Jean-Claude Juncker, President-elect of the European Commission – (Strasbourg,
the 22nd of October, 2014).
Peter Whiley
specialist, Grupa LOTOS
>>>
10
REPORT
The Southern Gas Corridor:
a struggle between EU co-operation and Chinese dominance
Eldar Latypov
By Eldar Latypov
The recent stand-off in Ukraine and freezing
of negotiations on the South Stream with
Russia has increased the importance of the
Southern Gas Corridor, especially for the EU.
The negotiations between the EU, Azerbaijan, and Turkmenistan had already intensified in September, 2011. In July 2013, after
high-level talks in Ashgabat, a framework
agreement was signed between the governments of Turkmenistan and Turkey, on cooperation regarding deliveries of Turkmen
gas to Turkey and Europe. In April, 2014,
the President of Turkmenistan, Gurbanguly
Berdimuhamedov, met with the head of the
State Oil Company of Azerbaijan (SOCAR),
Rovnag Abdullayev, and agreed to build
transit pipelines which will enable a diversification of gas supplies in both countries,
and pave the way for transit to international
markets.
The Trans-Caspian gas pipeline (TCP)
project, providing for the construction of a
300-kilometre gas pipeline across the Caspian Sea to the shore of Azerbaijan, is considered optimal for the delivery of Turkmen
energy resources to the European market.
With this in mind, the construction of the
second branch of the Baku–Tbilisi–Erzurum
gas pipeline began on the 20th of September, 2014, in Baku. Azerbaijan announced
that this was the official inauguration of the
construction of the Southern Gas Corridor.
However, Russia and Iran strictly oppose
the construction of the TCP, stressing that
the project cannot be implemented without
first resolving the issue of the international
legal status of the Caspian Sea. Moscow,
in particular, perceives such a union of
former Soviet Republics as undermining
the hegemony of the Russian gas market.
Russia, choosing to ignore the economic
importance of the project to Turkmenistan
and Azerbaijan, continues to complain
about Western interference in the affairs of
the region. In response, Baku and Ashgabat
reject the objections from Russia and Iran,
pointing out that the project affects the
interests of only two littoral states, and
>>>
‘China overtakes the EU
in CO2 emissions’
In 2013, China’s per capita CO2 emissions surpassed Europe’s for the first time ever. In addition, China represented nearly 60% of last year’s
total global emissions increase.
China independently set itself a target of 4045% reduction of GHG emissions per unit of GDP
by 2020, which is unlikely to be achieved, and
its arguments that it should not be bound to
any global mandatory climate targets are weakening. However, in its defence, one can argue
that its industry has grown, and therefore, its’
emissions rate, too, largely due to increasing
demand for Chinese products. (PW)
‘Solar Power set to be the biggest
single source of energy by 2050’
The latest ‘Solar Roadmap’ published at the
end of September by the IEA, predicts that the
cost of solar energy will fall to around 4c/kWh
in the coming decades, as the sun becomes the
largest source of power generation across the
world.
The IEA’s Executive Director, Maria van der
Hoeven, stated that capital costs were a key
element in bringing down the cost of solar
technologies. The IEA noted that, due to the
dramatic falls in cost for solar PV, the solar sector is currently about 5 years ahead of where it
thought it would be. (PW)
>>>
REPORT
11
The Southern Gas Corridor: a struggle
between EU co-operation and Chinese
dominance
>>> CONTINUATION from p.10
hence, can be implemented on a bilateral
basis. The EU, for its part, does not consider
the absence of a decision on the status of
the Caspian Sea as an obstacle to the implementation of the project.
EUROPE ASSIGNS A KEY ROLE IN THE
IMPLEMENTATION OF THE TCP TO TURKMENISTAN:
In an interview, Azerbaijan’s Minister of
Industry and Energy, Natig Aliyev, said that
the Turkmen side was ready to provide, for
the project, about 30 billion cubic metres
(bcm) of gas annually, and Azerbaijan was
ready to create all the necessary conditions
and infrastructure for its further transportation to European countries.
However, Ashgabat is in no hurry to start
laying the pipe, preferring to receive payment for the delivered gas on the state’s
borders, and leaving all other questions to
the buyers. However, for those doubting
the environmental risks of the project, the
government of Turkmenistan has repeatedly expressed its readiness to conduct an
environmental impact assessment, with
the participation of international experts,
thereby confirming its openness for further
dialogue.
AZERBAIJAN:
In his interview for the London-based news
agency, ‘The Report Company’, in late 2013,
Aliyev stated that one of the main areas of
co-operation between Azerbaijan and the
EU was the dialogue on energy. The Memorandum of Understanding on Co-operation
in the Field of Energy between the European Union and Azerbaijan, signed on the
7th of November, 2006, had earlier established such a dialogue. The major objectives
of the MoU included the diversification and
security of the EU’s energy supply, as well
as the development and modernisation of
Azerbaijan’s energy infrastructure.
According to the Minister, new opportunities were created for a more intensive
co-operation in the energy sector after the
adoption of the EU Eastern Partnership
Programme by Azerbaijan in May, 2009. A
reflection of the positive development of
such relations was the high-level visit of the
President of the European Commission, at
that time, José Manuel Barroso, to Azerbaijan in January, 2011. The Joint Declaration
on the Southern Gas Corridor was signed
during that visit, re-confirming that energy
was a priority area for both parties.
Regarding Azerbaijan’s energy diplomacy
towards the EU, another noteworthy statement was made by the Minister of Foreign
Affairs of Azerbaijan, Elmar Mammadyarov,
at the 5th Foreign Ministers’ meeting of EU
Member States and Eastern Partnership
countries on the 22nd of July, 2014 in Brussels. Mammadyarov emphasised that Azerbaijan was a reliable partner for the EU in
the energy sector, delivering its natural gas
>>>
‘Americans will pay more’
The (Environmental Protection Agency) EPA’s
plans to reduce greenhouse gas emissions and
improve the level of climate control in the US.
The Chamber of Commerce claims that the
EPA’s new environmental rules will result in
an increase of nationwide electricity prices by
6-7%, and up to 12% in some locations. This is in
addition to the 13% increase that has already
been forecast.
The Chamber of Commerce asserts that this will
not only place heavy burdens on businesses and
subsequently threaten jobs, but will also deeply
hit middle–class and lower-class families. The
proposed EPA regulations will fundamentally
alter how electricity is generated, transmitted,
distributed, and used”, an important fact the
EPA has been strongly criticised for failing to
mention. (PW)
REPORT
12
The Southern Gas Corridor: a struggle between
EU co-operation and Chinese dominance
>>> CONTINUATION from p.11
on a large scale and at a competitive price.
The Minister also stressed his country's
efforts in creating a potential gas transportation infrastructure as part of the process of
connecting the Caspian region with Europe.
Azerbaijan’s plan is to increase the volume
of gas production up to 28.8 bcm by the end
of 2014. According to the Trend News Agency, the first vice-president of SOCAR (State
Oil Company of Azerbaijan) Khoshbakht
Yusifzade said on October 27, 2014 in Baku
during the XIII Conference on investments
and energy regulations of the Energy Regulators Regional Association (ERRA), that
Azerbaijan's proven gas reserves amount
to 2.55 trillion cubic meters, and the proven
oil reserves of the country stand at the level
of 2 billion metric tons. In total, oil and gas
reserves of the country are estimated at 10
billion metric tons in oil equivalent. In particular, SOCAR launched a new well within
the Guneshli field in the Azerbaijani sector of
the Caspian Sea, with a daily production rate
of 85 tonnes of oil and 16,000 m3of gas. The
company plans to drill another 20 new wells
in this field. It is clear that Azerbaijan has
gas production to 250 bcm up to 2030, most
of which is intended for export.
"Turkmenistan will continue to actively
participate in the development of mutuallybalanced solutions to all issues related to
the Caspian Sea," declared the President, at
the weekly cabinet meeting in Ashgabat on
the 14th of April, 2014.
Moreover, at a special meeting regarding
the country’s oil and gas sector earlier this
year, President Berdimuhamedov called the
TCP project, “one of the most important
tasks for the country’s energy diversification.”
much to offer to its European partners and
potential customers in terms of gas supply.
TURKMENISTAN:
The Turkmen gas field, Galkynysh, recognised as the world's second largest, could
easily become a resource base for this
ambitious project. President Berdimuhame-
dov promised to begin its development this
year. South Korean and Chinese companies
have already started building three natural
gas-processing plants there. The capacity of
each will be around 10 bcm of gas per year.
Furthermore, in accordance with the Programme of the Oil and Gas Industry, Turkmenistan plans to increase its annual natural
A week earlier, on the 2nd of April, 2014,
the topic was also discussed in Baku, during
the visit of the Minister of Foreign Affairs
of Turkmenistan, Rashid Meredov, with his
Azerbaijani counterpart, Elmar Mammadyarov. The two Ministers expressed their
interest in the use of alternative routes for
supplying the energy resources of the Caspian region to Europe.
The 1st Trilateral Meeting of the Ministers
>>>
REPORT
13
The Southern Gas Corridor: a struggle between
EU co-operation and Chinese dominance
>>> CONTINUATION from p.12
of Foreign Affairs of Turkey, Azerbaijan, and
Turkmenistan was held in Baku, on the 26th
of May, 2014, where Azerbaijan’s ‘big brother’ Turkey, seemed to assume the role of the
key negotiator, motivator, and catalyst for
the development of the Southern Gas Corridor. At the end of the meeting, the Foreign
Ministers announced their decision to hold
the 2nd Trilateral Meeting in the second half
of 2014, in Ashgabat.
“These important steps are a positive sign,
and can provide an impetus for the rapid
implementation of all the projects in the
Southern Gas Corridor chain. In all endeavours, the first step is always the most difficult and the most important one, and the
natural gas market is no exception to this,”
the Ministers declared.
CHINESE DOMINANCE IN TURKMENISTAN:
market, and the two countries have great
economic complementarity and are determined to co-operate. The rich gas resources
of Turkmenistan contribute to China's goal
of diversifying energy imports and ensuring
energy security.
Russia is no longer the biggest competitor
to the EU in Turkmenistan, as it has been
replaced by China. Turkmenistan is rich in
energy resources, whilst China has a huge
Turkmenistan has become an important
partner for China in gas co-operation. This
was stated in an interview with the news
agency, ‘Xinhua’ by the Deputy Director-Gen-
eral of China’s petroleum
joint-stock company,
PetroChina, Lu Gunsyun.
According to the company official, in accordance with the agreement
signed by Chinese President Xi Jinping, during his
visit to Turkmenistan in
2013, the annual volume
of natural gas supplied
by Turkmenistan to
China, will increase from
40 bcm in 2014 to 65
bcm in 2020 (after gas
from the Galkynysh field
starts to flow), the fourth branch (D) of the
pipeline through Uzbekistan, Tajikistan and
Kyrgyzstan being built for that purpose.
According to the Deputy Director-General,
with the deepening of the strategic partnership between the two countries, their gas
co-operation will be further strengthened
and will become an inexhaustible impetus
for improving inter-state relations.
Turkmenistan is now, by far, China’s largest
foreign supplier of natural gas: 24.25 bcm
(about 17.7 million metric tonnes) in 2013,
or 50.2 percent of its total gas imports,
according to the article published by The
Wall Street Journal. This represents about
2.5 times more than Qatari supplies to China
(see the chart below). By the end of 2014,
gas deliveries from Ashgabat to Beijing will
have totalled around 30 bcm, or about onesixth of China's annual usage.
SIGNS OF HOPE FOR THE EU:
Nevertheless, there is reason to believe that
Ashgabat, in the light of the agreements
in mid-May, 2014, between Moscow and
Beijing on Russian gas supplies to China
to the amount of about 40 bcm per year,
via the Power of Siberia pipeline, may well
re-consider its position and take a political
decision in favour of the Trans-Caspian gas
pipeline. Russia's strong position, in relation to the Chinese energy market, is likely
to create competition for Turkmen gas that
could result in significant financial losses for
>>>
REPORT
14
The Southern Gas Corridor: a struggle between
EU co-operation and Chinese dominance
>>> CONTINUATION from p.13
Turkmenistan. Beijing’s policy of diversifying
energy sources, could also lead it to seek
a revision of gas prices with its current gas
suppliers - Turkmenistan, Uzbekistan and
Kazakhstan.
In addition, China plans to increase its own
production of gas, thus climbing up to
third place in the world, behind Russia and
the United States by 2025. So, although
the supply of Turkmen gas is expected to
increase (in the short-term), Ashgabat will
be limited to the role of a supplier, who only
patches up the holes in the Chinese energy
grid. Therefore, Turkmenistan’s long-term
interest in supplying its gas to Europe will
probably be perceived as necessary, and
the TCP will finally gain in true relevance for
Ashgabat.
CONCLUSIONS:
At a time when control over the energy
transit corridors from the Caspian basin to
Europe becomes extremely important, the
probability that Turkmenistan, and especially Azerbaijan, which is already in the
As a result of the high-level, trilateral
Turkish-Azerbaijani-Turkmen consultations,
in the near future, one can expect an intensification of the dialogue between the EU
and Turkmenistan on the implementation of
the Trans-Caspian gas pipeline. Experts suggest that once all the political and economic
differences between Turkmenistan and
Azerbaijan are solved, the project of building
a gas pipeline under the Caspian Sea could
be carried out.
game, will focus on strengthening energy
co-operation with the EU, is relatively high.
This will play a crucial role in strengthening
their energy independence and diversification.
It is not only these two countries
who should be involved in the process. The significant support and soli-
darity of the EU is crucial in order to resolve
the outstanding obstacles to the project.
Though there is a substantive discussion on
the opportunities for co-operation in the energy sector between Turkmenistan and the
EU, the relationship remains relatively weak,
and an organised campaign to build stronger
relations should be launched.
On the other hand, taking into account its
growing demand for energy, as well as the
country’s readiness to invest in the necessary infrastructure and to pay for the gas,
China is now a major competitor to the EU in
Turkmenistan.
Eldar Latypov
Energy Analytics intern at Central Europe
Energy Partners, Brussels. He is originally from
Turkmenistan. He is also the M.S candidate in
European Political Economics at University of
Trier, Germany.
REPORT
ENERGY DIALOGUE
AT THE REICHSTAG
By Alexandru Zegrea
Alexandru Zegrea
The 52nd Energy Dialogue at the Reichstag
discussed storage and
its role for the Energiewende. The panel
discussion was held on
September the 26th at
the invitation of Prof.
Dr. Friedbert Pflüger,
Janusz Reiter and Central Europe Energy Partners (CEEP).
Dr. Michael Fipper, Vice-President for Technology and Innovation Strategy of E.ON SE, presented three theses.
Firstly, storage, together with solar, will fundamentally
change the energy world. Secondly, storage for batteries, power-to-gas, power to heat, etc., should be brought
into the system through distribution networks in order
to balance supply and demand. Finally, from a political
perspective – in order to secure reserve capacity and ensure the stability of the network – storage technology
cannot be taxed like an end-user, for both power input
and output.
Clemens Triebel, CTO of Younicos AG, welcomed the
changing industrial market environment that he regards
as much more open to storage solutions, than it had
been just a few years before, but decried the reluctance
that is still present in the general population towards this
technology. Mr. Triebel described the subtle balance between renewables, storage and gas power plants, and
saw the opportunity for batteries to secure capacity
instead of coal power plants, concluding that Germany
needs to select which of these systems it wants to continue subsidizing.
Thomas Bareiß, MP and Spokesperson on Energy Policy
for the CDU/CSU Parliamentary group of the German Parliament, acknowledged that storage needs to be part of
a greater strategy for innovation – with flexibility standing at its heart. Mr. Bareiß envisaged a significant role for
the Government in giving financial impulses to a solarplus-+storage programme, but also noted that any future transformational framework needs to be mindful of
companies, giving them a chance to survive this process.
The vivid discussion that ensued touched on the need to
expand the proportion of renewables through increasing storage, on embedding German policies in a wider
European context and on designing policies to attract
research and innovation back to Germany.
Alexandru Zegrea
Consultant, Pflüger International Consulting GmbH
15
UPCOMING EVENTS
Dear Readers,
We would like to inform you that CEEP will be a Media Partner for
the 20th Jubilee Europower Energy Conference, which is taking place
in Warsaw, from the 19th to the 20th November, 2014, in Warsaw,
Poland.
This is the largest and most prestigious event covering the future of
the energy market in Poland. Over the last 19 annual editions, the
Conference has been a very effective platform for dialogue for all
key-decision makers from the energy industry.
The agenda of the conference is created by both the Advisory Board
- which consists of Presidents and board members from key energy
companies, and representatives from government, academia, and
chambers of commerce - and its Chairman, Dr. Leszek Juchniewicz.
The scope of the conference includes such topics as:
• POLISH ENERGY POLICY TO 2050,
• EUROPEAN ENERGY MARKET,
• T HE POWER INDUSTRY AS A SOURCE OF INNOVATIONS,
• P ROSPECTS FOR GAS AND FUEL MARKETS.
More information can be found on the website:
http://www.emerging-europe.com/events/xx-conference-on-energyeuropower,p1681156737
REPORT
16
NEWS FROM OUR MEMBERS
Poland’s largest photo,
voltaic farm launched in Gdansk
By Cristina Dascalu
Cristina Dascalu
Energa S.A. has just completed the
construction of a photovoltaic farm
just outside of Gdańsk and Przejazdowo, using 6,292 panels with a total
capacity of 1.636 MWp, taking up an
area the equivalent of three football
fields (25,000 square metres). It is estimated that their production will be
able to meet the electricity demand of
more than 700 households.
Investment for the farm – Poland’s largest – cost PLN 9.5 million, and the construction and assembly lasted two months,
with the photovoltaic farm expanding the installed RES capacity in the Group’s power plants by approx. 0.5%. The firm also
plans to build a photovoltaic farm in the Kujawsko-Pomorski
region with a capacity of about 4MW. Solar power is an addition to Energa’s mix of renewable sources, which include; hydro, wind, and biomass; however, it still represents only a small
percentage of the RES capacity installed in Poland, which totals
nearly 6,000 MW.
Mirosław Bieliński, CEO of Energa S.A. declared the photovoltaic farm in Gdańsk to be “an experimental investment”, but
noted that: “photovoltaic technologies are growing less ex-
CEEP REPORT
published by:
CENTRAL EUROPE ENERGY
PARTNERS, AISBL
RUE FROISSART 123-133,
1040 BRUSSELS, BELGIUM
[email protected]
TEL: +32 28 80 7297
FAX: +32 28 80 7077
Source: Energa SA - Photovoltaic farm in Gdańsk (Poland)
pensive at the fastest pace possible across the globe, and that
is why Energa do not exclude larger-scale photovoltaic investments in the future.”
Cristina Dascalu
specialist, Central Europe Energy Partners