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Ece DINCASLAN European Union Energy

Security Introduction Securing Supplies - Danger of

Dependence EU Dependence On Russia Problems And Possible Solutions -

South Stream And Nabucco PPL Conclusion

The Challenges of EU energy policy

How can we ensure energy supply in the long term?

Environmental ProtectionCompetitveness Security of Supply

Innovation + Diversification + Competition

Prices Availability Emissions

Challenges of Energy Policy

Challenges

Energy Policy

CompetitivenessSecurity of Supply

Climate Protection

Europe’s energy concern was first revealed in the oil shocks of the 1970s.

Europe’s dependency on energy imports is rising gradually.

Unless Europe can make domestic energy more competitive, in the next 20 to 30 years, the Union’s energy requirements, will be met by imported products.

Reserves are concentrated in a few countries. Today, roughly half of the EU’s gas consumption comes from only three countries ‘Russia, Norway, Algeria’.

EU’s primary energy demand will probably grow 0.7% per year over the next 20 years.

Oil and gas will continue to be the dominant fuel sources with gas as the largest growth market of any fuel.

EU’s import dependency is expected to grow through 2030, from 80 to 93 per cent in the case of oil, and from 57 to 84 per cent in the case of gas.

Russia currently provides 25% of that imported gas. Its share will rise to over 30% by 2015 and drop to about 27% by 2030.

Source: Director-General for Research, Sustainable Energy Systems. “Energy corridors: European Union and Neighboring countries.” EUR 22581, 2007.

EU countries currently buy around 40 percent of their natural gas ‘primarily for electricity’ from Russia, that is the state-controlled gas monopoly Gazprom.

States in central and eastern Europe are particularly dependent on Russian-supplied gas.

Varying degrees of gas import dependency on Russia, which ranges from %100 in the case of Bulgaria, Finland, Estonia, and Romania to %0 in the case of the UK, the Netherlands, Portugal, and Spain.

Source: European Commission, Directorate-General for Energy and Transport. “Energy for a Changing World.” 2007. http://ec.europa.eu/energy/demand/index_en.htm

0

5

10

15

20

25

30

35

40

45

1990 2000 2010 2020 2030

Oil

Solid fuels

Gas

Nuclear

Renewables

Source: Commission Staff Working Document. Annex to the Green Paper. A European Strategy for Sustainable, Competitive and Secure Energy. What is at stake - Background document. 2006.

Source: European Commission, Directorate-General for Energy and Transport. “EU Energy in Figures.” http://ec.europa.eu/dgs/energy_transport/figures/pocketbook/doc/2007/2007_energy_en.xls

Russian energy sector contribution to GDP: approx 25%.

Russian gas exports to the EU-25: 65% of gas exported.

By 2010 about 70% of Russia’s gas supply came from Gazprom. But, increasingly Gazprom will be selling increasingly expensive gas and oil from Central Asia.

Russia44%

Norway24%

Nigeria4%

Libya2%

Egypt2% Oman

1%Other Origin

0%

Qatar2%

Algeria21%

Source: European Commission, Directorate-General for Energy and Transport. “EU Energy in Figures.” http://ec.europa.eu/dgs/energy_transport/figures/pocketbook/doc/2007/2007_energy_en.xls.

The EU is attention alarmed by the several disruptions of supplies to Europe, in the pricing rows between Russia, Ukraine, Georgia, and Belarus.

More upsetting have been successful moves by Gazprom to renege on or block foreign partners in new gas fields and emerging oil exploration.

EU is failed to develop countervailing policy strategy exactly on imports, pipelines, distribution, or diversification.

EU Conservation Plan

Diversification

Special Deals

EU Common Policy and Capabilities

The European Commission in 2006 approved a plan to cut EU energy use by 20% by 2020, a day before European leaders raised their concerns about oil and gas supplies with Russia’s Vladimir Putin.

The energy saving plan will be introduced over six years. The cost of EU energy consumption may be reduced by more than 100 billion euros a year ($150 billion) by 2020 and CO2 emissions cut by 780 millions tonnes annually.

New sources in Africa (oil and gas). But, competition with Chinese and Indians.

Reconsideration of nuclear energy. But, popular opposition, especially from Germany.

Return to coal. But, environmental risks and increasing costs.

Bilateral Agreements; Large nations have a financial advantage. For example, German, Italian, and French deals with the Russians.

Disadvantaged Small states CEE states – “legacy” Poor states

EU Energy Charter - provides a multilateral framework for energy trade, transit and investments

US interest and help on TransCaspian Pipeline

Some initiatives Nabucco pipeline

No agreement on Pooling - Partnership Equitable distribution Future price caps Reserves/storage

It would run under the Caspian Sea from Türkmenbaşy to the Sangachal Terminal

where it would connect with the existing the South Caucasus Pipeline (SCP) from Baku to Erzurum in Turkey

which in turn would be connected to the Nabucco pipeline to Austria

thus taking natural gas from Turkmenistan to Central Europe

Nabucco and trans-Caspian – are interlinked

The projected capacity of the pipeline is 30 billion cubic meters (bcm) of natural

gas a year

The route would bypass both Russia and Iran

Trans-Caspian Pipeline

•The Russian antagonism toward Nabucco.•the EU and United States redoubled efforts to secure energy

deals with Turkmenistan•under-sea pipeline from Turkmenistan could link up with the

Europe’s ‘great pipe hope’ Nabucco, to aid its own diversification from Russian energy dependency.

•According to the Russian Natural Resources Ministry, any gas or oil pipelines across the floor of the Caspian Sea would be

environmentally unacceptable•Russian Deputy Prime Minister Igor Sechin: ‘depressed regional

demand, over-supply, as well as asserting the EU-backed Nabucco simply has no future’

•Same market with South Stream

Not one solution, but some features are clear

We need: Energy Efficiency … available at which cost?

Natural Gas, Coal … with CO2 capture & storage? Biofuels, Renewables … with lower costs, higher

availability? Nuclear Energy … safe waste management?

Fuel Cells … lower cost and technical advances? Fusion … maybe, in the very long term?

Need to pursue a “Portfolio” approach for policy,technology deployment and R&D

Concluding Remarks On EU Energy Security