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The Warsaw Voice » Business » December 21, 2012
Central Europe Energy Partners
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e=mc2 by Paweł Olechnowicz
December 21, 2012   
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The years ahead will be decisive for the future of the European energy sector. Fiercely disputes went on in 2012 over the shape of the common energy policy, the mechanisms that should be launched to make it effective and the related burdens for individual countries.

This year, a number of important decisions will have to be made. For the future of a united Europe, these will be some of the most important decisions ever taken together. And all of us—politicians, businesspeople, scientists and the media—share the responsibility for ensuring that these decisions are optimal, that they take into account the needs and capabilities of all our countries and that they contribute to Europe’s stability and strength.

The Energy Roadmap 2050 document defines the framework for this discussion and future decisions. The very fact that it has been adopted is a success in itself. Translating the document’s guidelines into specific decisions will be an even bigger success, though not an easy one.

We are approaching a stage when some detailed issues will have to be decided, for example carbon emissions quotas and the value of emissions rights. But before this takes place, let us look at several important figures.

The starting point should be the assumption that the common energy policy should contribute to economic convergence between the two parts of the European Union—the old EU and the new member states. Meanwhile, the Energy Roadmap 2050 is crafted for only one part of the continent, the EU15, while the needs of the new member states are essentially disregarded. This is a dangerous policy. Disparities in terms of economic potential, earnings and dozens of other social and economic parameters are slowly disappearing in Europe, but the existing differences are still huge. If we disregard these differences they may become even bigger or, worse still, impossible to bridge.

If Europe is to successfully compete with other regions of the world in the future it has to be truly unified. Internal conflicts, especially such basic ones and those resulting from the huge gap in economic development, make this strategic goal impossible to achieve.

CO2 reduction is not everything

The Energy Roadmap 2050 calls for a significant reduction in carbon dioxide emissions in the EU. This is a noble goal and it is worth making an effort to achieve it. But politics and business are about realism. If we adopt unrealistic indicators the result will be a prolonged conflict rather than progress. In 2010, per-capita GDP in the EU15 was 28,300 euros, while in Central Europe it was 9,000 euros—over three times less. If the strict carbon dioxide reduction norms are imposed on new member states, their economic growth will decelerate and their living standards will drop. This will affect 100 million EU citizens.

This needs to be made perfectly clear: expensive energy will destroy our ability to compete in the world. Cheap energy stimulates economic growth, while expensive energy stifles it. We cannot afford such experiments in Europe. We have to remember about the main rule of medical ethics: primum non nocere (first, do not harm).

It is also necessary to take into account the fact that other parts of the world have no intention to apply such radical measures. The United States and China, where emissions are much higher than in the EU, are definitely refusing to comply with high standards in dealing with carbon dioxide emissions. Even such a modest step as the EU’s decision to impose a tax on carbon dioxide emissions in civil aviation provoked a strong protest from 29 non-EU countries, which signed in Moscow a declaration against this tax.

Searching for a golden mean

Central Europe Energy Partners (CEEP) association, where I chair the Board of Directors, has been continuously calling for a compromise and making the case for maximum realism in applying emissions reductions. Central and Eastern Europe, where coal is the main fuel used for energy generation, is doing a lot to attain the highest environmental protection standards. Energy efficiency in Central and Eastern Europe has increased from around 25 percent half a century ago to 45 percent now. New highly efficient coal-based power plants, coupled with carbon capture and storage technology, are the key to sustainable energy production and to enhancing the EU’s energy security.

Several important international meetings have recently confirmed that wise compromises on carbon dioxide emissions can and should be made. The 29+1 energy sector summit in Budapest created an opportunity for CEEP members and the CEOs of large Central European energy companies to present their views to the EU authorities and the public. The most important conclusion from the Budapest summit is that an open and frank dialogue helps clear up misunderstandings and makes it possible to work out reasonable compromises. This is very important because compromise is the word that should most often be heard during discussions on the common energy policy; it should also inspire any decisions made in this area.

Paweł Olechnowicz is chairman of the Board of Directors at Central Europe Energy Partners (CEEP) and president of Grupa Lotos S.A.
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