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The Warsaw Voice » Business » March 1, 2013
Central Europe Energy Partners
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Sustainable Energy —a Solid Basis for Growth by Pawe³ Olechnowicz
March 1, 2013   
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The question of energy has become one of the most important issues in today’s world. This is a complex matter, especially for Europe. Developing a long-term European energy policy, which takes into consideration both energy security and climate aspects, is not an easy task. The EU’s internal and external factors, including geopolitics, have to be carefully weighed. One has to consider the ongoing, difficult economic and financial situation of Europe as a whole. A sustainable EU energy policy – the one we all are striving for – has to reconcile three main goals at the same time: strong competitiveness, sustainable development and the security of supply.

While energy security concerns may vary from country to country, there exists a strong common interest in making sure that Europe can access energy at reasonable costs, consume it in a sustainable way, and manage it in a collective manner. To achieve this, the enhancement of energy security will require a far-sighted and co-operative approach internationally, as well as a variety of specific initiatives and interventions at the EU regional and national levels.

Changing market, economic and political conditions will undoubtedly complicate choices in the future: energy security will be a greater concern, as the growing global demand for energy continues to push the bounds of accessible, affordable and environmentally acceptable supply; market developments and policy changes, particularly in alternative fuels and with respect to climate change and carbon policy, will change the economics of fuel choices and determine investments; there should be more multilateral co-operation in the energy sector.

Acting to achieve ambitious climate goals should coincide with developing a coherent competitiveness policy and its implementation. Central Europe Energy Partners and its members fully support the idea of a long-term climate and energy policy concerning the reductions of CO2, but the level of the reductions, as well as ETS policy, should be more realistic, and reflect the different economic position of Central European countries.

Transforming the European energy system is necessary for the climate, energy security and the development of economies. Energy investments take time to produce results. In this decade, a new investment cycle is taking place, as infrastructure built 30 or 40 years ago needs to be replaced. Acting now, we can avoid costly changes in later decades and reduce knock-on effects. However, the economic growth and political outlook for the coming years depend to a great extent on overcoming a major barrier in implementing more realistic regulations concerning CO2 emissions.

Reasons for concern
The EU’s Energy Roadmap 2050 gives us a reason for concern because it adds to the division between the so-called ‘old’ and ‘new’ Europe, thus consolidating inequality. It is in our common interests that the two parts of the continent form a uniform, balanced and rapidly-developing economic area as soon as possible.

Let’s look at some data. In 2011, GDP per capita in the 15 “old” EU countries stood at 29,100 euros, whereas in Central Europe it was 9,500 euros. This difference has hardly diminished since 2005. The strategy for the energy sector outlined in The Energy Roadmap 2050 does not take this difference into account. The Roadmap assumes that the EU will reduce its carbon dioxide emissions, without considering the significantly different conditions in individual member countries.

The EU’s recent proposals for reducing emission quotas in the 2013-2015 period raise doubts as to their feasibility, especially from the point of view of Central European countries. It is very likely that one unintentional but lasting effect of the proposed quotas will be an increase in differences between the old and new EU members. At the same time, it is possible that the EU15, struggling with substantial structural problems, will also fall victim to the strategy set down in The Energy Roadmap 2050.

EU member states are free to shape their energy mix by themselves. Yet, because of the ongoing integration of the European energy market, their room for maneuver in this respect is getting smaller. This is an increasing problem for us all. All Central European countries are doing their utmost to implement new and existing components, resources and technologies into their energy mixes. Coal will remain an important part of this development, while the role of gas, renewables and nuclear power will be steadily increasing in the coming years – at a pace affordable to these countries and their energy companies. At the same time, due to the introduction of best available technologies (BAT), we will observe a decrease of CO2 emissions, and I see no signs that the target of 20% by 2020 is not reachable. The best example is ten new lignite power plants in Germany, commissioned last year, where a 30% decrease of CO2 emissions was achieved. The same possibilities exist in Central Europe to replace old coal power plants, but unfortunately the EU does not help us, as in the example of the proposed coal power plant in Rybnik, Poland.

A balancing act
We at CEEP are conscious of the need to ensure affordable energy prices, for both private and industrial consumers across the EU. Given the strong correlation between affordable energy and economic growth, we consider it crucial that the competitiveness of the EU-11 economies, which are still in a transformation phase, should be encouraged and not disproportionately burdened when implementing the EU’s energy policy. This is why we believe it is vital that the EU’s energy policy balances the objectives of energy security and sustainable development, while avoiding any adverse effects on the competitiveness of European economies.

None of the countries in Central Europe is large enough to be considered an energy market by itself, but regional co-operation is vital. Given the nature of individual Central European countries, sustainable regional energy security will only be achieved if they co-operate and develop an integrated energy market. A united Central European policy will increase the region’s competitiveness and improve the security of supply through the establishment of a stronger, more resilient market. The countries in the region can benefit from mutual interdependencies as a more cohesive regional energy market will foster and encourage stronger economic ties with neighboring countries, which should be reflected in the new budget for 2014-2020, especially within the framework of cohesion policy.

The Visegrad Group (V4), the regional forum for the co-operation of four Central European states, the Czech Republic, Hungary, Poland and Slovakia, has entered the third decade of its existence as a respected and efficient regional initiative with a steadily improving reputation. The group is open to co-operation with non-members and regional groupings, mainly as part of the V4+ Process. The V4 is not a simple lobbying group, although it represents the joint interests of the four states. It has developed into a pragmatic form of co-operation aiming to fulfill the common objectives of the four participating members. One of the linchpins of the V4 is the principle of solidarity that helps protect the V4 from becoming a “multi-speed” regional initiative. It is of the utmost importance to the energy security of each V4 state and the region as a whole. The V4 co-operates on the political level, whilst CEEP co-operates on the industrial level, and there is a lot of scope for co-operation concerning vital energy issues in the region.

A busy three years
In June 2013, Central Europe Energy Partners will be celebrating its third birthday. We have worked hard over the past three years. We have achieved a lot, but we know that much more still needs to be done. Being the first regional association representing the Central European energy sector and its companies (gas – including shale gas, coal, oil, renewables, nuclear, grids, etc.), our overriding goal is to support the integration of Central Europe’s energy sector within the framework of a common EU energy and security policy. An important part of our work is to represent the interests of our members. At present, we have 18 members from Lithuania, Poland, the Czech Republic, Slovakia, Hungary and Romania.

CEEP is active in the International Energy Agency. We also work closely with the European Centre for Energy and Resources Security in London. We are taking part in consultations with EU bodies, including legislative initiatives within the Union.

CEEP organizes many conferences and events, as for example, the annual “29+1” Conference, which aims to give CEEP members an opportunity for a direct, unofficial dialogue with the EU’s Commissioner for Energy, Günther Oettinger. The 2012 Conference took place in Budapest, and this year’s conference will be held in Vilnius. At the Budapest Conference, the Budapest Memorandum was adopted as the guidance for CEEP activity for one year ahead. The document was submitted to EU institutions and officials, including the Commissioner for Energy.

Another outstanding project last year was a Conference in Prague in April. CEEP together with Ernst & Young presented a report analyzing the energy sectors of EU-11 countries—known as the Prague Report. CEEP also led a panel discussion on energy at the 2012 European Economic Forum in Katowice.

The Prague Report emphasizes the strengths and weaknesses of EU-11 countries in terms of energy and shows how much these countries have already done to catch up with the EU-15. One of the most important aspects of the report is that it debunks myths about the region, including one about its alleged inability to deal with environmental issues in the energy context: the greenhouse effect and carbon dioxide emissions. One of the key messages of the report is that EU-11 countries have to work harder together in the field of energy at the EU, European and external level. They need to make their voice heard across the European Union.

This year, a new report has been commissioned by CEEP: on the influence of energy prices on the competitiveness of the European energy sector. It is being prepared by consulting firm Roland Berger. The main point of this report is that low energy prices and the use of indigenous resources are of the utmost importance to the development of both Central Europe and the EU as a whole in the current macroeconomic situation.

In 2012, CEEP revamped its website (www.ceep.be), giving more and better information to not only its members, but also the general public. At the end of last year, we started publishing a monthly ‘CEEP Report’ to give more insight into European and global energy trends. This publication is distributed to more than 1,600 MEPs, politicians, scientific institutions, as well as key energy players in the industry.

In 2013, CEEP’s main task will be to continue supporting and facilitating the integration of Central Europe’s energy sector within the framework of a EU energy and climate policy. While fully supporting the EU’s “20-20-20” targets, we will be making sure that the interests of Central Europe are clearly and coherently presented and listened to. CEEP will be seeking to promote a balanced approach to achieving Europe’s climate, sustainability, and energy security objectives. This entails supporting a common and broad-based EU energy policy taking into account the interests of Central Europe.

Pawe³ Olechnowicz is Chairman of the Board of Directors at Central Europe Energy Partners, AISBL and President of Grupa Lotos S.A.
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