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The Warsaw Voice » Business » September 30, 2013
Central Europe Energy Partners
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EU Internal Energy Market: An Opportunity for Central Europe?
September 30, 2013   
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Energy sector integration in Central Europe and the prospects for reconciling the European Union’s climate and cohesion policies were among key issues debated during a panel discussion entitled EU Internal Energy Market: An Opportunity for Central Europe?, which was held Sept. 4 as part of the international Economic Forum conference in the southern Polish mountain resort of Krynica.

The discussion, which also focused on the relationship between rising energy prices and the competitiveness and growth of Central European economies, was moderated by Paweł Olechnowicz, CEO of Polish fuel group Lotos and chairman of the board of directors of Central Europe Energy Partners (CEEP), an association of energy and fuel sector companies from Poland, the Czech Republic, Lithuania, Romania, Slovakia and Hungary. Speakers included Jaroslav Neverovic, Lithuania’s energy minister; Maricel Popa, secretary of state at the Romanian economy ministry; Yvonne Ruf, senior project manager at Roland Berger Strategy Consultants; Joanna Strzelec-Łobodzińska, CEO of coal company Kompania Węglowa; and Günter Verheugen, former EU commissioner for industry and entrepreneurship.

During the panel discussion a report compiled by consulting firm Roland Berger and commissioned by the CEEP, was presented, focusing on the impact of energy prices on competitiveness and the security of energy supplies in EU countries, especially those in Central Europe. The main message of the report is that, in the current economic situation, low energy prices and the use of indigenous raw materials are the key factors that determine the further development of Central European economies and of the European Union as a whole.

Discussion participants agreed that the energy policy targets proposed by the European Commission for the whole of the EU is extremely difficult to carry out for Central European countries. “Energy prices are one of the main factors influencing economic growth and the performance of many sectors of the economy,” said Olechnowicz.

Ruf of Roland Berger Strategy Consultants said Central European economies are particularly sensitive to energy prices because energy-intensive industries play a big role in the development of the region. Rising energy costs make production costs grow and thus create pressure for higher prices throughout the economy, Ruf said. “The current trends show that prices will continue to rise in Central Europe in the coming years,” she added.

The report by Roland Berger says that Central European countries will need to invest hundreds of billions of euros in new, more efficient methods of energy generation and transmission in order to meet the EU’s energy policy targets by 2020. The climate package and the related substantial increase in energy prices may significantly inhibit the growth of Central European economies, while also hurting the global competitiveness of the European Union as a whole, the report says. Access to cheap energy from unconventional gas and oil deposits in the United States has caused an unprecedented increase in the competitiveness of U.S. industry, largely at the expense of Europe, and the EU11—the 10 countries that joined the EU in 2004 and 2007 plus Croatia—in particular.

According to Popa from the Romanian economy ministry, energy sector development is key to the prosperity of countries and that is why Central European states should work together in this area. Popa said that Romania, thanks to its supply of natural resources, can contribute to increased energy security in the EU.

Former EU commissioner Verheugen said the EU’s energy policy has not produced the expected results. The policy lacks a balance between environmental protection and competitiveness, according to Verheugen. Besides it changes every now and again, he said. Initially, the emphasis was placed on competitiveness; later climate protection became a priority. As a result, we are now dealing with a policy fragmented at the national level, Verheugen said.

According to Kompania Węglowa’s Joanna Strzelec-Łobodzińska, Central European countries should focus on the resources at their disposal. “The bottom line is that EU decisions on energy and the environment should be assessed in terms of their impact on the economies of individual countries,” said Strzelec-Łobodzińska. “The crisis has exposed some of the shortcomings of the Polish energy market. Perhaps now is the time and place to think about changing the architecture of our market. We need to rebuild our energy sector based on coal and lignite. It is necessary to invest in modern, highly efficient and low-emission solid-fuel-fired power plant units,” she said.

Energy is also a key focus for Lithuania, which in July took over the rotating presidency of the Council of the European Union. The country’s energy minister, Neverovic, said the pursuit of a single energy market is one of the priorities of Lithuania’s turn at the helm of the EU. “This is a great challenge for the EU, but this goal is achievable, especially as this project is already in progress,” Neverovic said. “We are pressing ahead with a process that started in 2011, during the Polish presidency, when the targets to be attained by 2014 were agreed on.”
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