Greening the Economy

The second plenary session of the European Business summit (EBS 2008) workshop will discuss energy security.

This post sets out the scope of this EBS 2008 plenary (see EBS ‘08 programme). Everyone interested in the topic, whether they’re coming to EBS 2008 or not, is welcome to use this blog to comment or submit their own ideas – see About this blog.

A. Context and objective of the plenary session

  • The EU must secure its energy needs in the 21st century while at the same time reducing greenhouse emissions.
  • According to the European Commission, the EU’s overall energy dependency is projected to increase from 50% now to 65% in 2030. Besides the already massive dependence on oil (currently 82% and projected to further increase to 93%), gas dependency will also rise from currently 57% to 84% in 2030 in a business-as-usual scenario. Several Member States are largely or completely dependent on one single gas supplier.
  • At least in the short run electricity generation will be heavily dependent on gas, and oil will continue to dominate transport.
  • From a global point of view, the pressure on energy resources is intense. The International Energy Agency (IEA) expects global demand for oil to grow by 39% by 2030. Gas demand is projected to grow by 67% by 2030. How supply will keep up with this demand is unknown: the IEA in its 2006 World Energy Outlook stated that “the ability and willingness of major oil and gas producers to step up investment in order to meet rising global demand are particularly uncertain”. The risk of supply failure is growing.
  • The question of supply security is dependent on the development of a number of energy dossiers such as diversification of energy sources and technologies, distribution infrastructure, international relations, energy efficiency, and the proper functioning of energy markets.
  • Objective of the plenary session is to discuss the external dimension to meet the challenges of a secure and affordable EU energy supply. What are the geopolitical challenges? What are the risks and opportunities for companies?

B. EU policy action

  • In January 2007, the European Commission published a strategic energy review and proposed a comprehensive policy aimed at securing a competitive energy supply in Europe while reducing greenhouse gases.
  • A number of policies have been launched in consequence which aim, among other things, to secure the energy supply in Europe: initiatives on energy efficiency, renewable energy and biofuels, better functioning of the internal market, enhancement of distribution networks, nuclear energy, and research in new energy technologies.
  • The geopolitical challenge of energy security has also been addressed. The Commission has called for effective mechanisms to be put into place to ensure solidarity between Member States in the event of an energy crisis. The demand/supply balance will be closely monitored to identify any potential shortfall. The European Council has endorsed the vision of a long-term framework for the external energy dimension.
  • As regards gas supply, the European Commission recommended to develop projects to bring gas from new regions, to set up new gas hubs in central Europe and the Baltic countries, to make better use of strategic storage possibilities, and to facilitate the construction of new liquid natural gas terminals. Ways to strengthen existing crisis solidarity mechanisms such as the Energy Correspondents Network and the Gas Co-ordination Group are also examined. In addition, strategic gas stocks are envisaged to foster the security of gas supply.
  • The EU aims at building up a wide network of countries around the EU, acting on the basis of shared rules or principles derived from the EU energy policy. To enhance relations with the EU’s external energy suppliers, the European Commission strives to further develop comprehensive partnerships based on mutual interest, transparency, predictability and reciprocity
  • An EU-Russia Energy Dialogue was launched at the EU-Russia Summit in Paris in October 2000. At the working level the Energy Dialogue consists of three thematic working groups: energy scenarios, market developments and energy efficiency. The Energy Dialogue involves the EU Member States, energy industry and the international financial institutions

C. EU Business recommendations

  • Security of supply is a key concern for the competitiveness of European companies. Energy users must have access to energy sources which are as diversified as possible in terms of both geography and technology, and reflect the need to reduce the carbon intensity of energy supply. Energy efficiency should be a priority as it reconciles at the same time the challenges of climate protection, security of supply and cost competitiveness.
  • BUSINESSEUROPE calls in particular on the EU to
  • i. coordinate as much as possible the EU Member States’ positions in international forums and vis-à-vis non-EU energy suppliers.
  • ii. introduce a more coherent framework to develop effective and properly financed policies to diversify energy imports. This will reduce the over-reliance of some Member States on single gas suppliers
  • iii. engage in constructive dialogues with key producer countries on security of supply issues and with major consumer countries to cooperate on energy efficiency matters.

D. Possible questions for the plenary session

  • What are the risks to a secure energy supply in the EU?
  • Where will the future energy supply for Europe come from?
  • Is the transport infrastructure of the EU with third countries sufficiently developed?
  • Have the possibilities to geographically diversify energy supply been used to the full, e.g. by enhancing cooperation with North African or Middle-East countries?
  • Is the EU-Russia energy dialogue, launched in 2000 working? Are further policy instruments needed?

E. Further reading

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