Energy Union – What’s Best for Poland and Europe? - Expert Conference Summary Report

Energy Union – What’s Best for Poland and Europe? - Expert Conference Summary Report

Opening: Irene Hahn-Fuhr, Greta Maria Tučkutė, Andrzej Kaźmierski, Claude Turmes
Opening: Irene Hahn-Fuhr, Greta Maria Tučkutė, Andrzej Kaźmierski, Claude Turmes — Image Credits

Energy security was the underlying idea behind the Energy Union which originally merely sought to reduce dependence on natural gas supplies from Russia. Over time, however, the Energy Union gradually evolved to become a way to boost European competitiveness, provide an impulse for innovation, contribute to climate policy, as well as ensure sustainable socio-economic modernisation. Energy was the foundation of the European Community – will Energy Union emerge as a driver of European cooperation in the spirit of solidarity, strengthening the European Union as a whole?

Katarzyna Ugryn

Recently Heinrich Böll Foundation and Representation of the European Commission in Poland invited experts, politicians, and public officials to Warsaw where they discussed various aspects of Energy Union that are particularly vital to Poland. The first panel, “Future Energy Market – International Cooperation on Renewables and Energy Security,” discussed primarily the Energy Package “Clean Energy for All Europeans” published by the European Commission at the end of November 2016.

Presentation "Clean energy for all"

The debate focused on elements of the Energy Package that may prove challenging for the Polish energy policy: CO2 emission cap of 550g/kWh, second-generation biofuels and biomass, and distributed generation. The panelists also discussed how to improve security on local, national, and international markets. Joanna Maćkowiak-Pandera, President at Forum for Energy, remarked: „we need a broader discussion on where will Polish energy sector be in couple of years from now – we are on the eve of transition because the Polish energy sector is losing its competitive edge and what we are essentially facing is a complete modernisation of our energy system. We need to ensure security of the system in the medium and long term by improving flexibility and regional cooperation. Each country relies on and seeks to preserve its own resources, but we need to look for compromise, talk governance, policy coordination, and mechanisms for safe and secure market integration.” Claude Turmes, Member of the European Parliament, Group of the Greens / European Free Alliance, noted that it is necessary for Brussels and national governments to intensify dialogue to achieve better understanding. He argued that over the years integration efforts in Europe have been driving energy prices down, something which would not be happening without these processes in place, with the UK being the case in point.

The conference panelists were critical of the Nord Stream 2 (NS2) project which they believe undermines the unity of the EU and deepens isolation of Ukraine. In the course of the discussion it has been pointed out that energy efficiency is the most effective measure to reduce dependence on natural gas. Greta Maria Tučkutė, Director of Centre for Geopolitical Studies, Vilnius, provided an overview of energy transition happening in recent years in Lithuania: the government shut down the nuclear power plant while ramping up renewables and enhancing cooperation with the neighbours. There is a new LNG terminal as well as interconnectors to Poland and Sweden, helping increase energy efficiency and drive down both energy prices and consumption of natural gas. “However, with our energy dependency index being as high as 78% it is a challenging situation for Lithuania. You might trust your neighbours alright, but you should always have a back-up plan,” said Tučkutė. Among other challenges Tučkutė singled out Belarus which is using risky Russian technology to construct a nuclear power plant at the Lithuanian border. She also added that regional cooperation should be based on common strategy and shared emergency plans, arguing that the guiding principle should be to preserve the balance of interests rather than let countries pursue their individual ambitions. Opened up to the questions from the floor, the discussion turned to the role of consumers on the energy market, one of primary drivers of change and technological progress.

Joanna Maćkowiak-Pandera commented: “Forum for Energy believes that consumers are overlooked in the domestic debate on new capacities. By tweaking the retail market, for example through changes in energy tariffs or better communication of possible options, we could be generating savings for the entire system rather than having to construct a new power plant”. Claude Turmes argued that it is not only civil society, but also business that can make a difference, noting that these two groups can achieve a great deal working together: if we look at investment in solar energy, for example, today it is cheaper than any fossil fuel. In order to improve energy efficiency “we need to unleash innovation in the construction industry to create economies of scale. In terms of governance, we need to ensure that energy efficiency, renewables, and the market are all part of a single strategy so that we can build trust between countries. Poland may greatly benefit from this approach, for example by working with other countries to construct new offshore wind farms in the Baltic Sea. Funds are available under Junker Plan and these projects would create jobs. There is much to be achieved through regional cooperation, whereas trying to forge a compromise on the EU level is not always the most effective way to succeed,” stressed Turmes. The panel also discussed the potential in geothermal energy, current prosumer support programs, and the so-called “Anti-Wind Farm Act.” Turmes encouraged efforts to promote involvement of citizens and local governments by introducing compromise-building mechanisms to regulatory frameworks governing construction of wind projects, he was also advocating the idea of energy cooperatives. Modernisation of the energy system brings not only challenges, but also opportunities – this approach is beginning to emerge in a dialogue between DG Energy and the Polish Ministry of Energy, which gives some hope for a constructive relationship around the Energy Package in the future.

The second panel, “Solidarity and Politics – Natural Gas in Europe,” was opened by Krzysztof Księżopolski, Ph.D., Warsaw School of Economics, who observed that while the old and new Europe clash in pursuit of various realities of energy security, some perspectives are not given enough thought. It is only now that the EC is beginning to realize that the emboldened Russia is a threat also to the old Europe. Will the EP and the EC be able to balance interests of the weaker and the stronger, or will we soon have a much different EU where Russian influence is even greater than today? Modernisation of the energy system and transition to renewables constitutes an opportunity to kick European addiction to oil and gas, although it must be said that at the same time Europe would be exposed to greater systemic risks. “Rather than pursue individual interests, national governments should tighten mutual cooperation to address challenges in oil and gas while ramping up renewables, this is a cheaper way to ensure security. There is a role to play for the EC which is to design the future shape of the Energy Union: the question is whether it will strengthen the EU, its cooperation with Ukraine and other states, or will it only further expose its vulnerabilities, creating a EU where the stronger gets the upper hand,” warned Księżopolski. With China and the US dominating the markets with their turbines and solar panels, these are extremely precarious times for the EU. Which is why Księżopolski envisages Winter Package as a New Deal for Europe – a way to preserve competitiveness by decoupling European economy from oil and gas as their prices continue to rise. However, with NS2 in place, Russia will be able to bypass transit countries and, no longer dependent on their infrastructure, treat every single one of them in a way beneficial to its own interests. Other panelists also noted that decisions taken in regard to NS2 and OPAL compromise security of supply and competitiveness, arguing that the role of the EC in this policy area is crucial even if it shares its energy competences with member states which often have differing perspectives on gas markets. Nevertheless, the EC is working through competition policies to strengthen the markets, knowing that the more competition there is, the weaker the individual players are. Which is why it is vital to pursue diversification and infrastructural investment and the EC indeed supports individual projects such as construction of terminals or gas interconnectors. Furthermore, the EC has proposed regulatory measures to support cooperation and put in place specific solidarity mechanisms, for example “Regulation concerning measures to safeguard security of gas supply” which provides a framework for regional cooperation and prepares ground for solidarity mechanisms that will detail how individual member states are going to behave in the event of a crisis. The EC is also strongly involved in trilateral talks facilitating dialogue between Ukraine and Russia as well as launched an effort to reform the energy system in Ukraine. Anna Bulakh, Research Fellow, International Centre for Defence and Security, Tallinn, described how solidarity is shaping the market in the Baltic Sea Region: “Small countries are profiting from cooperation because this is what makes them stronger.” In her view using market and competition policies to tighten cooperation, for example in infrastructural projects, is a source of strength.

Oliver Krischer, Member of the Bundestag, Bündnis 90/Die Grünen, admitted that transition to renewables does not come without costs, but it has been worth the effort. The first thing to do is to increase energy efficiency and reduce energy needs. Natural gas could contribute to energy transition in Germany, but the general amount of gas used in Germany should not increase – the amount of gas used for heating and industry purposes should be reduced. “There is no need to follow through on NS2. We cannot put ourselves in a position where we rely entirely on a single supplier and a single transit route, and, also, we cannot turn our backs on Ukraine. There is a better way to use money that will go to the construction of NS2. European policies must lay down a clear vision: what are we going to achieve in renewables, efficiency, and energy security, and how are we going to do this. And the EC should stand guard watching whether individual member states behave in a way they should,” concluded Krischer, adding that in terms of climate policies and further deployment of renewables, we need to agree on binding national targets. Księżopolski was also critical of voluntary contributions to climate policies. Verifiable commitments should be adopted under a binding global target, and the UE must recapture climate initiative while working to reduce differences between individual member states.

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