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European Commission - Speech - [Check Against Delivery]

Speech by Commissioner Miguel Arias Cañete at the 4th EU Energy Summit: International geopolitical uncertainties: brakes or accelerators for the EU energy transition?

Brussels, 12 April 2018

I am very pleased to be here today to open this 4th edition of the annual EU Energy Summit together with President Buzek and Minister Stankov.

We do live in very interesting times.

The world is now clearly coming together around the urgent need for a transition to a cleaner, more sustainable and less carbon intensive energy future. And the technologies and options are improving all the time. That is the good news!

However, at the same time, the geopolitical situation appears ever more fluid and uncertain. There are new challenges in our immediate neighbourhood, further afield and indeed even inside the EU which can impact the speed of our energy transition.

Frankly I believe that these challenges make the objective of unifying the EU around an ambitious energy transition agenda ever more urgent and this is the message that I am carrying to the Member States and to the European Parliament as they search for a final agreement on our Clean Energy for all Europeans Package.

To explain why I believe that the increasing geopolitical uncertainties should be seen as a reason to accelerate our energy transition, I propose to say a few words 

  • First, on the reality of our energy supply situation today and what this means for our policy priorities;
  • Second, on how we are addressing the immediate security of supply challenges  against the geopolitical challenges outlined above,
  • And I will conclude with some remarks why the international context should act as an accelerator rather than a brake on the EU's energy transition over the medium term.

 

The secure, competitive and environmentally sustainable supply of energy is fundamental for our modern societies – for our industries, our homes and our very way of life.

For the EU, an important challenge in an increasingly uncertain world is that we are still heavily dependent on fossil fuels today, and that this dependence will only decrease gradually.

We have made very significant progress with respect to renewable energy and energy efficiency; still coal, gas and oil together accounted for some 72% of our primary energy consumption in 2016, and most of this is imported.

In 2016, we imported around 88% of the oil we used, 70% of the natural gas we used and 40% of the solid fuels we used.

And our future scenarios show that we will be producing less of these fossil fuels in the EU. That means that while our overall consumption of fossil fuels will be reduced over time, the level of fossil fuel imports required to meet our needs will not decline at the same pace.

Looking in more detail at this energy import dependency, it is clear that the main challenge for the EU is in the natural gas sector since both the oil and coal markets are global, with multiple suppliers and flexible, multiple options for transportation.

However, looking at our external sources of gas, pipeline imports from a few major suppliers continue to dominate the picture today. In 2016, some 76% of our extra-EU gas imports came from just two countries, Russia and Norway. A further 13% arrived in the form of LNG, while the remaining 11% came from Algeria and Libya.

We have also learnt our lessons from the gas crisis of 2009 and 2014 when disputes between Russia and Ukraine flared up. The Commission, in response, took a proactive role not only to mediate between our two neighbours, but also to come forward with a European energy security strategy. This Strategy led to the European Council calling, in June 2014, for an Energy Union. In the almost four years that have elapsed since, we have started to fill this idea of an Energy Union, built on solidarity and trust, with concrete content.

The urgency to complete this work has been brought home to us very recently indeed, in the form of the dispute that followed the decision of the Stockholm arbitration tribunal on 28 February. This has made it clear one more time that the international geopolitical situation requires the EU to look even more urgently at enhancing its own energy resilience.

Key to this over the medium to longer term is reducing the overall dependence of our economies on imported hydrocarbons. At the same time, in the short to medium term, we need to ensure that our imports come from an increasingly diversified range of suppliers that are pricing the energy competitively, in particular with respect to natural gas.

 

Looking at our short term geopolitical and energy situation, it is clear that Russiawill remain a key energy supplier for the EU. What is important is to ensure that Russian energy supplies into Europe are subject to competitive pressures from the existence of other suppliers able to compete anywhere across our market. This will ensure that the continued role of Russia as one of our main energy providers does not come at the expense of our energy security and resilience, nor does it lead to excessive prices.

We also firmly believe in the role of Ukraine as a strategic European transit country which we believe to be in the mutual interest of Europe, of Ukraine and also of Russia. However, to ensure that remains the case, it is extremely important that the deep reforms of the energy sector continue, also to underpin Ukraine's own energy security. Creating a real competitive gas and electricity market, continuing to invest in energy efficiency and a sustainable renewable energy framework are key elements to Ukraine's own long term energy security. Ukraine has embarked on an impressive energy reform agenda, and we will continue to provide all the help needed to bring it to a successful end.

For Ukraine and other countries in our Neighbourhood prepared to adopt the EU energy acquis, we have the Energy Community. Under this international treaty, we are working with these countries to reform their energy sectors in line with EU energy laws and thereby make them more attractive to international investors, including international financial institutions such as the European Investment Bank, the European Bank for Reconstruction and Development, and the World Bank. This should also help to enhance the energy security of these countries.

A key major project for our diversification efforts is the Southern Gas Corridor. We already have working Northern and Eastern Gas Corridors, and it remains a major priority for us to bring gas from the Caspian region directly to Europe. It is a measure of the success of all involved that the first gas from Azerbaijan will be delivered to Turkey this summer already, and that it should arrive in Europe as of 2020.

Likewise we are intensifying our efforts at making the very extensive gas resources discovered in the Eastern Mediterranean basin available to Europe. In the coming weeks I will pay a visit to Egypt and discuss our energy cooperation. We are in the final stages of agreeing on an updated Memorandum of Understanding with Egypt that would deepen our energy sector cooperation on a wide range of issues, including gas.

These developments would add to the rapid expansion of the LNG market that is already contributing to our security of supply in a positive manner. Better access to LNG can reinforce our energy resilience by enhancing supply optionality and flexibility, by allowing the EU to draw upon a global rather than just a regional supply of gas.

In this context, the appearance of the US as a major energy exporter on the global market is an important development. And while we very much appreciate the US LNG that has so far been delivered to Europe, we believe that we have an attractive, large and competitive market that can attract more US companies to actively compete with their gas on our market.

At the same time, we in Europe are doing our own homework to ensure that all our Member States can benefit from LNG supplies. For example, most of the LNG import terminals are in Western Europe while Eastern EU countries have difficulty accessing them due to missing interconnections. So we issued an LNG Strategy which outlined exactly what needs to be done inside the EU, including identifying the key missing infrastructures and we are now actively working to realise them.

 

Looking at the medium to longer term, I believe it is clear that, despite all the geopolitical uncertainties today, the energy transition is happening everywhere, regardless of whether countries or regions are energy exporters or importers.

For us in Europe, the wider use of renewable energies, the further efforts at energy efficiency and the increasing involvement of energy consumers as active players through demand response, self-consumption or storage will help to mitigate our import dependency for oil and gas.

Increased electrification and new technologies will be a key element in this transition. This is not just about the way electricity is produced but also about how it is used, with further progress required in making heating and transport more electricity based.

The "Clean Energy for All Europeans" proposals that the Commission presented in November 2016 are designed to keep the European Union competitive as the clean energy transition is changing global energy markets. These proposals are designed to ensure that we can reach our binding EU targets of reducing domestic greenhouse gas emissions by at least 40% by 2030 compared to 1990.

In this context we will notably have to find an agreement on the level of the targets for renewables and energy efficiency for 2030, where the Parliament is pushing for a higher level of ambition compared to our proposals of 27% for renewables and 30% for efficiency. The significant cost decreases for renewables technologies, in particular for solar PV and off-shore wind, are an important factor that should be fully acknowledged when discussing the level of our 2030 EU target. We will have the occasion to discuss this in depth with Ministers during the informal Energy Council in Sofia next week.

Overall, good progress is being made in the discussions with the Council and the Parliament on the Clean Energy package proposals and I expect them to be adopted before the end of this year. In this context, I particularly compliment the strong commitment and efficient work of the Bulgarian Presidency.

The implementation of the resulting legislative framework will not only facilitate our energy transition in Europe but, at the same time, make the EU's energy supply more resilient and decrease dependencies.

And the Commission is playing its role in promoting the clean energy transition globally, in reaching out to our partners in the context of bodies such as the IEA and IRENA, and in fora such as the G7 and G20. Indeed on 23-24 May of this year, the Commission will be co-hosting in Copenhagen, together with Denmark, Finland, Norway, Sweden and the Nordic Council, the Ninth meeting of the Clean Energy Ministerial (CEM). This will take place back to back with the Third meeting of Mission Innovation, which will take place the day before in Malmö. With its 24 member countries, which include most of the G20 countries, plus the European Commission, the CEM represents about 90% of global clean energy investment and 75% of global greenhouse gas emissions.

For the EU and our Scandinavian co-hosts, the CEM meeting will therefore provide an important platform for demonstrating our leadership in the clean energy transition and to showcase the significant achievements that have already been made.

 

To conclude, irrespective of geopolitical and other uncertainties, the energy transition is moving forward on a global scale. The EU is playing a key leadership role here. And the March European Council has just given an additional push for the EU to maintain this leadership role in the future by inviting the Commission to present a proposal for a long-term EU greenhouse gas emissions reduction strategy by the first quarter of 2019.

I am deeply convinced that this energy transition, understood as a long-term project which has to be achieved through small but consistent steps, remains our strategic answer to the geopolitical uncertainties we are facing. And I am very grateful for the excellent cooperation we have received from the side of the European Parliament and the Council Presidency to achieve that and to make the EU more energy resilient.

I wish you an excellent conference.

Thank you very much.

SPEECH/18/3242


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