Günther OETTINGER SPEECH/12. EU Commissioner for Energy
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1 SPEECH/12 Günther OETTINGER EU Commissioner for Energy Commissioner Oettinger's presentation at the conference: Where Energy Meets Ambition: Energy Roadmap 2050 Brussels, 6 March 2012
2 Good morning, Mr Techau, Ladies and Gentlemen. A recent Carnegie report on transatlantic relations stated: "Without energy security for all, there cannot be economic security." 1 Energy geopolitics have never been just an issue of markets, trade and the transport of goods. They make our economy what it is. Energy policy created the original European Union. But that was in the days when indigenous coal powered our nations. If we want to continue with a stable, secure and sustainable economy in today's energy markets, we need the energy policies to match. In the past, secure and affordable energy enabled Europe to develop in peace and stability. In the future, a strong European energy policy will help Europe face the economic and political uncertainty we are currently in. It will not on its own cut public deficits, or resolve debt crises, but it can help make us more resilient and give us greater control. And it will make Europe a stronger and more effective global partner. President Barroso has called energy policy "the next great European integration project". For two generations, Europe has resisted the force which brought it together in the first place: a common energy policy. But global, geopolitical and population changes are forcing countries to rethink their approach to energy. This is my starting point for this morning's debate on the Energy Roadmap I am very grateful to Carnegie Europe and their Director Jan Techau for giving me this opportunity. The Roadmap is not just the launchpad for a debate on cutting our carbon emissions. It can be the basis for a long term economic project to make the EU a stronger international player. It can be the tool for better energy cooperation. Why 2050? Before I elaborate the 2050 angle, let me start with Europe's 2020 energy strategy. Energy 2020 is already changing our energy market. We have taken on board the climate challenge. We have looked at investments, innovation and infrastructure. We have a new external policy. And we are looking at the consumer dimension. So what does the Roadmap add? The Energy Roadmap is the first time that the Commission has attempted to look forward in energy policy over such an extended period, and such an uncertain period. Yet, the world which future generations inherit in 2050 will be shaped by the decisions we make today - in energy policy, energy investments and energy behaviour. Energy investors are not just investing for Their projects are for the next twenty, or even thirty years, at least. Once again, the economic question jumps out at us. Replacing our infrastructure means new businesses, skills and technologies. It means dealing with today's credit and financial crisis. And it means preparing consumers. Energy prices are on the way up, whatever we do. But there are ways of giving consumers a better deal. 1 Energy as a Building Block in Creating a Euro-Atlantic Security Community, EASI Working Group Paper, February
3 The geopolitical challenge poses further risks. Think about the changes in North Africa, the Middle East and Japan in the last year alone! [And the implications for future energy relations of the Russian elections.] Meanwhile, world energy demand threatens to grow faster than global production, creating the potential for a global energy squeeze. Under geopolitics, I would also include the climate question. Energy policy is one of the main instruments for reducing greenhouse gas emissions. Climate geopolitics move very slowly, but already we are seeing major changes in energy policy, from Germany to China and Mexico. Security, Economics and Geopolitics. Three reasons why we need a solid European energy policy taking us up to No matter which way we look at it, we will not deal with any of these issues in a few years. And Europe will not be able to deal with them alone. We need decades. And we need European, and international, policies. Role of Europe Why is the European level so important? Europe is committed to reducing greenhouse gas emissions by at least 80% by This means more or less removing carbon from the energy sector. This sounds almost impossible, and perhaps would be if each Member State attempted to do this on their own. But our scenarios show that the EU, working together, can achieve it. I cannot overstate the importance of the European approach. It is cheaper and easier for Europe to work together. The European market gives us the chance to make economies of scale and speed up new markets for low-carbon technologies. If one Member State fails, we all fail. But working together, in solidarity, we all benefit. In today's European energy market, it is no longer possible for Member States to look only at their national markets. The German nuclear decision and UK proposals on market reform illustrate this point. And globally, energy policy is an important motor of geopolitical collaboration. Europe, as a major importer, must play a strong role in international markets. Our internal market, with European solidarity and a common external strategy, gives us a strong hand! What the Roadmap does So what does the Roadmap do, and not do? The Roadmap is not a "strategy" for It does not forecast energy supply and demand or energy mix. It certainly does not forecast energy prices! Rather, it uses a number of scenarios to assess the impact of specific political instruments on a series of indicators. Each scenario is designed to ensure that the outcome should be a reduction of at least 80% in greenhouse gas emissions by But we also wanted to see how far decarbonisation and energy security and competitiveness could be reconciled over the longer term. Politically, the most important purpose of the Roadmap is to help us understand the course we want to follow over the coming decades, and what this means for investors, our strategy and citizens. 3
4 It also offers greater certainty to our international partners. It says, this is the way we are going. Our international partners are welcome to join us. We are indeed developing or about to develop 2050 roadmaps with some interested partners like the Russian Federation, the US or Algeria. Economically, it considers what this is going to cost. The fact is, no matter what we do, energy is getting more expensive and global prices continue to be volatile. There is remarkably little difference in the cost of different scenarios. The good news is, that the low-carbon options put more money into our economy - in capital investments - with lower operational costs, compared to today's system. This is a model which other regions can follow and benefit from as well! Main conclusions of the Roadmap Many of you are very familiar with the contents of the Roadmap, but let me for a moment highlight some of its conclusions. The main conclusion of the Roadmap is simple: Transformation of the energy system is feasible - if we act now, if we use energy better, if we exploit renewable resources fully, if we use full diversity of European solutions and if the EU acts together. Two other conclusions stand out. First, there are solutions which seem to work in all scenarios. These are not rocket science and will not surprise many of you: Starting with energy efficiency. Good for the economy, security of supply and the environment! Next, renewable energy. We could move towards almost 60% of renewables in gross final energy demand without greater cost compared to other scenarios. Smart grids and intelligent networks will lead to greater efficiencies and allow us to increase our use of electricity in transport and other applications. Greater market integration will make it possible to access local energy resources in a secure and competitive way. Second, the Roadmap offers huge opportunities for investors. Investment in hardware, in software, in technology, in people. We are talking about trillions of investment in our energy system. Investments which can lead to jobs, innovation and growth. And which make the economy more resilient to energy price rises. But we all know how long it takes to get energy investments on line. So we do need to get these investments going quickly! This means getting society on track. I now want a broad and open debate on the Roadmap to get Europe's economy, businesses and investors to work. Based on this debate, the Commission will make new policy proposals. As well as helping us meet our 2020 commitments, the new initiatives will put us on the right road for Already next April, we will be proposing a new framework for renewable energy and later in the autumn a set of measures to accelerate the development of our integrated market. 4
5 Energy and geopolitics Before I hand over to you, let me expand on the geopolitical dimension of the Roadmap. I know this is a particular concern of Carnegie Europe. The Roadmap is not just about climate emissions. It is not just about Europe. It is about secure energy, sustainable energy and competitiveness in a global economy. It is about global issues - energy security, economic stability and climate change. And it is looking for solutions which work not only for Europe, but internationally! Between now and 2050, energy is likely to be one of the greatest geopolitical challenges, not just for Europe, but for the world. I would like to make three points on this topic. My first point: Energy geopolitics begin at home! The EU is working to complete its internal energy market. This is fundamental to our future energy security. It is the starting point for Europe's position in world energy markets. We are also boosting our own energy security. Energy efficiency and investments in indigenous energy and new networks are just three examples of these policies. Our internal policies are the basis on which we want to build up our international relations. To mutual benefit, of course! My second point: Energy geopolitics need long term relationships. The energy relations we are building today are not just for the present. Good international energy relations will be the mainstay for energy security for decades to come. With Russia, we have a specific exercise on But longer term energy cooperation is crucial with other partners as well. For example, new pipelines for gas will be necessary beyond 2020, to give us greater diversity and to serve as a transitional fuel. But they also serve a strategic role, bringing us closer, literally, to our partners. Integrating energy systems with our neighbours is another long term project bringing greater security and stability to the continent. My third point: Energy geopolitics take time. The EU has promised to speak with one voice for several years, but we are just putting in place the first real instruments to do so. We have had recent success with our proposed new mechanism to ensure proper ex-ante and ex-post coordination for the conclusion of intergovernmental agreements. This is good news for the European energy market and good news for our neighbours. But we need to go further. Strategic corridors, such as the Southern gas corridor for Caspian gas imports into Europe, or the Mediterranean renewable electricity Ring, should be based on EU agreements setting out key principles and covering all partner countries at once. Partnerships, such as with the Russian Federation, US, the Gulf States or China should be upgraded to reinforce cooperation and promote regulatory convergence. To ensure the success of our 2050 strategies, the EU needs a broader and more coordinated approach to international energy relations. This should include the continuation of strong efforts to work for a global climate agreement, leading to an international carbon market, avoiding carbon leakage and preparing the world for a more efficient, low-carbon future. 5
6 The European Council is taking a more assertive role, pushing for a more strategic and coordinated approach to energy from all Member States. The European Parliament can also help by promoting this "Europeanisation". Conclusion I started with economic security, and I will end on the same note. For 50 years, energy security has been a key input to economic growth and prosperity. I would like this to remain so for another 50 years. But the world is changing, and with it, we need a new approach. We have gone part of the way. We have a Europeanised strategy, dealing with global energy challenges. The success of the Roadmap and the low-carbon transformation of our economy do not depend just on the policies we have at home. They also depend on how we position ourselves vis-à-vis our international partners. Today, and tomorrow. Thank you for listening. 6
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