EU-Russia Gas Relationship: defining a tolerable level of uncertainty

Transcription

1 EU-Russia Gas Relationship: defining a tolerable level of uncertainty Jonathan Stern, Ralf Dickel EU-Russia Gas Advisory Council Vienna, April 25,

2 OXFORD INSTITUTE FOR ENERGY STUDIES Natural Gas Research Programme The EU-Russia Gas Relationship to 2050: identifying different types of uncertainty Policy uncertainty: will EU decarbonisation policies be retained throughout the period and will they succeed in reducing demand for gas? Investment uncertainty: will investments in gas production and infrastructure Russian and non-russian - be made as a result of the first two types of uncertainty? Scenario uncertainty: are the assumptions which have been made consistent, and will the projections prove to be broadly accurate?

3 OXFORD INSTITUTE FOR ENERGY STUDIES Natural Gas Research Programme Defining Policy and Investment Uncertainty in the EU-Russia Gas Relationship POLICY UNCERTAINTY: Will decarbonisation commitments and policies be implemented through 2050: in all countries, in some countries? What will be the impact on gas of success or failure to implement these commitments in different countries? INVESTMENT UNCERTAINTY: How to make decisions on multi-tens of billions of dollars of production and transportation investments which may not be remunerated This may impact Russia more than other EU suppliers

4 OXFORD INSTITUTE FOR ENERGY STUDIES Natural Gas Research Programme Defining a tolerable level of uncertainty Tolerable in this context means recognising the degree of uncertainty and risk for both sides: the Russian Federation needs to recognise that there can be no certainty of EU requirements for gas and specifically for Russian gas - beyond a certain date the EU needs to recognise that there can be no certainty that Russian gas supplies and transportation capacity will be adequate and available to meet EU requirements beyond a certain date The RM 2050 Scenarios suggest that 2030 is the date after which uncertainty may increase beyond a tolerable level for both sides. But investment decisions need to be taken before that date. This is policy uncertainty which involves investment risk for Russia, and gas supply risk for EU

5 Natural Gas Research Programme Scenario Uncertainty: remaining questions about assumptions/projections in relation to future European gas requirements BUT: It is important to recognise that: scenario uncertainty increases substantially after 2030 the most important RM2050 scenario questions do not relate to gas, but to assumptions/ projections of efficiency improvements and renewable energy development 5

6 Natural Gas Research Programme Reduction in EU Gas Demand by Scenario (%) In 2020 and 2030 no decarbonisation scenario sees gas demand falling by more than 15% and 20% below 2010 levels; in 2040 and 2050, demand reduction increases to 20-35% and 35-50% significantly increasing investment risk 6

7 OXFORD INSTITUTE FOR ENERGY STUDIES Natural Gas Research Programme RM 2050 Scenarios: net gas imports (mtoe) 7 If decarbonisation fails: gas imports remain flat or slowly rising; EU policy uncertainty

8 Natural Gas Research Programme Policy Uncertainty: in the EU and Russian gas communities, there is widespread scepticism about: The likelihood that the decarbonisation agenda can succeed (period!) The possibility that demand for gas, including the demand for Russian gas, in European energy balances will decline even post-2030 Is this scepticism well-founded for example in the case of Germany? 8

9 The New German Energy Policy: still a need for more gas consumption /imports / infrastructure? Meeting EU Russia Gas Advisory Council, Vienna 25 April 2012 Ralf Dickel, Baden Badeb Group, Kyiv, 6 December 2010 Ralf Dickel Mobile: dickel.ralf@t-online.de

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11 Heating Systems in new Dwellings Source: BDEW

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13 Gas demand in Germany At best stagnant in the past Strong inroads by heat pumps and district heating for new dwellings Substantial decreases for future gas consumption: About 15% within 10 years

14 From the G 8 Declaration at L Aquila (2009): RESPONSIBLE LEADERSHIP FOR A SUSTAINABLE FUTURE 65. We reaffirm the importance of the work of the Intergovernmental Panel on Climate Change (IPCC) and notably of its Fourth Assessment Report, which constitutes the most comprehensive assessment of the science. We recognise the broad scientific view that the increase in global average temperature above pre-industrial levels ought not to exceed 2 C. Because this global challenge can only be met by a global response, we reiterate our willingness to share with all countries the goal of achieving at least a 50% reduction of global emissions by 2050, recognising that this implies that global emissions need to peak as soon as possible and decline thereafter. As part of this, we also support a goal of developed countries reducing emissions of greenhouse gases in aggregate by 80% or more by 2050 compared to 1990 or more recent years. Consistent with this ambitious long-term objective, we will undertake robust aggregate and individual mid-term reductions, taking into account that baselines may vary and that efforts need to be comparable.

15 Detailed targets of the German Energy Concept of 2010 Reduction renewables electriciy primary of CO2 emissions share in gross from energy vs 1990 final energy renewables consumption Consumptiom vs % 40% 18% 35% -20% % 55% 30% 50% % 70% 45% 65% % 80-95% 60% 80% -50% Every three years, starting in 2013, the government will present a report on the status of implementation of the Energy Concept together with the monitoring report

16 Fall out of Fukushima: Energy Concept remains, but phasing out of nuclear by 2022 (cabinet decision, , confirmed by parliament ) Decarbonisation targets remain unchanged Taxation of used nuclear fuel remains (challenged in court): 1.3 billion /a New after Fukushima: Phasing out of nuclear: i.e. back to Energy Consensus of Red Green Coalition of 2000/02 but with firm schedule: 7 oldest reactors plus Krümmel off grid as of March 2011 Remaining 9 reactors to be closed by 2022: 1 each in 2015, 2017, each in 2021 and 2022 Possibility to transfer remaining production volumes Detailed analysis of implementation by Bundesnetzagentur (BNetzA)

17 Power, gas scenario frameworks to 2022 (BNetzA) Timeframe 2022 defined by nuclear phase out Scenarios determined after discussion with power industry, gas industry for further detailed grid planning (Power) Scenarios differ according to role of renewables Scenario A: modest penetration of renewables (almost done) Scenario B: realistic penetration, also longer term scenario to 2032 Scenario C : ambitious targets for renewables Scenario frame for electricity decided on 20/12/ 2011 Power Scenarios B,C = Scenarios II,III of gas industry Scenario frame for gas decided on 2/2/2012 in line with proposal by gas grid operators (Prognos secenarios) Consistent with ENTSO- E / -G 10 years plans

18 Results of Gas Scenarios to 2022 (TWh) Scenarios approved by BNetzA on 2/2/2012 Scenario I (modest) Scenario II (realistic) Scenario III (ambitious) % change 2022 %change 2022 % change PEC Final EC Gas to power/dh imports

19 New German Energy Policy (Energiewende): Challenging but feasible So far so good: More interference into power grid, no black out Small positive power export balance in 2011 During the cold snap in February 2012: Some interruptible gas power plants could not be supplied from the grid (addressed by the network development plan of 1 April 2012), raising the issue of interdependence between the operation of the gas grid and the power grid Mobilisation of cold (coal and oil fired) power reserve Exports to France of up to 5000 MW CO2 emissions 2011/2010: -1% (not temperature corrected) Michael Süß, CEO of Energy Sector, Siemens (3/2012) The transition to a new energy policy is the project of the century for the Germans. It s the right thing to do, and it s feasible. But in terms of implementation, most of the work still lies ahead of us. The tight schedule and the requisite grid expansion present the biggest challenges. And other countries are closely observing how Germany is tackling them.

20 Natural Gas Research Programme Summary: definitions Policy, investment and scenario uncertainties related to the future of gas in a decarbonising European energy future need to be defined A tolerable level of uncertainty means recognising and clarifying risks for both sides arising from decarbonisation: for Russia, investment risks are the most important for Europe, policy and energy supply risks (including power supply) are the most important (but possibly different for different countries) The German case highlights the policy and investment uncertainties and risks of assuming that gas demand in its largest European market will be maintained post 2030 (or even post-2020)

21 Natural Gas Research Programme Conclusion: two stages of uncertainty 1 st STAGE before 2030: (possibly as early as 2020) investments - or the lack of them - will determine the availability of volumes and transportation capacity contracts or the lack of them will determine the level of certainty of delivery of volumes 2 nd STAGE after 2030, the degree of uncertainty can be reduced (but not eliminated) by: previous investments and contracts monitoring and discussion between partners Given the increase in scenario uncertainty beyond 2030, it appears very difficult perhaps impossible to maintain policy uncertainties and investment risks in the EU-Russia gas relationship at a tolerable level beyond that date 21

22 Natural Gas Research Programme Thank You