The EU-Targets from the Perspective of an Energy Company How will the new EU Energy and Climate policy influence oil business in the SEE Belgrade, September 7 th, 2015 Michael Sattler OMV Aktiengesellschaft
OMV an integrated, international oil and gas company Upstream Downstream Exploration and Production Worldwide activities, mature core countries: Romania and Austria Approximately 80% of production in EU and OECD countries Production: 288 kboe/d Reserves: 1.13 bn boe 1P 1.92 bn boe 2P Project pipeline: >1 bn boe Gas and Power Gas sales business in CEE, SEE and Turkey Gas-fired power plants in Romania and Turkey Refining and Marketing 3 refineries with capacity of 17.4 mn t 1 ~4,200 filling stations in 11 countries Figures from 2013 1 Figures do not include the Bayernoil refinery. The sale of the 45% stake was closed in 2014. 2 OMV Refining & Marketing
The EU 2030 Framework for Climate & Energy Policy could only become successful if globalized An unilateral commitment of EU to reduce GHG by 40% (1990-2030) would be too early, too ambitious and counterproductive for the global climate Share 2011 1 1990-2030 1 GHG Red. Target EU-28 11% - 33% -40% ROW: 89% +100%??? Global: 100% + 74% EU was not successful in globalizing its climate policy; partners lost in Kyoto II, missing international conditionality & solidarity? EU-28 reduced GHG-emissions 1990-2013 by >20%, but >90% within crises; could a stretched goal (-40% doubling the speed of de-carbonization) Carbon Leakage: danger of shifting CO2, industrial production and jobs to non-eu countries with no/low carbon costs; integrate green jobs-initiatives to industry policy 1) IEA WEO 2013 (New Policy Scenarios energy related CO2) 3 OMV Refining & Marketing
The official statement of the World Energy Congress: 7 myths & reality Exposing the myths, defining the future! It s time to get real to secure tomorrow s energy today Myths Reality Energy demand will flatten out Energy demand will double by 2050 Peak Oil Demand growth will be fully met by new clean energy sources Reduction of GHG by 50% by 2050 is possible Current business models and markets are delivering Universal access to energy will be achieved in 10-15 years Capital is cheap and abundant on a global scale No shortage in sight Until 2050 the renewables share will increase from 15% to 20-30% Best case projects double than aimed for 450 ppm by 2050 Untrue they cannot cope with renewable shares, decentralization, etc. With current programs, at least 730mn people will be without access in 2030 Capital is very sensitive to political and regulatory risks not easily available 4 OMV Refining & Marketing
The renaissance of coal is reality Renewables & gas should be partners of future growth Primary energy supply World Primary energy supply - EU-28 Gas Gas Coal Coal Renewables Renewables Oil 1990-2011 +49% Oil 1990-2011 +1% 2011-2030 +27% 2011-2030 -5% Nuclear Nuclear 0 500 1000 1500 2000 2500 Mtoe -400-300 -200-100 0 100 200 300 Mtoe Source: IEA / World Energy Outlook 2013 / New Policy Scenario 5 OMV Refining & Marketing
The GHG-emissions of EU-28 are mainly dependent on the economic development GDP Growing Stagnating Declining -6% -7% -1% -5% +2% +0% +7% -3% -2% -9% +1% +4% +20% +2% +12% +4% -5% +3% -8% -7% -9% -24% +5% GHG Emission >-5% -5% to -15% <-15% -20% -13% -8,3% -23% -8,2% -14% -14% -2% -3% -12% -13% -11% -8% -8% -23% -21% -9% -23% -20% -17% -29% -17% -20% GDP growth EU-28: 2007-2013: -0,7% 2000-2007: +17,2% GDP growth ranged between +20% (PL) and -24% (GR) Countries with higher share of manufacturing performed better GHG emissions EU-28: 2007-2013: -12,6% 2000-2007: -0,1% GHG decline correlates with economic performance D, Pl lagging behind in GHG reduction 6 OMV Refining & Marketing
The 2030 EU Framework for Climate & Energy has several critical issues Overstretching of targets during a dangerous crises environment (weak economy, growing debts, instable banking sector, lack of trust) Top-down targets derived from a back-casting approach ( wishful thinking instead of bottom-up analyses) National burden-sharing based on politics not on facts Missing policies against the renaissance of coal in the power sector No adequate policy framework and acceptance for deployment of CCS Difficult substitution of nuclear power generation (-15% 2000-2030) Oversized feed-in tariffs for renewables cannot be maintained up to 2030 Suspension of flexible mechanism (JI, CDM) 7 OMV Refining & Marketing
Biofuels Legislation is driven by EU directives and national legislations Renewable Energy Directive: 2009/28/EC RED Target 2020: 10%e renewables in transport sector by 2020 Fuels Quality Directive: 2009/30/EC FQD Target 2020: Binding 6% GHG reduction of fuels by blending in 2020 Sustainability: Based on both directives BioFuels have to comply with sustainability criteria's for recognition as biocomponent Realization: Significant impact on OMV business ( less fossil fuels, more complex product structure, investments ) EU Member states will implement 2 Directives in a different way 8 OMV Refining & Marketing