LA SFIDA DELL’EUROPA: ENERGIA, MOBILITA’, AMBIENTE Convegno Transdolomites 2007 Moena, 25 ottobre Matteo Fornara Rappresentanza a Milano della Commissione

LA SFIDA DELL’EUROPA: ENERGIA, MOBILITA’, AMBIENTE

Convegno Transdolomites 2007Moena, 25 ottobre

Matteo FornaraRappresentanza a Milano della Commissione europea

I. THE CHALLENGE

> The world is facing a massive energy and environmental challenge:

> How to secure competitive and clean energy against a backdrop of climate change, escalating global energy demand and future supply uncertainties

> A common European response is needed to ensure a sustainable, secure and competitive energy future

> In January 2007, the European Commission made proposals for Europe’s energy policy including an Action Plan. This has been endorsed by the European Council on 9 March 2007

> This aims to establish a new Energy policy for Europe to combat climate change and boost the EU's energy security and competitiveness

Energy Policy for

Europe

Internal market for gas and electricity (including priority interconnection plan)

International energy policy

Security of supply

Energy efficiency and renewable energies

Energy technologies (including nuclear power)

II. Three aspects of the same challenge

2. Security of the offer

3. Competitiveness

1. Sustainability

1. Sustainability

> Energy consumption amounts

to 80% of greenhouse gas

emissions (GHG) of the EU

> Current energy and transport

policies in the EU would

cause a raise in GHG

emissions of 5% by 2030

> Therefore current policies are

not sustainable

Energy 59%Transport 21%

Agriculture 9%

Industrial processes 8%

Waste 3%

Source: European Environemental Agency

Report 2006

EU-15 Shares of sectorsin total GHG emissions (2004)

1. Sustainability

Global CO2 Emissions from Energy Consumption

1900

Million tonnes CO2

1945 1970 1975 1985 1990 2000 2005 2010 2015 2020 2030 20501980 1995

45,000

40,000

35,000

30,000

25,000

20,000

15,000

10,000

5,000

0IEA: CO2 emissions from fossil fuel combustion, 2006: from 1975 onwardsCarbon dioxide information analysis center, Oak Ridge National Laboratory,USA: until 1970, growth rates used for linking with IEA dataIEA: World Energy Outlook 2006European Commission, DG RTD, World Energy Technology Outlook - 2050 (growth rates for extending series to 2050 and for missing years in IEA projections)

1. Sustainability EU-27: CO2 Emissions from Energy Consumption

Million tonnes CO2

IEA: CO2 emissions from fossil fuel combustion, 2006PRIMES baseline, 2006, from 1990 onwards

5,000

4,500

4,000

3,500

3,000

2,500

2,000

1,500

1,000

0

1970 1975 1980 1985 1995 2000 2010 2015 2020 2025 20301990 2005

1. Sustainability

The broader EU objectives

> Developing competitive renewable sources of energy

and other low-carbon energy sources and carriers

> Curbing energy demand within Europe

> Leading global efforts to halt climate change and

improve air quality

2. Security of supply

> Pressure on global energy resources is intensifying

> The International Energy Agency (IEA) expects global demand for oil to grow by 41% by 2030

> Over 70% of the projected increase in demand will come from developing countries

> Whether supply will keep up with this demand is unknown


World energy demand (total)

IEA statistical database 1975 - 2000; World Energy Outlook 2006IEA World Energy Outlook 2006BP Statistical Review of World Energy (without uncommercial energies): growth rates used for extending time series backwards for 1965 and 1970 as well as for the 2005 numberWETO-H2 study (DG RTD): growth rates 2050/2030 used for extending IEA time series to 2050

22,000

20,000

18,000

16,000

14,000

12,000

10,000

8,000

6,000

4,000

2,000

0

1950 20501970 1990 1995 2015 20302000 20051960 1980

Mtoe

Total


World energy demand (oil & gas)

Mtoe

IEA statistical database 1975 - 2000; World Energy Outlook 2006IEA World Energy Outlook 2006BP Statistical Review of World Energy (without uncommercial energies): growth rates used for extending time series backwards for 1965 and 1970 as well as for the 2005 numberWETO-H2 study (DG RTD): growth rates 2050/2030 used for extending IEA time series to 2050

1950 20501970 1990 1995 2015 20302000 20051960 1980

7,000

6,000

5,000

4,000

3,000

2,000

1,000

0

Gas

Oil


Proven oil reserves (end of 2005)

Billion barrels40.2

AsiaPacific

59.5

NorthAmerica

103.5

South &Central America

114.3

Africa

140.5

Russia & othereurasian countries

742.7

MiddleEast

8.7

EuropeanUnion


Proven gas reserves (end of 2005)

Trillioncubic metres

7.02

South &Central America

7.46

NorthAmerica

14.39

Africa

14.84

AsiaPacific

57.46

Russia & othereurasian countries

72.13

MiddleEast

6.55

EuropeanUnion


The challenges for Europe

> Europe is increasingly dependent on imported

hydrocarbons

> Oil and gas reserves are concentrated in the hands of

just a few countries that control them through national

monopolies

> EU electricity demand is rising by some 1.5% per

year. Investment in generation alone over the next 25

years will need to be in the order of € 900 billion

> The risk of supply failure is growing


EU-27 Baseline projection: Import dependency

2000

2010

2020

2030

Oil Gas

90%

80%

70%

60%

50%

40%


EU-27 Origin of oil and gas (2004)

GasOil

Saudi Arabia9%

Libya8%

Nigeria3%

Algeria3%

Norway13%

EU own production total18%

Others10%Iraq

2%

Iran5%

Russia26%

Kazakhstan3%

Russian Federation29%

EU own production total37%

Qatar1%

Algeria13%

Nigeria1%

Others2%

Norway17%


EU-27 Energy investment needs up to 2030

Source: EUROSTAT

Estimated EU-27 energy investmentneeds up to 2030: €1.79 trillion

RES-H,T5%

Generation65%

Transmission8%

Distribution27%

Electricity77%

Oil5%

Gas12%

Coal1%



> Tackle rising dependence through:• Reducing demand• Diversifying the energy mix• Diversifying sources and routes of supply

> Stimulate adequate investments to meet growing energy demand

> Better equip the EU to cope with emergencies

> Improve the conditions for European companies seeking access to global resources

> Make sure that all citizens and business have access to energy at fair and not discriminatory prices

3. Competitiveness

> EU is increasingly exposed to price volatility

on international energy markets

• Example: oil price increase to $100/barrel in 2030 => every

EU citizen pays additional €350 per year

• Very little of this wealth transfer would result in additional jobs

in the EU

3. Competitiveness


> Ensure that energy market opening brings

benefits to consumers and to the economy

> Stimulate investment in clean energy

production and energy efficiency

> Mitigate the impact of higher international

energy prices

> Keep Europe at the cutting edge of energy

technologies

3. Competitiveness

A good example

> The European Union is already the global leader in renewable technologies • Turnover of € 20 billion and employment of

300 000 people

• In wind energy, EU companies have a 60% share of the global market

• Opportunity for EU to drive the global research agenda

III. The objectives

A strategic objective to guide Europe’s energy policy

Core energy and climate change objective

A 20% reductionin EU greenhouse

gas emissions by 2020compared to 1990

levels

> A unilateral EU commitment:

20% reduction in GHG

emissions by 2020 compared

to 1990 levels

> An EU objective: 30%

reduction in GHG emissions

by developed countries by

2020 compared to 1990

levels

> 2050 global GHG emissions

must be reduced by up to

50% compared to 1990

140%

120%

100%

80%

60%

40%

20%

0%

Baseline Reduction Scenario

1990 2005 2020 2030 2040 2050


Developed countries’ GHG emissions


> After 2020, developing

countries’ emissions will

overtake those of the

developed world

> Effective action on

climate change requires

reduced growth in the

GHG emissions of

developing countries

Developing countries’ GHG emissions

280%

240%

200%

160%

120%

80%

40%

0%

Baseline Reduction Scenario

1990 2005 2020 2030 2040 2050

320%

IV. The Action Plan

An ActionPlan for a new

industrial revolution

The Action Plan

> To achieve the strategic energy objective means catalysing a new industrial revolution

> No single element of the policy provides all the answers

> The first step is for Member States to endorse a strategic vision and an Action Plan

> Backed up by careful monitoring and reporting of progress, effective exchange of best practice and continued transparency

The Action Plan

1. Internal market for gas and electricity(including priority interconnection plan)


3. International energy policy

4. Energy efficiency and renewable energies

5. Energy technologies(including nuclear power)

Additionally:

6. A low CO2 fossil fuel future

7. Effective monitoring and reporting

1. Internal market for gas and electricity

> Challenges• Incomplete and incorrect transposition

of EU Directives• Markets are not integrated sufficiently• Different powers and competences of regulators• Lack of cross-border capacity and need for

interconnections


Unbundling, regulation and transparency

> Unbundling: ownership unbundling or a fully independent system operator

> Effective national regulators: harmonisation of powers and independence; tasking with development of the markets

> Cross-border regulation: a European network of independent regulators, strengthening the role of the “European Regulators‘ Group for Electricity and Gas”

> Transparency: new legislation and minimum requirements for market players


ElectricityTrans-European Networks European projects address the missing links

© EuroGeographics 2001 forthe administrative boundariesCartography: DG TRENhttp://ec.europa.eu/dgs/energy_transport


GasTrans-European Networks European projects address the missing links

© EuroGeographics 2001 forthe administrative boundariesCartography: DG TRENhttp://ec.europa.eu/dgs/energy_transport


Network security, capacity in generation and supply,and public service

> Network security:

common, legally-binding minimum standards

> Assessment of investment needs

> Energy Customers’ Charter with 4 objectives:

1. Help vulnerable customers deal with increases in energy

prices

2. Improve the minimum level of information available to

customers

3. Reduce paper work when customers change supplier

4. Protect customers from unfair selling practices


> The internal energy market increases the interdependence of Member States in terms of both electricity and gas supply

> Oil and gas will continue to meet over 50% of our energy needs. A secure supply of these fuels will continue to be of paramount importance to our economy

> Promoting diversity with regard to source, supplier, transport route and transport method enhances the security of supply

> Ensuring solidarity between Member States in the event of an energy crisis through effective mechanisms


Pursuing energy security

> Develop projects for new gas sources, routes, hubs

and storage

> Evaluate mechanisms such as the Energy

Correspondents Network and the Gas Coordination

Group

> Reinforce communication on the strategic stocks of

Member States and coordinate more effectively if the

IEA calls for stocks to be released

> Improve electricity interconnections and develop

binding, enforceable reliability standards


> The EU cannot achieve its energy and climate change objectives on its own

> Develop effective energy relations with all international partners: developed and developing countries, energy consumers and producers

> Pursue competitiveness, sustainability and security goals with a common voice

> Establish a network of energy security correspondents which will provide an early warning system and enhance the EU's ability to react in times of external energy security pressures


EU external energy policy priorities

> Be a key driver in the design of international agreements

> Build up a broad network of neighbouring countries, willing to act on the basis of shared rules or principles

> Enhance relations with external energy suppliers and with other major consumers

> Develop the use of financial instruments

> Improve the conditions for investment in international projects and appointing European coordinators to represent EU interests in key international projects

> Promote non proliferation, nuclear safety and security


Priority measures

> A comprehensive Africa-Europe energy

partnership

> An international agreement on energy

efficiency

> EU-Russia Energy Dialogue

> EU-Caspian dialogues

> Cooperation with OPEC, Gulf Cooperation

Council, Norway, etc.


> Improved energy efficiency has the potential to make

the most decisive contribution to achieving

sustainability, competitiveness and security of supply

> Energy Efficiency Action Plan: Realising the potential,

saving 20% by 2020

> By 2020 the EU would use approximately 13% less

energy than today, saving € 100 billion

> BUT, this will require significant effort, both in terms

of behavioural change and additional investment


Key measures

> Using fuel efficient vehicles for transport, making better use of public transport and ensuring that the true costs of transport are faced by consumers

> Tougher standards and better labelling on appliances

> Improving the energy performance of existing buildings and make very low-energy construction the norm for new buildings

> Coherent use of taxation

> Improving the efficiency of heat and electricity generation, transmission and distribution

> A new international agreement


Key implementation instruments

> Intelligent Energy – Europe Executive Agency

> European Commission Work Programme

> Energy Directives (Energy Performance of Buildings; Co-generation; Eco-Design; Energy Services; Labelling)

> Energy Star Agreement

> Energy End-Use Efficiency

> Industrial agreements/commitments

> ManagEnergy and Sustainable Energy Europe Campaign

> Structural Funds and the EIB/EBRD

> Investments and financial incentives


Proposals of the renewable energy roadmap

> Increase the share of renewables in the EU energy mix from 6.5% today to 20% by 2020

> Set a binding overall renewables target for each Member State

> National Action Plans that set the share of electricity, heating & cooling and biofuels in the energy mix

> Achieve in each Member State a minimum 10% of biofuels in transport fuels


Economics of renewable energy sources

> Renewable energy is generally more expensive than hydrocarbons, but the gap is narrowing

> Economies of scale can reduce the costs for renewables, but this requires major investment today

> Renewable energy helps to improve our security of energy supply by increasing the share of domestically-produced energy

> Achieving a 20% share for renewables will result in an additional average annual cost of approximately € 18 billion – around 6% extra on the EU's total expected energy import bill in 2020

> But this assumes oil prices of $ 48/barrel by 2020. If these rose to $ 78/barrel, the average annual cost would fall to € 10.6 billion

5. Energy technologies

(including nuclear power)

> Two key objectives for energy technology: • to lower the cost of clean energy • to put EU industry at the forefront of the rapidly growing low-carbon

technology sector

> Vision of the European Strategic Energy Technology Plan: • 2050: The overall European energy mix is composed almost

exclusively of renewables, sustainable coal and gas, sustainable hydrogen, Generation IV fission power and fusion energy

5. Energy technologies (including nuclear power)

Priorities

> Energy efficiency

> Biofuels

> Large scale offshore wind energy

> Photovoltaic

> Fuel cell and hydrogen technologies

> Sustainable coal and gas technologies, particularly carbon capture and storage

> Fourth generation fission nuclear reactors and future fusion technology


European strategic energy technology plan

> Under the 7th Framework Research Programme (2007-2013), annual spending on energy research over the next 7 years at EU level will increase by 50%

• Energy: € 2,350 million

• Environment: € 1,890 million

• Nuclear: € 2,751 million

TOTAL investment in energy research:

€ 6,991million


Nuclear energy

> Further development of an advanced framework for nuclear energy that meets the highest standards of safety, security and non-proliferation

> Waste and decommissioning should also be addressed in future Community work

> The EU should continue its efforts to ensure that high standards are observed internationally

> The Commission proposes to establish an EU High-Level Group on nuclear safety and waste management


Nuclear energy

> Currently around one third of the electricity and 15% of the energy consumed in the EU comes from nuclear

> Nuclear power is less vulnerable to fuel price changes than coal- or gas-fired generation

> Uranium comes from sources which are sufficient for many decades and widely distributed around the globe

> Nuclear energy is one of the cheapest sources of low-carbon energy that is presently produced in the EU

> Nuclear energy is one way to achieve significant reductions in emissions

> Each Member State must decide for themselves whether to rely on nuclear power

> If the proportion of nuclear energy in the EU’s energy mix declines, then other low-carbon energy sources must fill the gap


> Coal produces roughly twice the emissions of CO2 compared to

gas

> The IEA expects twice more electricity to be produced from coal by 2030. That would represent 40% of the expected increase in global energy-related CO2 emissions

> The EU must provide a clear vision for the introduction of CO2

capture and storage technology in the EU:

• Establish a favourable regulatory framework for its development

• Increase the level and effectiveness of investment in research

• Take international action

• Incorporate CO2 capture and storage into the EU Emissions Trading

System


EU Emissions Trading System

> The emissions trading system (ETS) is and

must remain a key mechanism for stimulating

reductions in carbon emissions

> It could be used as a basis for international

efforts to fight climate change

> The Commission is reviewing the EU ETS to

ensure that it reaches its full potential


Priorities

> Stimulate the construction and operation by 2015 of

up to 12 large-scale fossil fuel power plants with

carbon capture and storage technologies

> Provide a clear perspective for when coal- and gas-

fired plants will need to install CO2 capture and

storage technologies

• By 2020 all new coal-fired plants should to be fitted with CO2

capture and storage and existing plants should then

progressively follow the same approach

7. Effective monitoring and reporting

> Monitoring, transparency and reporting will be essential elements in developing an effective European energy policy

> Establish an Office of the Energy Observatory looking at future energy investment needs and at the evolution of the energy mix

ENERGY FOR A CHANGING WORLD

For more information: http://ec.europa.eu/energy/energy_policy/index_en.htm

Thank you for your attention!

Documents

LA SFIDA DELL’EUROPA: ENERGIA, MOBILITA’, AMBIENTE Convegno Transdolomites 2007 Moena, 25 ottobre Matteo Fornara Rappresentanza a Milano della Commissione