Legislating for energy security –using gas as an example

g g p

Yolanda Garcia MezquitaUnit B1- Security of supply & NetworksDG Energy, European Commission

Workshop “EU-UK Energy Security: Perceptions and Realities” Chatham House, London – 20th September 2011

S it f S l f th k Security of Supply – one of the key European Energy Policy Priorities

Treaty on the Functioning of the European Eunion

Internal marketp

New Art. 194 on energy:

Union policy on energy shall aim, in a spirit of solidarity, to:. Ensure the functioning of the internal market;

Objectives: Objectives: 2020--2020--20 by 20 by . Ensure security of supply;. Promote energy efficiency and

the development of renewable

yy20202020

the development of renewable forms of energy;. Promote the interconnection of

t k

Security of Supply

Sustainability

2

energy networks

Role of gas in the EU energy mix and import needs Role of gas in the EU energy mix and import needs• Share of gas: in the energy mix 24%, in the electricity mix: 23%

•• 500 bcm EU-27 gross inland gas consumption

• EU-27 dependency on gas imports: 64.2% [UK gas import dependency 40%]

•S l MS l i l li f BG EE LT LV FI RO SK HU•Several MSs rely on a single supplier for gas: BG, EE, LT, LV, FI, RO, SK, HU

•EU pays 2.5% of its annual GDP to import energy: €270 bn for oil, €40 bn for gas

Import dependency (%) Share of gas that needs to be imported to the EU

90 0Egypt; 2,08%

Other ; 8,99%

EU 27 Imports of Natural Gas UK gas import depency 70% by 2025

57,762,3

82,875,9

50,0

60,0

70,0

80,0

90,0

Gas

Nigeria; 2,37%

Russian Federation; 34,24%

Qatar; 4,61%

Libya; 2,88%

10,0

20,0

30,0

40,0

50,0

(%) Gas

All Fuels

Norway; 30,69%

Algeria; 14,14%

0,02005 2008 2020 2030

Source: Eurostat Source: PRIMES 2009 baseline scenarioin % (2009, total extra-EU = 13 201 256 TJ)

EU Security of Supply – January 2009 crises. Although on the EU level gas supplies are well diversified Central and European Eastern countries are dependent on Russian gas in 60-100%p p g. Different level of preparedness between Eastern and Western countries. The January 2009 crisis made evident the threats of such dependence

d th l k f d t i f t t h bi di ti land the lack of adequate gas infrastructure such as bi-directional physical interconnections in the CEE

% of missing gas supplyfrom 6 to 20 January 2009(- 300 million m3/day for 14 days)

> 75 %

50 - 75 %

( 300 million m /day for 14 days)

25 – 50 %

< 25%

0%

4

0%

What does the EU do to improve energy security?.Enhance better preparedness: EU provides an efficient legislative framework for infrastructure robustness and coordinated emergency response – Regulation 994/2010coordinated emergency response – Regulation 994/2010.Improve interconectivity&flexibility: EU provides funding and political support for the Projects of Common Interestand political support for the Projects of Common Interest – EEPR, TEN-E» To be streamlined by the new proposal on energy y p p gy

infrastructure to be tabled in Autumn 2011.Facilitate development of regional cooperation:EU assists Member States (e.g. BEMIP, North-South Interconnections, Southern Corridor) E h i t ti l ti EU d l

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.Enhance international cooperation: EU develops an external dimension of the EU Policy

Regulation EU No 994/2010 on Security of Gas Supply Regulation EU No 994/2010 on Security of Gas Supply

In force since 3 December 2010

. Based on the lessons learnt from January 2009 gas crisis f. Example of cooperation between EU institutions:

Parliament, Council, CommissionM i bj ti f S S R l ti. Main objectives of SoS Regulation:

1) Ensure a high level of protection of customers2) Strengthen prevention and level of preparedness3) Enhance flexibility of the gas infrastructure4) Coordinated response in case of crisis5) Increase transparency and information exchange

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5) Increase transparency and information exchange6) Regional cooperation

/ S f G S.Comprehensive approach on the basis of Lisbon Treaty: ( )

Regulation EU No 994/2010 on Security of Gas Supply

Article 194 (2) TFEU – internal market, interconnections, in the spirit of solidarity.Three-level approach:market, national/regional and EU level with Union/ regional emergency.Common EU concept of protected customers.Sets common binding standards for gas SoSg g

» N-1 infrastructure standard

Obli ti t bl bi di ti l it ll» Obligation to enable a bi-directional capacity on all interconnections

S l d d» Supply standard - at least 30 days in severe conditions.Transparency rules(gas contracts, IGAs, crisis information)

S it f S l R l ti 994/2010 Security of Supply Regulation 994/2010

Risk assessment

P ti A ti Pl

Consultation between competent authorities

and CommissionPreventive Action Plans

Emergency Plans

and Commission (ENTSOG, NRAs,

ACER)Emergency Plans

Published and notified to the CommissionPublished and notified to the Commission

Assessment by the Commission:• Compliance with EU law

• Solidarity• Mitigation of risks

| 8Commission can require changes to the Plans

O / IMPLEMENTATION - Regulation EU No 994/2010 on Security of Gas Supply

By 3 December 2011

.Risk assessment finalized and notified to the EC.Risk assessment finalized and notified to the EC.Notification of protected costumers beyond households (SMEs & essential social services [max 20% final use of gas], district heating installations).Communication of IGAs .Communication in aggregate form of gas contracts duration >1year

Next steps after December 2011

.Preparation of Preventive Action and Emergency Plans (by 3/12/2012).Evaluation of Plans by the EC (3 months).Infrastructure standard obligations: reverse flow (proposal by TSOs 3/03/2012; RF capabilities by 3/12/2013), N-1 (by 3/12/2014)

F i f t t Focus on infrastructure: Experience from the European Energy Programme for Recoveryfor Recovery

€ 2,268 million

Elect(€ 905 m)

€ 565 million€ 1,000 million

Gas

(€ 905 m)

(€ 1.36 bn)€ 146 million

CCS Infrastructure Offshore Wi d

Energy EfficiencyWind

44 projects with commitments of total of 2.268 M€•Gas interconnectors: 1.285 M€

Efficiency

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•Reverse flow: 78 M€•Electricity interconnectors: 905 M€

EEPR – Improving gas infrastructure

European Energy Programme for Recovery

* Gas interconnector Czech Republic-Poland

*Reverse gas flow Austria-Slovakia

* Gas interconnector Hungary-RomaniaGas interconnector Slovakia-Hungary

* Gas interconnector Hungary-Croatia

Gas interconnector Romania-Bulgaria

Gas interconnector Bulgaria-Greece

What does the EU do to improve energy security?

• EU improves diversification of supply: routes, sources and counterparts (e.g. Southern Corridor, LNG)

12Source: European Commission

Extension of the EU energy market to the Extension of the EU energy market to the

neighbourhood The integration of EU gas networks with the

EU

neighbours will deliver:

• Greater and political stability to the

Energy Community Members

yneighbourhood

• Development of transit countries to stable

Energy Community Observers

Other countries of the

economies and rule of law

• Development of Southern Eastern gas markets:

neighborhood • Investment opportunities

• Contribute to Caspian

Source: European Commission

• Contribute to Caspian and Middle-East development

13EU neighbourhood policy and Eastern Partnership key elementsEuropean Council calls for a new partnership with North Africa and the Middle East

Priorities for 2020 and beyond

Priorities for 2020Priorities beyond 2020

ElectricityHighways

CO2 transport network

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Thank you for your attention!http://ec.europa.eu/energy/security/gas/gas_en.htm

B k lid t f ENTSOG Back-up slide – courtesy of ENTSOG

N-1 standard N 1 standard

by Member States and EU

250%

300%

200%

150%N-1

50%

100%

0%DK GR DE BE SK AT PL NL LV CZ EE ES IT HU FR UK RO SE LU PT BG SI LT IE FI EU

Normal EERP