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Reconsidering EU-Russia energy relations: a basis for a new balance

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The aftermath of the Ukrainian crisis, the Russian military intervention and the undeclared war in eastern Ukraine brought about a crucial change in the EU’s foreign affairs. The new understanding of a conflict-oriented and imperial rationality-based attitude of the Russian leadership caused a substantial shift in the EU’s Russia-politics – and raises security questions not only at European level but also on the global scale.

The military conflict in Ukraine has brought to the forefront the issue of energy security and the need to reduce all forms of energy dependency from Russia. Underlining this is importance of the EU speaking with one voice in energy policy as well as in its foreign policy.

Russia is the EU’s biggest neighbour and its third biggest trading partner. In the last decade, EU-Russia relations have been characterised by mutual recognition and increasing cooperation, which was evident not only in the fields of trade and economic cooperation. The so-called common spaces cover aspects such as research, culture, education, environment, freedom and justice. Moreover, negotiations have been ongoing since 2008 to further strengthen the partnership and have legally binding commitments in all areas including political dialogue, freedom, security and justice, research, culture, investment and energy. After 2010, the partnership for modernisation has become the focal point for cooperation, reinforcing dialogue initiated in the context of the common spaces.

Not acceptable in any sense

The role of Russia in the Ukrainian crisis shed light on the fact that Russia is not on track in the process of democratisation and modernisation in the way the EU had believed. Russian politics did not become more moderate through the cooperation with the EU, but rather the opposite occurred. Even if we accept the experts’ argumentation for the need for a ‘buffer zone’ between the EU and Russia, the illegal annexation of Crimea and the continuous destabilisation of Eastern Ukraine including aggression by Russian armed forces on Ukrainian soil cannot be considered acceptable in any sense. These issues give a clear indication of the unchanged aggressive nature of Russian politics and leadership. It became clear that Putin is primarily led by imperial rationality and now it seems that Putin’s Russia is no longer interested in a trustworthy and functional relationship with the EU.

Since 2014, the EU has progressively imposed restrictive measures in response to the annexation of Crimea and the destabilisation of Ukraine. After a series of rocket attacks in Mariupol by pro-Russian separatists in January this year, the Latvian EU presidency has called on a council of EU foreign ministers to prepare the ground for a summit of EU leaders on the crisis with Russia and to determine the role the EU should take. The developments over the past two years call for a new interpretation of the Russian-EU relationship as they demonstrate that Putin’s Russia is impossible to handle with peaceful approaches and methods based on seeking consensus. It is all the more important that the EU speaks with one voice and acts in a united manner. And this is exactly what is missing.

A need for clear signals

Some EU member states including Poland and the Baltic states regularly use strong anti-Russian rhetoric, while others, such as Hungary, take political decisions showing an opening towards Russia. These seemingly contradictory attitudes, however, might stem from a common fear of growing Russian influence – partly due to historical reasons. The only difference lies in the role these national governments attribute to the EU (or the US) in handling the conflict, depending on the extent they believe that the EU is willing and able to send clear signals to Russia.

Germany itself, having a huge influence on EU politics, has recently re-evaluated the Russian relationship. Before, Germany had the standpoint that a close economic cooperation could have a stabilising effect on Russia and reduce the possibility of aggressive geopolitical measures. They hoped that this cooperation might also further the modernisation of the Russian economy and thus it might contribute to the creation of a Russian state that was linked to the world economy not only through its energy export, but with many other ties and which has its interests in sustaining the balance of international relationships. Germany, however, has realised that these presuppositions and hopes were wrong. Therefore, Chancellor Merkel placed harsh measures and defends consistently the sanctions that the EU adopted in response to Russia’s military intervention in the Ukraine.

The sanctions in place include the suspension of most cooperation programmes, suspended talks on visas and the new EU-Russia agreement, as well as restrictive measures targeting sectorial cooperation in the fields of defence and sensitive technologies, including those in the energy sector. Russian access to capital markets is also restricted. The European Investment Bank and the European Bank for Reconstruction and Development have suspended the signing of new financing operations in Russia and a trade and investment ban is in force for the Crimea region.

The sanctions would have expired in the course of this year, yet various EU leaders stressed that the EU should maintain the sanctions until Russia stopped the aggression in Ukraine. Thus, the Council meeting of June 2015 extended the restrictive measures and economic sanctions until June 2016. These sanctions, however, are somewhat questionable in their effect.

Thus, the EU has to find a way to ensure aid and protection for the civilian population in eastern Ukraine as well as to find a new balance in the EU-Russian relations.  In this respect, again, speaking with one voice is essential. Finding a new balance is key in the broader context, for the sake of a global equilibrium as well, as Russia might opt for building stronger links to China.

Extreme dependency

These recent developments also affect the issue of energy security in the EU, which is very high on the political agenda now. However, the impacts of Russia’s nuclear investments in the EU are not seriously considered.

We are all aware that the EU is extremely dependent on external energy sources, mainly coming from Russia. (And vice versa, supplies of oil and gas make up a large proportion of Russia’s exports to Europe, which are crucial for the Russian economy. The recent collapse of the Russian economy due to the rapid fall of oil prices is a clear proof of this, as it has shown that the country’s self-confidence merely stemmed from high oil prices.)

The dependency on Russian fossil fuels and the lack of diversification of energy sources have been widely recognised in the EU’s energy policy. However, these are only a small part of the whole picture. The impacts of Russia’s fossil or nuclear investments in the EU are hardly considered in the energy-related acquis, even though it is obvious that through its energy corporations, the Russian government has means of influence far beyond the mere business transactions.

Energy dependency can appear in multiple forms including financial, technological or fuel dependence in the nuclear and fossil sectors, acquisition and ownership of strategic energy infrastructure as well as investments in energy projects by Russia in the EU, in particular, the Baltic and the Central-Eastern European member states. Here again, we see no unified behaviour from EU member states. Some EU member states have reconsidered their cooperation with Russia, or Rosatom in particular, as a consequence of the crisis in Ukraine. For example: Germany refusing to sell gas storage capacities to Russia; Bulgaria refusing a second Rosatom nuclear plant; Slovakia stopping negotiations with the Russian nuclear complex; and the UK suspending its negotiations with the company. At the same time, some EU countries such as Finland or Hungary still consider building new nuclear power plants partly using Russian financial sources, technology, fuel and waste management facilities. It is the responsibility of the EU bodies to ensure that decisions in any member state do not undermine the energy security of the EU as a whole.

Equally importantly, the EU should think out of the box and look beyond resource route diversification and new infrastructure projects, when it comes to improving energy security. A systemic, long term solution for the problem is increased energy efficiency with special attention to the transport sector, residential buildings and industrial sites and the wide-scale use of local, renewable energy sources building upon, inter alia, novel financial solutions and community-based models. Energy efficiency and renewables projects could be very useful components of this project, as they could contribute to reducing all forms of energy dependencies.

To conclude: even if the hopes of the EU for the stabilisation and democratization of Russia have failed to come true, geopolitical realities are given. The EU has to reassess its relationship with Russia, to act firmly in a united manner and to tackle security threats at all levels, including in the field of energy policy. The EU should work for a healthier relationship with Russia in this regard, as well, by systemically reducing its dependency, wherever possible – yet acknowledging long-term mutual dependencies which can be used as a basis for the new balance.

(An earlier version of this article was published on the website of the Green European Journal in February 2015.)

Paks hearing summary

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Given the recent developments in the Paks-case, the hearing on the planned nuclear power plants at Paks – jointly hosted by Benedek Jávor and Rebecca Harms – was given a special emphasis.

Ms. Harms started by reminding the audience that just as we have passed the fourth anniversary of the Fukushima accident, we are nearing to the 29th of the Chernobyl disaster. She also expressed her concern over the incident at the Paks power plant in 2003 and enlisted some of the serious risks of the aftermath of the incident, such as the shipment of hazardous waste via the conflict-heavy Ukraine. In her introduction she urged the European Commission to respond.

In his opening speech, Mr. Benedek Jávor started by recalling that the EURATOM Supply Agency has just recently taken a negative decision on the fuel supply contract. Mr. Jávor warned that since the Hungarian Government has not engaged in a proper dialogue with the EU institutions, including EURATOM, now it has to restart negotiations; therefore, the Russian partner’s involvement in the project might easily become uncertain due to the conditions on fuel supply diversification. Meanwhile, during his visit to Budapest, President Vladimir Putin made no secret of his commitment to carry out the project despite the changed economic conditions. Mr. Jávor emphasized that beyond the obvious environmental dangers, there are serious political and economic risks that cannot be properly assessed due to the lack of public debate and the classification of all the relevant documents. He also reminded that in the context of the debate on European Energy Security Strategy so far, gas supply has been in the centre of attention while nuclear investments carry the same risks despite the multiple forms of dependence it creates. The dependence is not only financial and technological, but also on the fuel cycle.

Ámon Ada Paks konferenciaMs. Ada Ámon, director of Energiaklub, explained that the problem with Paks2 is Paks2 itself. Today the 4 block at Paks have a generation capacity of 2000 MWs. This would be more than doubled by the new nuclear power plant to 4400 MWs. The cost of the total investment, she continued, is 12.5 billion Euros, which is 20% of the Hungarian yearly budget with 10 billion coming from the Russians, the rest from state budget. This will lead to a substantial increase in energy production in Hungary, which, given the long term trends in energy consumption, would barely leave any room for other types of energy on the national market. From among the problems raised by the project, Ms. Ámon emphasized the lack of transparency and public debate, which highly increases the likeliness of corruption. Furthermore, we are facing a case of potential illegal state aid, the exclusion of experts from the decision making process, the lack of an alternative energy-scenario, and the centralization of the country’s energy supplies. All the above mentioned go against EU objectives. She also emphasized the lack of tendering, calling it the sign of the government’s indifference towards market efficiency. In addition, there is a persistent threat of increasing national debt by 5-8%. According to Ms. Ámon Paks2 will never be built, because it does not serve either interest of the Hungarian public or the European Union.

Stephen Thomas Paks ConferenceProfessor Stephen Thomas from the University of Greenwich presented a comparison of the British Hinkley Point C and the Paks power plants. Beyond the many similarities, including the lack of tendering and the probability that tax-payers will suffer the consequences if the plan goes wrong, there is a difference in the ability to withdraw from carrying out the project: while in the UK this possibility can still be considered, the situation in Hungary is not so straightforward. Another difference lies between the economic situations of the two countries: Hungary is much more prone to go bankrupt after building two new power plants, whereas the UK would most likely not suffer such harsh consequences. The risks are also higher in the case of Paks, because there is a possibility that the new power plants will not yet be operational by 2026, the year when the government will have to start paying back the loan. In addition, the question of the inclusion of the overnight costs in the price also differs in the two cases: these costs are clearly included in the prices of the Hinkley Point power plants; as to Paks, the status of the cited price is not obvious. An important similarity, though, is the classification of data, hence the lack of public discourse. There is also quite a great deal of uncertainty surrounding the affordability of the Paks plants: the Russians, said Mr. Stephenson, cannot even afford plants in their own country; it is highly questionable, therefore, how they would be able to pull through with the Paks investment.

Tóth István János Paks ConferenceDr. Todor Galev, researcher at the Center for the Study of Democracy in Bulgaria, explains how the consequences of the Ukrainian crisis have had a major impact on dealing with the question of energy dependency. Mr. Galev expressed his concerns over how Bulgarian politics are penetrated by Russian influence, meanwhile suspicions circulate that certain Bulgarian political parties are financed by Russia. He urged measures to be taken in connection with the formation of a regional cooperation, saying that without such a joint action, no country can protect itself from Russian influence.

Dr. István János Tóth, researcher at the Hungarian Academy of Sciences and the Corruption Research Centre in Budapest, described the nature of corruption within Hungary’s energy sector, where the lack of transparency is more typical than in any other sector. With regard to the Paks2 project, he described the so-called “white elephant syndrome”, i.e. the lack of an actual objective, where corruption itself is the goal. Based on statistical evidence, he said that the Paks2 project will be loss-making. He presented a comparison of 75 projects carried out between the years of 1966 and 1977, which pointed out that the price of nuclear power plant investments were the double or even the triple of their original price in addition to the fact that the time of their construction also typically expanded.

Massimo Garribba Paks ConferenceOn behalf of the European Commission, Mr. Massimo Garribba from DG Energy emphasized two major elements in connection with EU regulations since the Fukushima accident: firstly, the so-called stress tests and secondly the improvement of the legislative framework. He reminded, however, that nuclear energy is an important element of the EU energy mix. He enlisted the different aspects under the EU’s scrutiny of the project. First, he confirmed that negotiations about the fuel supply contract have restarted. He also confirmed that both DG COMP and DG GROW are instigating the project. In addition, he expressed the Commission’s commitment to reach an increased transparency in nuclear issues and called on the Hungarian government to declassify as many documents as possible.

The question of illegal state aid recurred during the question panel as well. Professor Thomas explained that at this stage there is no way of knowing whether there is state aid involved, because the documents are made secret; however, he said, it is clear that public money is involved, since the company responsible for carrying out the project is itself state-owned. His stance was seconded by Mr. Garribba, who said that some clarifications are required in order to know more. The debate on this issue tied in with, Mr. Garribba’s stance that the Commission aims towards requesting as much transparency as possible.

The topic of the lack of a public debate over the Paks decisions was given a twist as Dr. Attila Aszódi, responsible government official for the construction of the new Paks power plants, gave his remarks on the issues discussed at the hearing. He began by expressing his disappointment that no one from the Hungarian authorities had been invited to tell their side of the story. Mr. Jávor later responded to this remark saying he had no intention of creating an inconvenient situation in which a governmental official was asked questions he is legally bound not to answer, as the documents on Paks2 are classified. However, he expressed his appreciation for Mr. Aszódi’s participation in the hearing, saying this way at least a debate can finally evolve.

Mr. Aszódi also explained that one third of Hungary’s electricity is imported and it mainly consists of coal-based technologies. “We strongly believe that this isn’t sustainable,” he said, “we need energy sources not relying on coal.” 40% of Hungary’s electricity should come form from nuclear energy in the long run according to the energy mix chosen for long term by the Hungarian government, he explained. He also pointed out that the country would be much more able to use green energy if it had high mountains, like the Alps; however, Hungary is flatland and as such, its energy policy is determined by limited possibilities.

In response to Mr. Tóth’s presentation and other remarks on non-transparency, Mr. Aszódi rejected claims that the Paks project was in any way corrupt, as corruption, he said, is a crime. He urged the speakers to initiate a legal procedure if they suspected corruption. He also warned Mr. Tóth not to mix the concept of corruption risk with nuclear safety. He stated that the 12,5 billion euros is the total cost of the project with all inflation and other risks included.

Mr. Jávor provided Mr. Aszódi with the conclusions of a recent study that found that there had not been any investigations initiated on corruption cases by the Public Prosecutor’s Office in the last 5 years. He also called Mr. Aszódi’s attention to the fact that there were a number of occasions when he filed reports on corruption with documents and evidence to the public prosecutor, however, without any effect. He also mentioned, that the total cost cannot be 12,5 billion euros, because the interest is around 11 billion to begin with, so the total cost (overnight+capital costs together) of the project should be over 20 billion euros.

Ms. Harms also reacted to Mr. Aszódi’s comments telling about her visit to Paks in 2013, when her aim was to find out more about the project; however, as she said referring to the problem of secrecy and non-transparency, during her visit she found out more about the gardening around the plants than the actual project itself. Should she be invited to Paks this time to have a more elaborate view, she would be more than happy to come, she said.

EU summit; Flagship energy union project risks being stillborn

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EU heads of state and government will meet for a summit on Thursday and Friday, with proposals for a European energy union and relations with Russia at the top of the agenda. Ahead of the summit, Greens/EFA co-presidents Rebecca Harms and Philippe Lamberts said:

“The energy union should be a flagship project for Europe over the coming years but there is a real risk it will be stillborn, as EU leaders look set to strip it of any convincing future-oriented approach. Leaked drafts of the ‘conclusions’ to be adopted by heads of state and government indicate the overarching focus is on finding new supply routes for gas and reviving nuclear power, rather than trying to wean us off our damaging dependence on unreliable fossil fuel exporting countries. If the EU wants to get serious about energy security, it should be working together to prioritise energy efficiency and home-grown renewable energy as the first line of defence. Instead, this energy union seems to be placating vested interests in the energy sector.


“Despite 2015 being a make or break year for the international climate negotiations, EU leaders look set to simply kick the can down the road. The clock is ticking quickly down towards the crunch UN climate summit in Paris in December (COP21) but EU governments clearly do not seem to care about adopting a proactive approach to ensure the EU plays a role in securing a positive outcome: an ambitious global agreement to limit warming to below 2 degrees, which is necessary to prevent catastrophic climate change.


“Yet again, EU governments are using the very prominent stage of an EU summit to highlight their disunity on Russia. This division, whether as regards to sanctions or other issues, completely undermines the ability of the EU to help support pluralism and fundamental rights in Russia and to shape an outcome to the crisis in Ukraine in the interest of the Ukrainian people. In terms of the outcome of the Minsk negotiations, it is not yet the moment for the EU to scale down sanctions on Russia. Until there is no control of the Russia-Ukraine border in the Donbass region, there is no stability.”

Press release – Brussels, 18 March 2015 (The Greens,EFA)

Paks-expansion: Let’s classify the place of the investment too!

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Now, instead of 15 years, the Orbán government wants to classify the contracts of the Paks-expansion for 30 years. Dialogue for Hungary has a better idea: the government should either not sign any contract at all (thus there is nothing that needs to be classified, and everything will go according to the Russians’ wishes anyway – there is no need for paperwork), or they should not carry out actions that can only be carried out in secrecy.

unnamed

The fifteen-year classification of the Paks documents has already lead to an uproar in the public and now the Orbán-government raises the stakes: they want the timespan of the classification to be 30 years for every document, not just technical or business details, but all the preparatory materials as well; indeed, everything that would provide the public with information about how much money was spent and on what exactly.

If the aim, indeed, is to spend public money of 4000 billion Forints’ worth without external control, then Dialogue for Hungary has better ideas:

  • Do not sign contracts at all, always pay every bill handed over by Rosatom and its subcontractors (this is what is going to happen in reality, but our idea would at least spare the government from a lot of unnecessary paperwork)
  • The whole of Tolna county should be announced as the area of operation and the place of the investment should be classified as well; this would also be a convenient way to take home huge amounts of money without any civilian or authority intervention

If, however, the government and the Fidesz-friendly clientele is not up to the theft of the century, then it is unnecessary to classify everything: decent contracts should not be hidden from the public.

27 February, 2015
Budapest

Benedek Jávor, Member of the European Parliament

Changing EU-Russia relations and their consequences for energy security in Europe

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The aftermath of the Ukrainian crisis, the Russian military intervention and undeclared war in eastern Ukraine brought about a crucial change in EU’s foreign affairs. Russia can no longer be regarded as a fully reliable partner to the EU. The issue is highly relevant today as the city of Mariupol in eastern Ukraine were recently assaulted by pro-Russian separatists, using weapons obviously supplied by Russia. The new understanding of a conflict-oriented and imperial rationality based attitude of the Russian leadership caused a substantial shift in the EU’s Russia-politics substantially – and raises security questions not only at European level but also at the global scale. The military conflict also brought to the forefront the issue of energy security, the need to reduce all forms of energy dependency from Russia and it underlines the importance of the EU speaking with one voice in energy policy as well as in its foreign policy. (Benedek Jávor’s article in Green European Journal)

The Russian-Ukrainian crisis, which unfolded after the Ukrainian revolution in 2014 and resulted in the Russian annexation of the Crimea and the destabilization of Eastern Ukraine largely affected the EU-Russia relations.

Russia is the EU’s biggest neighbour and its third biggest trading partner. In the last decades, the EU’s Russia-politics have been characterized by mutual recognition and increasing cooperation, which was evident not only in the fields of trade and economic cooperation. The so-called common spaces cover aspects such as research, culture, education, environment, freedom and justice. Moreover, negotiations have been on-going since 2008 to further strengthen the partnership and have legally binding commitments in all areas including political dialogue, freedom, security and justice, research, culture, investment and energy. After 2010 the Partnership for modernization has become the focal point for cooperation, reinforcing dialogue initiated in the context of the common spaces.

The role of Russia in the Ukrainian crisis, however shed light on the fact that Russia is not on the perceived track in the process of democratization and modernization, that is to say, Russian politics did not become more moderate through the cooperation with the EU, on the contrary.

Even if we accept the experts’ argumentation for the need for a ‘buffer zone’ between the EU and Russia, illegal annexation of the Crimea by Russia and the continuous destabilization of Eastern Ukraine including aggression by Russian armed forces on Ukrainian soil cannot be considered acceptable in any sense and give a clear indication of the unchanged aggressive nature of Russian politics and leadership. It became clear that Putin is primarily led by imperial rationality and now it seems that Putin’s Russia is no longer interested in a trustworthy and functional relationship with the EU.

The question is highly relevant today after a series of rocket attacks in Mariupol by pro-Russian separatists. Against this background, the current EU presidency has called a council of EU foreign ministers to prepare the ground for a summit of EU leaders on the crisis with Russia and the role the EU should take.

Indeed, the developments over the past two years call for a new interpretation of Russian-EU relationship as they demonstrate that Putin’s Russia is impossible to handle with peaceful approaches and methods based on seeking consensus.

It is all the more important that the EU speaks one voice and acts in a united manner. And this is exactly what is missing.

Some EU member states including Poland and the Baltic states regularly use a strong anti-Russian rhetoric, while others, such as Hungary take political decisions showing an opening towards Russia. These seeming contradictory attitudes expressed in the rhetoric and concrete choices, however, might stem from a common fear from growing Russian influence- partly due to historical reasons. The only difference lies in the role these national governments attribute to the EU (or the US) in handling the conflict, depending on the extent they believe that the EU is willing and able to send clear signals to Russia.

Germany itself, having a huge influence on EU politics, has recently re-evaluated the Russian relationship. Before, Germany had the standpoint that a close economic cooperation can have a stabilizing effect on Russia and reduce the possibility of aggressive geopolitical measures. They hoped that this cooperation might also further the modernization of the Russian economy and thus it can contribute to the creation of a Russian state that is linked to the world economy not only through its energy export, but with many other ties and which has its interests in sustaining the balance of international relationships. Germany, however, has realised that these presuppositions and hopes were wrong. Chancellor Merkel placed harsh measures and persecutes consistently the sanctions that the EU adopted in response to Russia’s military intervention in the Ukraine.

The sanctions in place include the suspension of most cooperation programmes, suspended talks on visas and the new EU-Russia agreement as well as restrictive measures targeting sectorial cooperation in the fields of defence, sensitive technologies including those in the energy sector. Russian access to capital markets is also restricted. The European Investment Bank and the European Bank for Reconstruction and Development have suspended the signing of new financing operations in Russia and a trade and investment ban is in force for the Crimea region.

These sanctions, however, are somewhat questionable in their effect and will expire in the course of 2015 unless all 28 Member States of the EU agree to renew them. Chancellor Merkel called for joint European action and during their December Council meeting various EU leaders stressed that the EU should maintain the sanctions until Russia changes its behaviour and stops the aggression in Ukraine.

Thus, the EU must again discuss economic sanctions against Russian, as well as how to ensure aid and protection for the civilian population in eastern Ukraine. In this respect, again, speaking with one voice is essential.

Finding a new balance in the EU-Russian relations is key in the broader context, for the sake of a global equilibrium as well. Russia might opt for building stronger links to China.

These recent developments with Russia have also point the attention to issue of energy security in the EU, which is very high on the political agenda now.

However, the impacts of Russia’s nuclear investments in the EU are not seriously considered.

We are all aware that the EU is extremely dependent on external energy sources, mainly coming from Russia. (And vica versa, supplies of oil and gas make up a large proportion of the Russia’s exports to Europe which are crucial for the Russian economy. The recent collapse of the Russian economy due to the rapid fall of oil prices is a clear proof for this, which has also shown that the country’s self-confidence was merely stemming from high oil prices.)

The dependency on Russian fossil fuels, the lack of diversification of energy sources have been widely recognised in the EU’s energy policy. However, these are only part of the whole picture. The impacts of Russia’s fossil or nuclear investments in the EU are hardly considered in the energy-related acquis, even though it is obvious that through its energy corporations, the Russian government has means of influence far beyond the mere business transactions.

Energy dependency can appear in multiple forms including financial, technology or fuel dependence in the nuclear and fossil sectors, acquisition and ownership of strategic energy infrastructure as well as investments in energy projects by Russia in EU, in particular the Baltic and the Central-Eastern member states.

Here again, we see no unified behaviour from EU member states. Some EU member states have reconsidered their cooperation with Russia, or Rosatom in particular as a consequence of the crisis in Ukraine, e.g. Germany refused to sell the gas storage capacities to Russia, Bulgaria refused a second Rosatom nuclear plant, Slovakia stopped negotiations with Rosatom, and UK suspended its negotiations with Rosatom. At the same time, some EU countries such as Finland or Hungary still consider building new nuclear power plants partly using Russian financial sources, technology, fuel and waste management facilities. It is the responsibility of EU bodies is to ensure that decisions in any Member State do not undermine the energy security of the EU as a whole.

Equally importantly, the EU should think out of the box and look beyond route diversification and new infrastructure projects, when it comes to improving energy security.

A systemic, long term solution for the problem is increased energy efficiency with special attention to the transport sector, residential buildings and industrial sites and the wide-scale use of local, renewable energy sources building upon, inter alia, novel financial solutions and community-based models.

Energy efficiency and renewables projects could contribute to reducing all forms of energy dependencies.

To conclude: even if the hopes of the EU for the stabilization and democratization of Russia have failed to come true, geopolitical realities are given. The EU has to reassess its relationship with Russia, to act firmly in a united manner and to tackle security threats at all levels, including in the field of energy policy. The EU should work for a healthier relationship with Russia in this regard as well, by systemically reducing its dependency, wherever possible – yet acknowledging determinations, long-term mutual dependencies which can be used as a basis for the new balance.

Accelerating renewable energy development for reduction of energy dependence of Europe

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organised by the Innovative Business Centre in cooperation with the Energy Watch Group at the European Energy Security Forum 2014

 

26 September 2014

Session 1

SPEECH BY MEP BENEDEK JÁVOR

 

We have seen that several support mechanisms and forward looking initiatives exist in the diverse fields of renewable energy, yet, there are still substantial obstacles and barriers for further development of renewables both in financial terms and attitudes.

In my short presentation I look at some of the challenges and give a few examples to show the need for re-contextualization of the renewable energy agenda and making clear links with various issues like energy efficiency, energy security, environment, climate change mitigation, not to forget energy poverty and wellbeing.

I point to some of the interlinkages, highlight possible synergies and call for establishing or reinforcing the policy links among these issues. The geographical scope of the paper is mainly Europe with an outlook to regional (Eastern-Central Europe) or country level aspects.

 

The EU has committed itself to a low carbon economy, which implies a much greater need for renewable sources of energy. The use renewables is also crucial for reducing the EU’s dependence on energy imports (EU dependency increased from less than 40 % of gross energy consumption in the 1980s to reach 53.4 % by 2012), and its vulnerability to price increases. According to the Commission estimates, by moving towards a low carbon economy EU could save € 175-320 billion annually in fuel costs over the next 40 years.

However, we all see that the current energy and climate framework with 3 interlinked targets on energy efficiency, greenhouse gas reduction and renewable energy) is at risk of being consolidated into a single emission reduction target. This would likely result in an uncertain future for the EU’s renewables sector and other low-carbon technologies. These projects in general face a danger of cost overruns, operational and regulatory risks, problems of carbon price and weather variability, public acceptance. Renewables are associated with very significant investment needs and long payback times. Besides, these projects have the added risk of uncertain load factor due to grid integration challenges. Hence, spreading renewables is highly challenging from a policy point of view.

Focus of my speech is on a coherent policy framework and appropriate financing.

I argue that the foreseen reform of climate and energy policy in itself would not provide sufficient motivation to all member states, business, households and other actors for a wide-scale sustainable energy use.

To give you 2 examples from my country, according to a recent study, 75 – 85% of households in Hungary do not have any savings; 80% of those households planning energy related investments would not take a bank loan to cover the investment costs.

If we look at the allocation of renewables-related development funds in the country, mayor distortions occur, as well.

The link between renewables, climate change mitigation and energy efficiency is obvious. There are other, seemingly unrelated aspects, too. Here I would like to highlight the importance of combining green energy efforts with the alleviation of energy poverty. To put it simply, energy (or fuel) poverty occurs when a household is unable to heat its home or afford to use energy services at an adequate level which hampers the fulfillment of other basic needs of individuals. Based on estimates from EPEE (European fuel poverty and energy efficiency) project, 50-125 million EU citizens are affected.

 

As the map below shows, a main aspect of energy poverty is manifest across the EU.

% of households unable to afford to keep their home adequately warm

eu-inability-to-heat-home-map-031013

Source: EU Fuel Poverty Network

To flag some of the multiple consequences of energy poverty: across the EU as a whole, 9.8% of the population are unable to keep their home adequately warm, 15.5% live in homes that are damp, rotting or leaking, and 8.9% are behind on payments for utility bills (results of recent Fuel Poverty research based on 2011 data from the Eurostat SILC survey). In addition, energy poverty is associated with a wide range of physical and mental illnesses. According to a recent study, only in Hungary, 5000 deaths per year can be associated with non-adequately heated homes.
If we take a closer look at the characteristics of energy poor households (regardless of the exact definition or threshold) we can see that – besides other features – these households usually inhabit buildings with bad energetic characteristics (including panel blocks in Eastern-Central Europe).

If we look at former energy poverty alleviation strategies across Europe based on income or energy prices (subsidies, tariff policies) have often turned out to be contraproductive and become a burden for public budgets.

It is only when synergies between building efficiency, social welfare and climate mitigation was recognised that the policy efforts have accelerated in parts of Europe (e.g. Energy Performance of Buildings Directive, energy-efficient refurbishments). Studies focusing on Eastern Central Europe show that efficiency improvements and sustainable energy investments would enable many households to escape energy poverty, yet due to their unfavourable financial situation households cannot take the necessary investments and thus this potential synergy remains unexploited in the region.

Another striking example is that while in many countries households are incentivised to use sustainable energy, in my country, the payment of the utility bills are subsidised – mostly providing a driver for higher consumption of imported gas instead of shaping attitude towards energy savings, improved efficiency and greener sources.

This brings me to the issue of financing low carbon investments.

 

Renewable energy investments, according to recent data from Hungary, are mainly concentrated to upper middle class living environments, as they need a remarkable contribution from the households themselves. This characteristic cuts off low income households from being beneficiaries of renewable subsidies, as well as from harvesting the energy and cost advantages of such investments. Very simply we can say, that most of the public money spent on household energy efficiency and small-scale renewable investments is finally allocated to, and supports middle or high income households, and thus these subsidies are widening the gap between low and high income groups.

 

The presentation does not allow me to address the issue in its complexity, yet I see an opportunity for vulnerably groups in mainstreaming the ESCO (Energy Service Company) financial model. An other important issue is creating specialized programmes for low income households, marginalized groups – like the Roma community in Central and Eastern Europe, or immigration groups in the West – and financially extremely fluctuating and vulnerable families. In this environment very often the simple electrification of the buildings is not established yet, so cheap, affordable and low tech renewable solutions might move those households from the 19th to the 21st  century.

 

In my presentation I argued that separate energy policy goals might not lead to wished results. There is a need to show co-benefits of renewables in terms of social and economic aspects. I used energy poverty as an example show that linking different policy goals is likely to tip the cost-benefit balance and help mobilise efforts of the stakeholders in all fields.

As for renewables, possible directions, steps include:

  • developing a common understanding of related concepts, indicators
  • further improving relevant research and establish a proper science-policy interface
  • developing methodologies to quantify co-benefits and co-costs
  • establishing specified, well targeted programmes for disseminating the benefits of energy efficiency and renewable investments for our most needy fellow citizens .

On that basis, further and better targeted incentives can be drawn for the wider use of renewables, which not only help boosting the economy and improving employment in the EU, but also brings about substantial benefits for the environment and the whole society.

To conclude, I argue that the new climate and energy policy has to be comprehensive combining renewable energy target with further aspects in order to bring a socially just transition.

 

 

LINKS, REFERENCES:

http://ec.europa.eu/economy_finance/publications/occasional_paper/2013/pdf/ocp145_en.pdf

http://www.eea.europa.eu/publications/towards-a-green-economy-in-europe

http://energiaklub.hu/sites/default/files/energiaklub_poverty_or_fuel_poverty.pdf

http://www.fuel-poverty.org

http://fuelpoverty.eu/wp-content/gallery/fuel-poverty-maps/eu-inability-to-heat-home-map-031013.jpg

http://www.ieep.eu/work-areas/climate-change-and-energy/transport/2014/01/important-decisions-on-future-eu-energy-and-climate-policy-ahead

http://www.sciencedirect.com/science/article/pii/S0301421511009918

https://www.shef.ac.uk/cees/pgfuelpoverty/presentations

http://www.map.ren21.net

Conference on the role of renewables for EU’s energy security

Posted on

organised by AEBIOM

22 SEPT 2014

KEYNOTE SPEECH BY MEP BENEDEK JÁVOR

 

Being personally committed to the energy transition issue, it’s a pleasure to join you at today’s conference. Europe’s energy policy has seen profound changes in the last decades, but it is currently facing a new situation with multiple challenges. Although energy mixes and choices around energy in member states may vary, we have three common and distinct policy objectives: limiting the environmental impact of energy production, transport and use, ensuring a reliable and uninterrupted supply of energy as well as making energy affordable for every citizen and fighting against energy poverty. In my speech I will focus on this threefold challenge that Europe’s energy policy needs to tackle and argue for a need to smartly reframe the renewables agenda by closely linking sustainability, energy security and social aspects.

First, lets have a closer look at the sustainability and climate change aspects of the energy policy agenda. I quote the Intergovernmental Panel on Climate Change (AR5): “The world now has a rough deadline for action on climate change. Nations need to take aggressive action in the next 15 years to cut carbon emissions, in order to forestall the worst effects of global warming.”

This means that the world is (again) being warned of an ecological or climate tipping point by the UN. I say, it might be already late or we might delay too long in reacting to these risks and may see irreversible changes in all parts of the environmental system. Hence, its time for urgent action at all levels (from governments to individuals). We need substantial and sustained reductions of GHG emissions and other environmental impacts related to energy.

If we look at the level of ambition of the EU’s 2030 Climate and Energy Package as it stands, even if discussions are on-going on its details, it is clearly insufficient.

We need more. (Of course, we also have to look beyond Europe’s borders and prevent outsourcing carbon emissions and footprint to other parts of the world.)

 

However, this is only part of the overall picture. We all sense that energy security and is now higher and higher on the agenda, an issue that has clear linkages with renewables.

Yet, even if there is currently much political will around energy security, providing clear opportunities for you, renewables stakeholders, there are also some threats that I would like to point out.

In the 2030 Climate and Energy Package we have to thrive for much more (at least a 45% share for renewables) than the numbers currently discussed and I will only support a deal that has this ambition.

Beyond ambitious and binding goals at the European level we have to define specific targets at the level of member states, together with well designed, result-oriented and conditional support schemes.

 

Besides, energy security as a new buzzword and umbrella concept might provide an opportunity for the fossil fuel (e.g. shale gas) or nuclear lobby, which, if successful, can delay the genuinely sustainable energy transition alternatives in the EU. I personally am fully convinced that energy efficiency in combination with a nuclear free energy supply and a rapidly growing share of renewables is the direction we should move towards.

This would also make national and European energy systems less dependent on external sources, less vulnerable and more resilient in an energy crisis situation.

 

Furthermore, I warn decision makers not to throw out the baby with the bathwater and let go the achievements the EU has made in environment and climate-protection. Sustainability goals and new investments (physical and intellectual) in climate-friendly technologies using energy from various renewable sources need to remain an inherent part of future energy policy in the EU.

In some regions of the European Union (mainly in Eastern-Central Europe and the Mediterranean member states), the issues I have mentioned are accompanied by a third challenge, namely the extensive problem of energy poverty.

 

Hence, making energy affordable for each and every member of the European society and making sustainable technologies available for all are of utmost importance. (This is also valid at global scale – according to the International Energy Agency estimates provided in the World Energy Outlook, 1,8 billion people lack access to electricity and in some regions, particularly in sub-Saharan Africa and developing Asia, energy poverty either stagnated or worsened as population growth outpaced energy access efforts.)

 

In Europe itself, it is estimated that 50-125 million EU citizens are affected by energy (or fuel) poverty meaning that these households are unable to heat their home or afford to use energy services at an adequate level. Many households are unable to escape energy poverty and are basically excluded from existing energy modernization programmes (e.g. insulation and improving heating efficiency of homes) due to their unfavourable financial situation.

In my view, at the European level, efforts should be concentrated on providing programs for low-income households to reach energy savings and to help them to get access to renewable energy investments. The latter would allow them to diversify their own energy sources and to build energy autonomy at household level.

We need programmes that do not require an own contribution from disadvantaged households, as savings that they will be able to achieve via energy modernization will cover their loan instalments. We also need low-cost micro projects targeted at the most vulnerable groups.

 

 

To sum up, I am convinced that the future European energy policy can only be successful if it integrates and provides solutions for all the above challenges.

Based on our geopolitical position, we, member states and stakeholders in Europe need to deepen our cooperation, aim at an energy transition along the lines of improved affordability, security and sustainability of our energy system.

Energy savings, efficiency and sustainable sources have to be fundamental elements of a renewed, common European energy policy. Here I stress the need for strong cooperation with the energy efficiency community. Supporting each others’ ambitions and exploiting synergies are crucial.

 

I also argue for a decentralized energy system which requires clearly different developments, investments and infrastructural priorities than a traditional energy network. We have to apply a participatory approach, as vast local use of renewables turns consumers to “prosumers”.

It’s essential to give regional answers for system regulation challenges in order to open up the possibility for higher shares of renewables in some Member States.

We also need to look beyond our borders. Creating linkages, better integration with our neighbors would be a chance of spreading renewables technology and know-how, in addition to helping the sustainable development of these regions.

 

In conclusion, we need to build on the momentum of the energy security efforts, and we definitely need to a more ambitious Climate and Energy Package that provides proper incentives, brings about behavior change and at the same time, provides benefits for the widest public. Mainstreaming sustainable technologies, new solutions should follow with a view to reducing disparities in the EU.

We should look far beyond progress in terms of infrastructures, systems, technologies and also aim for providing better services and beyond all, improving accessibility to these in the widest sense.

These are the preconditions for boosting investments in renewables.

 

As a member of the European Parliament I wanted demonstrate that in the EP we have forward looking ideas. As for the next steps (e.g. upcoming decision on energy policy priorities and short-term measures) the European Parliament wishes to play an active role and be as much involved as possible. Here I would like to mention that we are currently working on a European Energy Security Strategy where I act as shadow rapporteur and I aim for integrating the above thoughts and elements into this Strategy.

Nevertheless, I am here also to hear your opinion, your contributions and to gain new insights.

I wish ourselves a fruitful conference, a lively exchange of views. I hope we keep looking for new solutions together.

 

 

Ref:

Carbonbrief.org – tipping elements 

IPCC AR5

http://www.ipcc.ch/report/ar5/

http://www.climatechange2013.org/images/figures/WGI_AR5_FigSPM-1.jpg

COM paper http://ec.europa.eu/europe2020/pdf/energy2_en.pdf

EEA Technical report No 5/2013 Achieving energy efficiency through behaviour change: what does it take?

http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/ec/137433.pdf

http://www.worldenergyoutlook.org

http://www.carbonbrief.org/blog/2014/01/in-brief-the-eu’s-new-2030-climate-and-energy-package-(1)/