# Presentation: 392107

## Briefing on “EU Energy Industry: At a Crossroads”

**Briefing on ****“EU Energy Industry: ****At a Crossroads”**

- Keith Curtis, RSCO Sweden
- Presentation courtesy of
- James P. Dorian, Ph.D.
- Washington, D.C.

## EU Energy Industry: At A Crossroads

**EU Energy Industry: ****At A Crossroads**

- - Crossroads in energy planning & decisions.
- - Kyoto Protocol obligations looming.
- - Russia major supplier of gas & oil.
- - Two-thirds of EU energy requirements to be imported by  2020.
- - Nuclear now being revisited.
- - 2001 EU directive limits coal.
- - Diesel-based car fleet.

## European Energy Consumption By Fuel 

|  | 2004 | 2015 | 2030 |
| --- | --- | --- | --- |
| Oil | 41% | 41% | 41% |
| Natural gas | 24% | 27% | 30% |
| Nuclear | 15% | 12% | 10% |
| Coal | 14% | 11% | 9% |
| Other | 6% | 9% | 10% |

## Fossil Fuels and Nuclear in Europe

**Fossil Fuels and Nuclear in Europe**

- -  EU’s dominant fuel: oil. Accounts for 40% of total EU energy consumption.
- -  Natural gas is fastest growing fuel source, now 24% of energy consumption.
- -  Coal share dwindling due to environmental concerns.
- -  Oil dedicated to transport.  Gas to power.
- -  Nuclear accounts for one-third of European power.

## World Nuclear Power & Electricity Generation

**World Nuclear Power & Electricity Generation**

## World Nuclear Power Reactors By Region 

**World Nuclear Power Reactors By Region **

##  Selected European Countries’ Positions on Nuclear Power 

** ****Selected European Countries’ Positions on Nuclear Power **

## Future of Nuclear

**Future of Nuclear**

- - Around 1/3 of the electricity and 15% of the EU energy mix
- - CO2-free source with importance in low emission scenarios
- - Concerns on nuclear waste and decommissioning
**Policy Actions:**
- Commission proposes to establish an EU High Level Group on Nuclear Safety

## Europeans Revisiting Nuclear Power Policies

**Europeans Revisiting Nuclear Power Policies**

- - New reactor technologies use simpler designs, are safer, more fuel efficient, and of lower capital cost.
- - Natural gas, a key alternative to nuclear power, costs more than two times as much in Europe as it did in 1990s.
- - Western Europe hosts about 135 operating reactors—most in the world on a regional basis.
- - Environmental concerns remain a key obstacle.

## Russia’s Critical Role

- - Currently accounts for up to 40% of gas imports and nearly one-third of oil imports.
- - Russia earns $25 bln/year from gas trade with Western Europe.
- - Plays the dominant role in transit across Europe.  Dependence on Russian oil and gas will probably increase in the next several decades.
- - By 2010, Russia could face a gas production shortfall of 100 bcm annually, or about 18% of expected European gas demand.

## Primary Gas Suppliers:  Russia’s Share Will Dwindle Slowly Over Time

**Primary Gas Suppliers:  ****Russia’s Share Will Dwindle Slowly Over Time**

- - Russia:  37% of Europe’s current total gas imports, 155 bcm/yr
- - Norway: 20% of imports, 79.5 bcm/yr
- - Algeria: 15% of imports, 62 bcm/yr
- - Netherlands and others
- - LNG comes from Algeria, Nigeria, Egypt, Qatar, & Oman
- - Future pipeline gas: Iran, Iraq, Caspian, North Africa

## Russian Oil Exports, 2005

**Russian Oil Exports, 2005**

## Slide 13

## Russian Gas Supply Scenarios Contingent on Yamal Production

**Russian Gas Supply Scenarios Contingent on Yamal Production**

## Slide 15

## EU Policies and Actions: On the Move

- -  Blair launches UK energy review in November 2005 to focus on nuclear options.  Final energy plan released in summer of 2006.
- -  Austria’s economic minister Bartenstein proposes in January 2006 that EU diversify its energy supplies by expediting the Nabucco pipeline project that will connect Europe to Caspian.
- -  EU publishes ‘green paper’ on sustainable energy in March 2006.
- -  In January 2007 European Commission proposes a common energy policy aimed at diversification of energy sources and supplies.  European Council endorses proposals in March 2007.
- -  Mainstay of new policy are core objectives that EU reduces GHG emissions by 20% by 2020 and replace 10% of transport fuel demand with biofuels.

## Energy For A Changing World

**E****nergy For A Changing World**

**Communications of the Commission: **
**“****An Energy Policy for Europe”**** and the Energy Package 2007**
**“****Limiting Global Climate Change to 2°C: The way ahead for the EU and the World**** f****or 2020 and beyond”**

## 20% unilateral EU reduction of GHG by 2020

**The Strategic Objective****:**
- 20% unilateral EU reduction of GHG by 2020

## The Three Challenges

**FULLY **
**BALANCED **
**INTEGRATED**
**AND **
**MUTUALLY REINFORCED**

**Competitiveness**
**“****LISBON”**

**Sustainable Development**
**“****KYOTO”**

- Renewable energy
- Energy efficiency
- Nuclear
- Research and innovation
- Emission trading

**Internal Market**
**Interconnections **(Trans-European networks)
**European electricity ****and gas network**
**Research and innovation**
- Clean coal
- Carbon sequestration
- Alternative fuels
- Energy efficiency
- Nuclear

**Security of supply**
**“****MOSCOW****”**

**International Dialogue**
**Diversification**

## Competitiveness

- - EU internal market on electricity and gas
- - Investment needs
- - Impact on energy-intensive industry and internationally traded goods
- EU-27 energy bill would increase by €170 billion/year to reach  ($100/barrel in 2030) = €350 per EU citizen

## Sustainable Development 

**Energy => 80% of EU-GHG**
**Energy => 93% of EU CO2 emissions **
**75% of GHG are CO2 emissions **

## Sustainable Development 

**EU-27 ENERGY MIX: High dependence on fossil fuels => Business as usual is****  ****NOT  SUSTAINABLE**

- Source: EUROSTAT

## Internal Energy Market

**The Challenges:**
- - Incomplete and incorrect transposition: 26 infringement cases against 16 MS
- - Different powers and competences of regulators
- - Markets are not integrated sufficiently – national markets concentrated;
- - Lack of cross border capacity and need for interconnections

## Prices for commercial electricity users

**Average industrial electricity prices 2002-2006**

**Member States with regulated tariffs such as France and Spain are not representatives ****Euro/MWh net of tax**

## Energy Efficiency

**        ****Energy Efficiency Action Plan**** **
-           (adopted on 19 October 2006)
- Saving 20% by 2020 Realising the Potential:
- - Transport: fuel efficient cars; better use of public transport; introduction of biofuels
- - Appliances: tougher standards and better labelling
- - Buildings: improving the energy performance of the EU’s building stock
- - Improving the efficiency of heat and electricity generation, tranmission and distribution

## Renewable Energy Sources

**- Necessary to increase the level of renewable energy in     the EU’s overall mix**
**- Commission proposes a binding overall 20% target by 2020 and a ****10% minimum binding target for biofuels**
**Member States set national targets and action plans on: **
**	****RES in electricity **
**	****Heating and cooling **
**	****Biofuels**

## Research and Sustainable Fossil Fuels

**	****                       ****STRATEGIC PLAN by end 2007**
**	****Promotion of technologies to support the low-carbon energy economy with 20% 2020 RES target**
**- Sustainable coal and gas: to make plants CCS ready by 2020**
**- Second generation biofuels, photovoltaic, large-scale offshore-wind, hydrogen fuel ****	****cells**
**- Generation IV fission power, fusion energy**
**- Energy efficient transports, appliances and  ****	****industrial systems**

## Research and Sustainable Fossil Fuels

**In the 7th Framework Programme (FP) energy funds doubled in comparison with the last FP:**
**2007-2013**
** ****Energy: €2350 million (>50% for RES and energy efficiency)**
** ****Environment (including climate change): €1890 million**
** ****Nuclear (Euratom): €2751 million**

## Alternative Fuels:Promising But How Much Impact?

- -  Global producers of heavy oil, gas-to-liquids, oil sands, ethanol and biodiesel, and coal-to-liquids are boosting output and R&D.
- -  Europe is world leader in biodiesel production and research, with Germany and France the biggest producers, accounting for 3⁄4 of European output.
- -  Qatar—with a goal of becoming a world leader in gas-to-liquids production—could ultimately provide GTLs to the European market.

## Comparison of Market Conditions for Ethanol

## Slide 31

## Million barrels per day oil equivalent

**Million barrels per day oil equivalent**

**Biodiesel share, reference case**

**Biodiesel share, optimistic case**

**Biofuels reference case**

**Biofuels optimistic case**

## Alternative Energy and Power Generation - Sweden

- Global leader in renewable energy and alternative fuel use
- - Aims to break its dependency on fossil fuels by 2020
- Renewable sources account for 26% of the total energy
- Government encourages the use of alternative energy through electricity certificate programs, tax benefits and production incentives
- SKR 500 million ($US73million) GOS investment
- Impressive fleet of bio-fuelled vehicles

**Best prospects for US exports include:**
**- Wind, solar and geothermal power production equipment and services**
**- New technologies for efficient and cost-effective biofuel production**
**- Energy Efficiency products and services**
**- Sustainable housing projects**
**   ****Renewable Energy Trade Mission to Sweden, April 2008**
**   ****PowerGen US/Swedish Roundtable, March 2008**

## The Way Ahead

- - European Council: 8-9 March 2007 =>Consensus on an Action Plan on An Energy Policy for Europe
- - After March 2007: Legislative proposals to be tabled by the Commission
- - UNFCCC & Kyoto Protocol processes
- - G-8

## Realities/Conclusions

- -   Europe has few if any energy alternatives in short- and medium-term.
- -   “Common” EU energy policy will be difficult to implement in practice.
- -   Over long-term, Europe will diversify gas sources (Algeria, Egypt, Libya, Caspian), build new pipelines, move towards LNG, boost nuclear and renewables.
- -   EU will become increasingly dependent on foreign energy suppliers.

## SHOWCASE EUROPE ENERGY & POWER GENERATION

**	****	****http://www.buyusa.gov/europe**

**Power-Gen Europe 2007 – Madrid, Spain  June 26-28**
- _[http://pge07.events.pennnet.com](http://pge07.events.pennnet.com/)_
**World Energy Congress – Rome, Italy  November 11-15**
- _[http://www.worldenergy.org/wec-geis/wec_congress](http://www.worldenergy.org/wec-geis/wec_congress)_
**Power-Gen International 2007 – New Orleans, USA  December 11-13**
- _[http://pgi07.events.pennnet.com](http://pgi07.events.pennnet.com/)_

**	****UPCOMING EVENTS**