Briefing on EU Energy Industry: At a Crossroads

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Briefing on EU Energy Industry At a
Crossroads
Keith Curtis, RSCO Sweden Presentation courtesy
of James P. Dorian, Ph.D. Washington, D.C.
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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.
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European Energy Consumption By Fuel
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Fossil Fuels and Nuclear in Europe

• - EUs 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.

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World Nuclear Power Electricity Generation
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World Nuclear Power Reactors By Region
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Selected European Countries Positions on
Nuclear Power
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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
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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 reactorsmost in the
world on a regional basis. - Environmental
concerns remain a key obstacle.
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Russias 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.
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Primary Gas Suppliers Russias Share Will
Dwindle Slowly Over Time

• - Russia 37 of Europes 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

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Russian Oil Exports, 2005
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(No Transcript)
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Russian Gas Supply Scenarios Contingent on Yamal
Production
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(No Transcript)
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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. - Austrias
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.
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Energy For A Changing World
Communications of the Commission An Energy
Policy for Europe and the Energy Package
2007 Limiting Global Climate Change to 2C The
way ahead for the EU and the World for 2020 and
beyond
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Energy For A Changing World

• The Strategic Objective
• 20 unilateral EU reduction of GHG by 2020

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The Three Challenges

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

Competitiveness LISBON
Sustainable Development KYOTO
FULLY BALANCED INTEGRATED AND MUTUALLY
REINFORCED
Security of supply MOSCOW

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

• International Dialogue
• Diversification

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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

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Sustainable Development
Energy gt 80 of EU-GHG Energy gt 93 of EU CO2
emissions 75 of GHG are CO2 emissions
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Sustainable Development
EU-27 ENERGY MIX High dependence on fossil fuels
gt Business as usual is NOT SUSTAINABLE
Source EUROSTAT
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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
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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
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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 EUs building stock
• - Improving the efficiency of heat and
  electricity generation, tranmission and
  distribution

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Renewable Energy Sources

• - Necessary to increase the level of renewable
  energy in the EUs 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

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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
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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 (gt50 for RES and energy
  efficiency)
• Environment (including climate change) 1890
  million
• Nuclear (Euratom) 2751 million

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Alternative FuelsPromising 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 RD.
• - Europe is world leader in biodiesel production
  and research, with Germany and France the biggest
  producers, accounting for ¾ of European output.
• - Qatarwith a goal of becoming a world leader
  in gas-to-liquids productioncould ultimately
  provide GTLs to the European market.

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Comparison of Market Conditions for Ethanol
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(No Transcript)
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Million barrels per day oil equivalent
Biofuels optimistic case
Biofuels reference case
Biodiesel share, optimistic case
Biodiesel share, reference case
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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

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The Way Ahead
- European Council 8-9 March 2007 gtConsensus
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
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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.
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SHOWCASE EUROPE ENERGY POWER GENERATION
UPCOMING EVENTS
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26-28 http//pge07.events.pennnet.com World
Energy Congress Rome, Italy November
11-15 http//www.worldenergy.org/wec-geis/wec_cong
ress Power-Gen International 2007 New Orleans,
USA December 11-13 http//pgi07.events.pennnet.co
m
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