Intro
Energy has been the dominating issue on the economic and political agenda in the past few years. There is, at present, more controversy in the air than in a long time. The BSR is subject to global trends and uncertainty in energy demand and supply, and our member country Russia is a key player in the on-going discussions on how to handle and distribute energy and how much to pay for it.
Main Messages
· The EU needs to act in a more coordinated and more united manner in order to gain a better position from which to influence the development of the world energy markets (Matti Vanhanen)
· The EU needs to establish a close and legally binding partnership based on mutually balanced benefits with Russia. Reaching an agreement satisfying both sides of the energy game is of utmost importance! - Matti Vanhanen
· The EU must show strong leadership in combating climate change and improving energy efficiency. -Matti Vanhanen
· The BSR countries need to develop their economies and energy systems in a sustainable way, so they can ensure security of energy supply. This can be done by promoting enhanced energy efficiency in all links of the energy chain as well as by developing renewable energy sources in order to replace the existing energy sources, namely fossil fuels. - Maud Olofsson
· The BSR should take regional responsibility and set a global example of research and technological development as well as market deployment of new and improved energy technologies, thereby taking the lead in creating improved and sustainable energy systems! - Maud Olofsson
· The key requirements for an efficient energy policy are the following: more investments in energy, making use of all energy options, creating well-functioning energy markets and developing energy efficiency and technology. - Christoffer Taxell
· Prosperity, sustainability and energy safety must be made compatible in the future! - Christopher Beazley
Themes
Energy - EU
The challenges the EU is facing concerning the security of energy supply can be illustrated by the increase of the EU’s energy import dependency. Striking figures show that energy import dependency will increase from 47% to 67% until 2030 if no preventive measures are taken. According to the Prime Minister of Finland, Matti Vanhanen, to limit dependency, significant changes are needed in our current energy systems. First of all, the strengthening of consumer-producer relations and energy partnerships to strategically important partners of the EU is of utmost importance. Furthermore, the EU needs to act in a more coordinated and more united manner in order to gain a better position to influence the development of the world energy markets and to be better prepared to respond to short term energy disruptions. Finally, the Union must show strong leadership in combating climate changes and improving energy efficiency. According to Mr. Vanhanen the first steps towards such strategies were taken at the recently held summit in Lahti during the negotiations with President Putin, where EU member states spoke with one united voice on the energy issue.
Energy - BSR
Swedish Deputy Prime Minister, Maud Olofsson, stated that in the Swedish Government they share a strong belief in the future of the Baltic Sea Region as Europe’s strongest growth region. Energy is indeed a necessity for growth, and political and economic cooperation on the energy issue needs to be strengthened among all neighbours in the BSR. The economies and energy systems of the BSR need to be developed in a sustainable way in order to ensure the economic, social and environmental objectives as well as security of energy supply, she explained. This can be done by promoting enhanced energy efficiency in all links of the energy chain as well as developing renewable energy sources to replace the existing ones, namely fossil fuels. She stressed that the BSR has the political will and the know-how to do so and it can begin its efforts by the practical regional implementation of EU’s recently proposed energy policy and action plan for energy efficiency. In a nutshell, the BSR now has excellent conditions to improve its energy systems and to make a shift towards cleaner and more efficient use of energy. Chairman of JSC Latvenergo, Karlis Mikkelsons, explained that we are entering a high-price market in the energy industry. It seems that regional cooperation is the only way to secure energy supply in the BSR and to accelerate the use of renewable energy sources in the future, he said. Cooperation policies in the BSR should therefore concentrate on promoting strategies to attract new technology investments in energy. Furthermore, BSR power companies should raise their competitiveness and member countries shall work towards a unified Baltic Sea Region power market. Harmonization of power policies in the member countries would be an important first step in this direction, Mikkelsons stated. The Baltic Europe Intergroup, chaired by Christopher Beazley, has recently presented to the EU a proposal on a Baltic Sea Strategy claiming a concrete budget line. One of the recommendations of the proposal was to gather the ministers from the EU-BSR member states to discuss the energy issue with Russia. There are still huge differences in the member states of the BSR in terms of prosperity and there is still no integrated energy market in the region. The Baltic Sea Strategy would contribute to solving these remaining deficiencies in the region by addressing issues on how EU-Russia relations should evolve, how to tackle environmental problems, how to promote economic prosperity and how to secure energy supply in the BSR.
Energy - Russia
Chairman of Renaissance Capital, Igor Yurgens, stated in his speech that Russia wants to be a key player in the European region and the BSR when it comes to energy. However, some bilateral conflicts in the relationship between the EU and Russia have made it difficult to reach a mutually beneficial agreement on energy supply, he explained. One major problem is that the EU aims at creating a consumers’ market with equal competition and low prices. At the same time Russia is looking for a long-term commitment and security of demand as well as the assurance of a fair price. Yurgens stressed that this conflict must be solved in order to reach a stable and mutually beneficial strategic partnership. He explained that Russia has the energy resources, but does not have the technology to extract it. At the same time Europe possesses the technological know-how and is facing increasing demand in energy sources. According to Yurgens, Russia is interested in a win-win situation, where both parties gain from a fair exchange of equities. If the controversy of long versus short-term interests of Russia and the EU respectively is solved, discussions can proceed with issues on energy charter and transit protocol. Access to the Russian pipeline can only be guaranteed on an “Equity for the Resource” base, as Yurgens put it. Further, he stated that “if we can look at the Northern pipeline not as a political instrument, but as an instrument for future development, we can find answers to some very important questions”. In fact, Russia possesses 40% of the world’s gas and 18% of the world’s oil resources. If we can negotiate friendly common policies, these resources are accessible for Europe in return of investments and technology. Russia’s interest lies in an adequate swap of equities, and a partnership is the only sensible solution for such a win-win exchange.
Energy – Globally
President of the Confederation of Finnish Industries, Christoffer Taxell, stressed that without energy there is no growth, prosperity or welfare. He explained that there is an increasing gap between supply and demand, as the demand for energy has been increasing rapidly and continues to grow globally. Such rapid energy usage leads to global warming. According to Taxell, we must acknowledge that this is a global problem that needs to be tackled by global efforts. First of all, significantly more investments are needed in energy globally, he emphasised. Secondly, there is a need for new energy sources, especially in the electricity area. There is also a call for making use of all energy options. Taxell pointed out that the businesses need to acknowledge that the climate change is a global challenge that requires global action. In a nutshell, the key requirements for an efficient energy policy are the following: more investments in energy globally, a utilization of all energy options, the creation of well-functioning energy markets in the BSR and globally, and the development of energy efficiency and technology. Head of Division of the International Energy Agency, Ann Eggington, stated in her speech that one of the most significant global problems at present is that unexpected events have large effects on energy prices. Where will energy come from in the future? Eggington explained that the oil market will remain subject to the instability of the Middle East and gas supplies will come from Norway and Russia. Pressures on energy resources are growing and more demands are made from emerging economies, especially new Asian markets. Therefore, vast investments world wide are needed to meet our energy demand in the future and to develop ways of reducing energy usage, Eggington said. “We cannot afford to rest on business as usual! We have to implement new policies and implement them on an accelerated time scale”, she stressed. In fact, our global responsibility is to find new technologies to reduce energy usage as well as to develop new sources of energy.
