Joint Eurogas-EURELECTRIC Conference
“Can Europe finance secure and clean Energy in the future?”
- Impact of the current economic and financial challenges on the energy agenda -
26 May 2009
Hôtel Renaissance, Rue du Parnasse 19, Brussels
Introduction
 Hans TEN
BERGE - Videoclip
 “We certainly do have an issue on the table, said EURELECTRIC Secretary-General
Hans ten Berge,
as he welcomed 180 delegates to a conference entitled Can Europe Finance Secure and Clean Energy in the Future?
jointly hosted by EURELECTRIC and EUROGAS in Brussels on 26 May “Given the fact that the total asset base of the
electricity industry will have to be replaced within a couple of decades, plus the impact of trading in CO2, which will
have a yearly impact of €20 to 25 billion, and seeing that we still don’t have an integrated European electricity market
nor a liquid retail market with free price-setting, I think the question posed by the title of this conference is a valid one”,
Mr ten Berge underlined.
Jean-Marie DEVOS - Videoclip
 Due to today’s globalised economy, the impact of the financial crisis on Europe has been very significant and
“this is surely a much-needed and timely event,” Eurogas Secretary-General
Jean-Marie Devos told the delegates. Mr Devos also pointed to the
“serious problem” which arose earlier this year with transit of Russian gas to the European Union, which highlights the impact of geopolitics on the energy sector, the consequent desirability of diversifying both supply sources and transport channels, the need for more interconnections, and the importance of dialogue with gas-producing countries. Setting the scene for the two panel discussions to follow, Mr Devos asked
“In this difficult environment, how should the energy sector react?” “Are long-term strategies and investments still possible?” “What will happen with major investment projects due to the situation and the difficulty for example of obtaining access to credit?”.
Andris PIEBALGS - Videoclip
 “It is necessary to decide and implement investment projects required to ensure the functioning of the internal energy market, the transition to a low carbon economy, and greater energy security for the European Union”, European Energy Commissioner
Andris Piebalgs told the conference. He was confident that the new regulatory framework established by the Energy-Climate package and the Third Energy Market Package, together with the actions set out in the Second Strategic Energy Review
“should improve investment conditions,” but nevertheless saw a risk that industry would adopt a short-term focus on energy investments.
“I am concerned that delays or withdrawal of investment projects could
result in a capacity crunch when the economy recovers and when demand is
back again. These risks cannot be underestimated and it would be the worst
case scenario if an energy crisis were to be added to the financial
crisis”, he warned.
The Commissioner stressed that the EU together with the Member States “must continue to restore macro-economic confidence and promote investment for a secure and sustainable energy market”. Already, an “unprecedented step”
has been the European Recovery Programme, which assigns a sum of €3.98 billion for energy projects. Moreover, the European Commission is preparing a new Sustainable Energy Financing Initiative and is considering a new EU infrastructure instrument which could replace the Trans-European Energy Networks (TEN-E) programme after 2013. The Commission is also seeking to develop
“a new generation of energy interdependence” by engaging in dialogue with producer countries, will continue to support energy efficiency, and is ready to engage in dialogue with industry over the various challenges posed by nuclear energy, Mr Piebalgs revealed.
The Energy Commissioner concluded with an assurance that he is “confident that we will reach the targets” - ie reducing CO2 emissions by 20%, sourcing 20% of total energy from renewables and improving energy efficiency by 20%, all by 2020. He acknowledged however that there was a risk of higher prices and recognised that customers are not ready to
“pay excessive prices”. “I hope that this conference will help
to grasp the problems and identify the solutions”, he concluded.
 Marc O. Bettzüge, Professor at the Institute of Energy Economics of the University of Cologne, acknowledged the
“very tangible” short-term impact of the financial crisis on the energy sector, before concentrating on the long term challenges.
“Given all the challenges we face and the speed with which we hope to meet them,”
we need to have a “very careful discussion about how to design the interface between the state and the market to make sure we achieve our goals”, he underlined.
For gas, “the challenge obviously is to balance the quest for a cost-efficient, liberalised market and the need for a secure supply base.”
He praised the gas industry, which was able to minimise this year’s gas crisis to
“the best possible degree with the physical infrastructure that was available,”
but the challenge to the gas sector will increase, he warned, making it vital to build more storage capacity and create storage volume, increase bi-directional flexibility in the Eastern European pipeline system, and realise selected investments to increase the connectivity of the EU pipeline grid. In order to achieve this, it will be essential to have right regulatory regime, he told delegates.
For electricity, the issues are “even more daunting and complex” given the much larger financial investments necessary to ensure system stability and reliability, in addition to the environmental goals of achieving carbon-neutrality by 2020 and integrating renewable energy sources into the system, so the basic challenge is to transform the sector
“and within a short timeframe”, he stressed. Prof Bettzüge pointed to two major challenges: providing sufficient incentives for efficient and effective investment projects; and adjusting
“the grid to the efficient generation landscape” through integrated optimisation of power generation and infrastructure. The task of the authorities will be to provide incentives to create sufficient capacity in the power sector, achieve sufficient speed of transformation, while increasing energy efficiency and maintaining supply security.
“Ongoing and trustful dialogue” is therefore necessary between policymakers and industry if the objectives are to be achieved.
Prof Bettzüge also warned that the need for huge financial investments brings the danger of energy becoming more expensive in the EU than the rest of the world, creating an apparent contradiction between the Lisbon Agenda of making the EU the most competitive economy in the world and the energy-climate goals, with the attendant risk that industry may be driven out of Europe. Elaborating more on this point, he said: “I believe that Europe will be able to finance secure and clean energy only if the interface between the state and the market is well-designed and if it has a good way of financing that part of the investment that is out of the money in terms of global competition”.
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