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GLOBAL & REGIONAL KEY ENERGY ISSUES:HOW TO FACE THEM. - Slav Slavov - WEC Regional Coordinator for Europe & Central Asia. Current Process Status: Driving Forces. Goals, targets &commitments as defined by: - Agenda 21;and PFIA21 - UN CSD, 9 th session, April 2001

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global regional key energy issues how to face them
GLOBAL & REGIONALKEY ENERGY ISSUES:HOW TO FACE THEM

- Slav Slavov -

WEC Regional Coordinatorfor Europe & Central Asia

current process status driving forces
Current Process Status: Driving Forces
  • Goals, targets &commitments as defined by:

- Agenda 21;and PFIA21

- UN CSD, 9th session, April 2001

- Johannesburg Plan of Implementation (JPOI)

- UNCSD-14 (April 2006): SG report on progress

- Participation: Governments, industry, NGOs

energy global issues
ENERGY: GLOBAL ISSUES
  • Access to energy for poverty alleviation
  • Integrating of energy for SD into national policies
  • Support efforts to improve functioning of markets
  • Encourage PPP, to give impetus to energy for SD goals
  • Strengthen the role of major groups in policy making
  • Promote increased R & D in varies technologies
sustainability the regional dimension
SUSTAINABILITY: THE REGIONAL DIMENSION
  • Regions face different priority challenges:

For example:

- Access to energy for poverty alleviation (poor countries)

- Reducing CO2 emissions (developed countries only)

- Internalisation of external costs (western Europe)

- Technology transfer (developing countries)

  • Conclusion: (1) Developed countries-environment & security ;(2) developing countries- economy & social

development.

key energy issues
Key Energy Issues
  • Enhance security of supplies and reduce further dependency on oil;
  • Pursue market reforms in energy sector while secure reliability of electricity markets;
  • Enhance energy efficiency in both, supply and demand sides, with particular emphasis on C/E Europe.
key energy issues6
Key Energy Issues
  • Preserve environment & climate by:

- promoting inter alea Kyoto mechanisms;

- promoting market for renewables;

- enhancing R & D on nuclear, oil

substitution & CO2 sequestration;

- harmonization of energy tax systems;

wec and sustainablity
WEC AND SUSTAINABLITY
  • WEC contribution to this global process:

- World Energy Assessment Study;

- WEC Global & Regional Studies and Scenarios;

- WEC 19th Congress, Sydney, September 2004:

Delivering sustainability: Challenges & Opportunity

for the Energy Industry

19th world energy congress sydney 2004
19th World Energy Congress, Sydney 2004

Main conclusion:

Delivering sustainability to energysector should be a priorityobjective. It is achievable but..... challenges are many; and they must be tackled now and urgently if sustainabilityis to be achieved in this century.

security of energy supplies
SECURITY OF ENERGY SUPPLIES
  • WEC`position on security - AAA
  • WEC`Recommendation: Keep all the options open

as

diversity is the backbone of a robust, less vulnerable energy system, even if the optimum mix would vary according to the local conditions.

selected key issues
SELECTED KEY ISSUES
  • Security of supplies in liberalised markets;Europe`s vulnerability;
  • Energy Intensity and Energy Efficiency.
the two possible energy worlds
THE TWO POSSIBLE ENERGY WORLDS
  • Definition of a “CONCAVE” energy trajectory: All published scenarios, e.g. WEC-IIASA, shape an accelerating energy demand over time in which “Acceptability” is the binding constraint
  • Definition of a “CONVEX” energy trajectory: Still unexplored domain of decelerating energy evolution in which “Availability”, “Accessibility” and “Acceptability” are all binding constraints
security of supplies 1 the risks
SECURITY OF SUPPLIES (1)- the risks-
  • Energy fundamentals revert back to 1970s/1980s crises:

- volatility of oil prices;

- continuous growing import dependency;

- growing reliance on one supplier-Middle East;

  • But under different conditions:

- today oil is used in transport sector only;

- oil share in Europe`s energy market is less than 10%;

- price increases dictated by the market imbalance;

security of supplies 2 the risks
SECURITY OF SUPPLIES (2)- the risks-
  • Investment risks & uncertainties persist, as:

- full implications of market liberalization unclear;

- impact of market opening on contracts (take or pay ?);

- longer supply routes and fear of terrorism;

and recent doubts:

- oil reached the peak, no spare capacity;

- oil & gas might face geological constraints ???

- price escalation of hydrocarbons;

what prospects for oil
WHAT PROSPECTS FOR OIL
  • Peak of the non-Middle-East production reached;
  • Maturity of OPEC Middle –East seems also reached.
oil dependency on midle east
OIL DEPENDENCY ON MIDLE EAST
  • 2/3 European oil imports from ME in 2025-2030;
  • at average, the OPEC- ME fields are 50 years old;
  • they might produce for many years, but:

like Marathonians (unlike sprinters)

  • Recent studies (Matt Simmons) show Saudi Arabia

could already be mature (confirmation of Hubert curve); and ambiguity about Kuwait reserves;

  • Current role of OPEC

-

- today oil is used in transport sector only;

- oil share in Europe`s energy market is less than 10%;

- price increases dictated by the market imbalance;

the 1973 shock
THE 1973 SHOCK…

A growing gap that OPEC could not fill

what prospects for natural gas
WHAT PROSPECTS FOR NATURAL GAS
  • Production peak reached in OECD regions;
  • Production rise elsewhere with the LNG boom;
  • Higher price would limit consumption:tendency to use it in residential & commercial markets only.
dependency on russian oil gas
DEPENDENCY ON RUSSIAN OIL & GAS
  • Europe depends 40% of Russia on gas and 25% on oil;
  • Russian reserves move far way from Europe and close to the Asian markets;
  • Asian markets are more attractive than Europeans;
  • Gazprom seek partners and distribution markets;
  • Russia may continue to be a reliable supplier.

-

- today oil is used in transport sector only;

- oil share in Europe`s energy market is less than 10%;

- price increases dictated by the market imbalance;

what prospects for coal
WHAT PROSPECTS FOR COAL
  • Increased use of coal for CTL and power generation;
  • Risk of limited use in power generation exist if:

- energy efficiency in combustion stay low;

- CO2 sequestration technology stay late, behind 2020.

Coal reserves are abundant!

what prospects for nuclear
WHAT PROSPECTS FOR NUCLEAR

U N C L E A R ?

but

getting more place in the Energy Agenda

reforms in elmarket should n conflict with security
Reforms in elmarket should`n conflict with security

Adequacy and Reliability are the backbone of a modern

power system;

  • Costumers and economy need 100 percent reliability;
  • Disruptions caused by ``brownouts`` and `` blackouts``

imply substantive costs to economy and households;

  • A clear ``trade off`` between operators and regulators;
  • Sharing responsibility for securing supplies in a liberalised market.
security of supplies conclusions on fuel imports
SECURITY OF SUPPLIES - Conclusions on Fuel Imports -
  • Scarcity of resources create supply imbalance and call for large price increases.
  • The current and future oil price volatility will affect GDP severely, future economic recessions might be worst than previous.
  • Oil price volatility lead to price increases in other fuels, but mostly of gas, making it less competitive.
  • Current policy and market tools do not support investments neither in upstream nor in energy infrastructure.
  • Europe becomes more dependent on imports and vulnerable in infrastructure;
  • Energy crisis lower GDP growth and energy intensity.
security of supplies conclusions on fuel competition
SECURITY OF SUPPLIES - Conclusions on Fuel Competition-
  • Oil price increases affects differently other sources:
  • fossil fuels

might reduce gas market share; boost coal use and non

traditional (synthetic liquids, coal gasification);

- speed up R &D on hydrogen and CO2 sequestration;

  • nuclear:

re-consideration of policies; speed up R &D on technology & waste storage;increase the market share;

  • RES: Increasing the share to the possible extend;
  • efficiency: Ease investments for further improvements
  • Investment risks & uncertainties:

- increasing the share of production outside Europe;

- impact of market opening ( take or pay ?);

  • Longer supply routes and fear of terrorism;
  • Full implications of market liberalization unclear;

and recent doubts:

  • Oil might face geological constraints ???
  • But under different conditions:

- oil share in energy (Europe) is less than 10%;

- price increases dictated by the market de-balance;

- oil production reached the pick, no spare capacity;

security of suppliy conclusions on internal market
SECURITY OF SUPPLIY- Conclusions on internal market-
  • LIBER shifted responsibility to market, but barriers still exist to become fully competitive;
  • LIBER confirmed a higher level of energy service, and management, perhaps lower costs (?) but not lower prices. Some disadvantages:
  • The market remain national;
  • The role of stakeholders not well defined;
  • Uncertainty about security of supply (disruption);
  • Reserve capacities declined, in generation and interconnections, investments are rather cyclical.

therefore

  • Markets require new policy instruments (cost-effective) to manage risks and cover costs of disruption;
  • In electricity, reliability contracts and capacity markets prove to be most effective, for ensuring adequacy and reliability of market operation;
what is needed to enhance security of oil gas supplies
What is needed to enhance security of oil & gas supplies
  • re-defining policies, in view of recent circumstances;
  • assess & increase if needed, by regulations the emergency stocks, in particular that of natural gas;
  • encourage diversification of supplies & accelerate development of strategic projects (Nabuko?);
  • ensure conditions & support partnerships with upstream supply companies (Gazprom?);
  • encourage a regular dialogue (on policy & company level) with suppliers and neighbouring ``energy corridors``countries.
what is needed to enhance security in electricity market
What is needed to enhance security in electricity market
  • First, more transparency and harmonization is needed;
  • Markets require some new policy instruments (cost-effective) to manage risks and cover costs of disruption;

(Re-consideration of the Directive ?)

  • The market should be more encouraged to invest in security: reliability contracts and reserve capacitycould be effective market instruments, for ensuring adequacy and reliability of market operation;
what is needed to reduce euro dependency on import
What is needed to reduce EURO-dependency on import
  • Main directions formulated in the ECnew Green Paper;

among which:

  • policy of fuels substitution; increase the share of RES

by policy and market tools (Renewable Energy Road Map);

  • enhance EE in energy supply & demand, in particular in the new members (with 20%by2020).
  • launch a public debate on nuclear;
  • Finance R & D in CO2 sequestration & nuclear.
  • re-considering each energy mix and min. quota for
security of suppliy wec europe contribution
SECURITY OF SUPPLIY- WEC-Europe contribution-
  • WEC is carrying out two regional studies, namely:

1.Vulnerability of Europe to Energy Crises; and

2. Future of Nuclear power in Europe.

  • WEC & EC cooperate on this issue:annual seminars.
  • Joint EC-WEC Seminar on Security of Supplies

(Brussels, Friday 30 June 2006)

under the chairmanship

of

EC Commissioner: Mr. Andris Piebalgs;

and

WEC-Vice Chair Europe: Mr. Pierre Gadonneix

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