By giving priority to the climate policy over the energy and industry policies, the European Union condemns itself to the loss of competitiveness and deindustrialisation, participants of the '29 +1' Energy Summit in Bucharest, Romania, agreed.

Energy prices and climate objectives of the EU, compromising the competitiveness of its economy and – in the light of the developments in Ukraine – also energy security, were the main topics of talks held between representatives of energy sector companies and energy-intensive businesses from Central Europe with Guenther Oettinger, the EU Commissioner for Energy.

Voice heard in Brussels

The annual meeting, called the ‘29 +1’ summit, was organised for the third time by Central Europe Energy Partners, an association established in 2010 at the initiative of five Polish companies, with the original concept coming from Paweł Olechnowicz, CEO of the LOTOS Group. This time the summit was held in Bucharest, Romania, under the auspices of the Romanian Prime Minister, Victor Ponta, and the local energy minister, Razvan Nicolescu. “Our region must be heard in Brussels. We must speak loud about the challenges lying ahead,” Minister Nicolescu explained the purpose of the meeting with the Commissioner. Mr Oettinger assured that Brussels knows CEEP's opinions and takes them into account.
What are the challenges? “We need to reduce Central Europe’s dependence on gas supplies from one direction, and promote the protection and development of our industry to encourage creation of new jobs,” the LOTOS Group CEO told Rzeczpospolita on the sidelines of the summit. In the Memorandum of Bucharest, adopted at the conclusion of the meeting, the participants pointed out that growing energy prices in the EU are not conducive to the competitiveness of EU industry, which remains important for the development of many member states. This has a direct and negative impact on economic growth across the EU, as well as on the results of the EU cohesion policy, so important for Central European countries. To counter this, Brussels should “redefine its climate policy” in order to better align its objectives with economic and social goals. This also means that the EU should not seek to eliminate fossil fuels from the EU energy mix as this harms the competitiveness of EU industry and energy security of some countries. Instead, it should encourage investments in more efficient technologies leading to lower CO2 emissions.

Unrealistic approach

“Member States should be encouraged to use the most economical and easily available local energy sources, whether fossil or renewable, since the approach whereby the same policy for the entire energy sector and energy-intensive industry suits everyone is unrealistic,” the CEEP document stated. The signatories to the memorandum also stressed that within the EU the per capita CO2 emissions and their reduction costs vary by country, depending on such factors as energy prices, level of development or structure of the economy, which Brussels must bear in mind when planning new climate targets. For example, as pointed out during the summit by Bogdan Janicki, senior adviser to LOTOS and CEEP, in Romania, where annual CO2 emissions are less than 4 tonnes per capita, the social and economic costs of CO2 emission reduction are significantly higher than in Germany, where the per capita emissions are nearly 10 tonnes.

The greatest energy challenges currently faced by our region are energy prices and security of supplies. Both should be addressed at the Europe-wide level. The proposal tabled by Polish Prime Minister Donald Tusk to establish an energy union was appreciated by the Romanian energy minister, Razvan Nicolescu. “It is a paradox that the EU was established based on the European Coal and Steel Community, and to this day no common energy policy has been implemented,” said Mr Nicolescu. “We need to build a common energy market. For this we need interconnectors, and also better regulation. Currently, we have 28 agencies regulating the energy markets, while we should be thinking about creating a single, pan-European regulator,” he argued.

EU needs industry

Commissioner Oettinger, whose term of office ends in autumn 2014, presented himself in Bucharest as a pragmatic politician, with a good understanding of industry problems, also those observed in Central Europe. He said that instead of dividing industry into old and new branches – only in order to condemn the former – we should divide industry into existing and new branches. The EU needs the existing ones, often energy-intensive, such as the chemical or metallurgical industries, too. Mr Oettinger also reassured that coal will be used in Europe for a long time ahead.

“When I was starting work in the EC, the energy policy was shaped based on the climate policy provided for in the 20-20-20 programme (the idea behind the programme is that by 2020 the EU should cut greenhouse gas emissions by 20%, increase energy efficiency by 20%, and achieve a 20% share of energy from renewable sources in the total energy mix, all relative to the 1990 levels). These are good targets, but only climate-wise. Energy policy must be linked with climate policy, but cannot depend on it completely. Industrial policy, energy policy and climate policy must be in balance.

Referring to the EC’s proposal that by 2030 EU countries should have reduced CO2 emissions by 40% relative to 1990, Mr Oettinger said that it would be a very ambitious goal. He noted that many member states are close to achieving the objectives for 2020, while others have even exceeded them. “The largest reductions have been made by Central European countries. This resulted from shutting down inefficient factories of the communist era, and even then it took almost a quarter of a century. Repeating this feat in a decade would be extremely difficult,” said the Commissioner at the summit, which was held in the impressive building of the Romanian Parliament.

Minister Nicolescu pointed out that the EU is responsible today for just 10% of global CO2 emissions, so even if it continues to curb the emissions it will sooner harm its economy than prevent climate change. “We must work within the framework of international agreements. Otherwise, we can hit the competitiveness of the European economy without reaching any climate policy goals,” he explained. Friedbert Pflueger, Director of the European Centre for Energy Security and Commodities (EUCERS) and a lecturer at King's College in London, noted that in the recent years the United States have been limiting CO2 emissions without virtually any climate policy. This is attributable to the substitution of coal energy with energy from shale gas, characterised by relatively lower emissions.

“I’ll do anything to ensure that pilot shale gas production programmes are run in Europe. Our conventional gas sources will run out in nearly two decades. If they are not replaced, Europe will become increasingly dependent on imports. Shale gas is part of the solution to this problem. There are many countries that are willing to extract it,” Mr Oettinger assured. He also agreed with the observations of several summit participants that the large differences in energy prices between EU countries are a consequence of not only the lack of a common energy market, but also of differences in tax regimes, which sometimes account for more than half of the final energy price. “Taxes should be harmonised, but it is an idea to be promoted in the future. I do not expect this to happen in a short term,” he said.