13
Mar
2015
Publications Éditoriaux de l'Ifri

Ifri’s conference on the New Frontiers of Energy Identified Strategic Orientations for the European Energy Union 2015 Ifri Energy Conference Brief, March 2015

The Ifri Center for Energy held its annual conference in Brussels on March 4th, 2015. The event gathered more than 150 participants, together with prominent policy makers, industry leaders and distinguished academics to discuss how the European energy policy can deliver effective results in light of geopolitical upheavals, technological developments and governance issues.

To download the presentations, click here

The Founder and President of Ifri, Mr de Montbrial, opened the event and stressed that emotions, not reason, are driving today’s world governance. He insisted on the fact that the energy dimension was crucial and stated that it was high time for the European Union to build a coherent energy policy. Mr Kauliņš, representing the Latvian Presidency of the Council of the EU, further emphasized that the Energy Union opens a new era in the sense that the EU is taking a less technical and a more political approach to addressing its energy challenges.

Commencing with a session on new frontiers of geopolitics and the strategies of the main actors, panelists emphasized the key role of the US on the international energy scene since the shale oil revolution. Many operators in the US and in the rest of the world are cutting capital expenditures in reaction to low oil prices, calling into question the time it will take to recover from excess supply. Beyond adapting to this new context of low oil prices, the need for a long term view was illustrated by the discussion on the Oil and Gas Climate Initiative, an industry-led platform launched by several NOCs and IOCs, among them Total, to address climate change concerns, share industry best practices and advance technological solutions. Meanwhile, Russia, faced with the challenges of a stagnating economy and the effects of sanctions, is changing its strategy and is increasingly turning to China to secure its energy exports. Another key theme of the session was the development of Asian rivalry over energy, despite the many fora created to enhance cooperation in the region.

The Energy Union was at the heart of the special debate between Mr Ristori, Director General of DG Energy, and Mr Clamadieu, President of CEFIC and CEO of Solvay. Some concerns were raised around the compatibility of the Energy Union project with the Lisbon Treaty. The discussion showed that the lessons from the past are clear to everyone: any change in national energy policies should not be triggered without appropriate coordination and consultation. The debate also revealed that improving competitiveness has to be a key priority for the “Energy Union”.

The discussion around the frontiers in technology and business showed the numerous structural changes affecting the European energy landscape. For instance, the large scale development of renewables is transforming the economics of electricity systems, triggering a real shift in paradigm. In the context of regulation, panelists highlighted the high risk in investing in any energy technology due to a lack of predictability, in particular on the ETS rules. Based on smart grid technologies and digitalization, new business models are allowing a reduction in peak demand and a new redistribution of system costs.

The session also highlighted the major successes in the European energy policy, such as the substantial progresses achieved in interconnecting the networks and coupling the electricity market. RTE mentioned that, in the long term, the key challenge is to facilitate the development of networks by shortening administrative procedures due to their crucial contribution to the energy transition.

Governance has been identified as the key area for the challenges ahead. Europe has come a long way since it set out to create an internal energy market. From the regulator’s point of view, providing ACER with more decision making powers is a logical step. From the industry perspective, GDF SUEZ presented its full support of the EC’s new direction, including the Juncker investment plan and the Energy Union. To reinforce the credibility of the first steps, the industry is working within the Magritte Initiative, to inform and provide recommendations of future orientations of EU energy policy. As underlined by EPEX SPOT, competition and cooperation will have to be reconciled in view of achieving efficient energy policies and ensuring the expansion of those new actors actively participating to the integration of energy markets. 

At the close of the dialogue, Mr Watkinson, Head of the Climate Change Negotiations Team for France, gave an overview on the preparation for the climate conference (COP21) in Paris. The French Presidency aims at a universal, ambitious, long-lasting, legally-binding agreement and also fostering the space for action, mobilization and partnerships.

With a notable caliber of presenters at the conference, many new ideas emerged regarding new strategies for paving the way towards an effective energy policy. While the idea of building an Energy Union reached consensus, many wondered whether this new concept can bring impactful change or if it is just old wine in new bottles. The central question remains whether it is actually possible to build an Energy Union without a real progress on governance issues.

Keywords
European Energy Policy