Energy security and prices of top importance for Slovakia

MAROŠ Šefčovič, Vice-President of the European Commission for Energy Union, considers the European Energy Union to be  the biggest energy project since the Coal and Steel Community recalling the precursor of the European Union established in 1951.

Commissioner Maroš ŠefčovičCommissioner Maroš Šefčovič (Source: TASR)

The commissioner introduced the ambitious plan based on five dimensions on February 25 in Brussels. He  believes that the current energy system in the European Union is unsustainable in the long term and that the European Energy Union should solve the situation.

The Slovak Spectator disc ussed the different aspects of the Energy Union with Šefčovič as well as other energy topics.

The Slovak Spectator (TSS): From which countries do you expect the biggest dislike or criticism of the Energy Union project and which countries would welcome it the most?

Maroš Šefčovič (MŠ): I hope that this project will gain wide support within the EU. On the other hand, I’m sure that when it comes down to individual legislative proposals discussions will not be easy.

What I see as the biggest challenge will be the pressure on changing the national mindset for adoption of decisions to a regional or even European one, to persuade ministers of energy as well as finances that joint [energy] solutions are economically more advantageous, more effective and that simply in the end they will mean not only lower prices but also more saved money in state budgets.

This will be kind of a general challenge for discussions we will need to have with each member country. Each country has its own specific features and I’m sure that there will be something for each country that it would really like and something that will obstruct it.

TSS: What changes will Slovakia have to implement in respect to the Energy Union?

MŠ: Certainly at question would be how to set energy prices, especially for industrial companies. These often point out that energy prices in Slovakia are high. Already in the past we have very intensively communicated with energy intensive companies. These require guarantees that there will be no carbon leakage, what means that there are conditions created for them to stay here. I think that this will be a challenge also for the future because Slovakia is one of two or three of the most industrial countries in the EU, even the most industrial one according to some indicators, thus energy prices will be what Slovakia would consider as a priority.

The second priority will be to secure sufficient energy security because Slovakia is one of the countries that is nervous each summer or autumn of what will happen in winter.

Thus these will be two priorities that will be of key importance for Slovakia.

TSS: The Energy Union is a very ambitious project while its price or related costs have not yet been mentioned.

MŠ: During the time being it is very problematic in any way to estimate these. This is because at question is a complex change of energy management and because there are many factors involved. Of course, some of them are under our control. For example, I estimate that the level of support schemes for various renewable energy sources is annually about €120 billion. Another factor which I can mention is that investments needed for changes of the energy infrastructure because of obsolescence and smartening of the grids are estimated at as much as €1 trillion. Actually, we should do this anyway, but the question now stands how we can do it more effectively on the joint European basis.

Of course, citizens and business people will especially assess the quality of energy services they will get, what the impact on the business environment will be, how many new jobs also thanks to the energy union would be created, etc. So, these are things which are very difficult to quantify now, also because of our high energy imports as one year ago nobody expected that the price for one barrel of crude oil would decrease to USD 50. Thus there are a lot of variables and because of this I think that what would be important is setting of the trend and those policies and to have a complex change in the approach to energy management.

TSS: Slovakia has also one project, which may increase energy security in the EU, Eastring, connecting western Europe and the Balkans via Slovakia. How do you perceive this project?

MŠ: Slovak representatives introduced the Eastring project in Sofia on February 9. The aim of the meeting was, on one hand to analyze what we can do for south-eastern European countries and their interconnection with central Europe. This means that we discussed 14 projects of energy interconnectors which have been on the table for some years already, but which, alas, have not been carried out yet and how the EC can help, either via financing or creation of a better atmosphere between individual countries in order that they inter-connect faster. Simultaneously, there were also introduced initial ideas from these countries about how they can contribute to a better integration of individual energy systems of these countries. The Slovak delegation introduced the idea of Eastring. Now the talks will continue on the level of expert groups with the aim to work out an action plan by June. It should guarantee that each country in this region should get the chance to gain, in this case gas, from three various sources. But this needs much better interconnection. Eastring is one of the projects which will be discussed on an expert level.

TSS: Do you see it is as an alternative to the transit of gas via Ukraine?

MŠ: It will be necessary to assess this whole matter in a very complex way. I think that it would be necessary to look for an optimal solution which would keep gas transit via Ukraine and which would also respect new Russian plans to transit part of gas supplies via Turkey. Thus there are many more other interests and therefore it is necessary to put these projects on the table in order that they are assessed on the expert level.

TSS: How do you perceive the cancellation of the South Stream which Russian President Vladimir Putin announced in December? Do you consider this project as over?

MŠ: Basically here we can get navigated by those many times reiterated statements from the side of the Russian Federation and the head of Gazprom that the South Stream project is over and the project of the Turkish stream was introduced. The project is now also discussed by the Turkish side and I believe that we will discuss it also on the EU level. Let’s hope that the situation, especially in eastern Ukraine would improve also because of the project of the Turkish stream in the parameters in which it was introduced, I believe, cannot work in reality. This is because of long-term contracts Gazprom has signed with individual suppliers in which not only the volume of gas to be shipped, but also the points of supply are set and this is certainly not the Greek-Turkish border. This means that this will be a very complex discussion to which we will have to return.

TSS: The energy consumption in the EU decreased in 2013 to 1,666 million tonnes of oil equivalent, which means to the level where it was at the beginning of the 1990s. Compared with 2006, when the energy consumption in the EU reached its highest level, it decreased by 9.1 percent. What reasons do you see behind this decrease?

MŠ: I see several factors behind this while the decisive one is that the EU was in a very difficult economic cycle. This means that production stagnated; the economy did not develop in the pace as it should have. On the other hand I think that gradually measures for improving energy efficiency began to bring results.

But this is still not enough and we have huge space for improving energy efficiency, when for example, we spend 40 percent of energy on cooling and heating of our buildings. When we compare it abroad, for example, Asia has taken a lesson from the development in Europe and has implemented energy efficiency measures into new construction codes without any compromises.

Also we in the EU will have to push for something like this. Our indicative target is to increase energy efficiency by at least 27 percent by 2030. But I believe that there is room for  a greater improvement, it is only necessary to set up those mechanisms so that municipalities and others are not afraid, in order that the measures are available and in order we are able to explain to them better about how much these measures, after being carried out, would reduce their energy bills. 

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