Energy priorities for Europe
Presentation of J.M. Barroso, President of the European Commission, to the European Council of 22 May 2013
New realities in the global energy market
Impact of the financial crisis Fall in private investment, tight financing conditions
Fukushima
Shale gas US oil and gas production Unconventional gas
Conventional gas
Unconventional oil
Conventional oil
Some countries phase out nuclear power production
mboe/d 25 20 15 10 5
1980
1990
2000
2010
2020
2030 2035
Source: IEA
Rising demand rising prices By 2030, world economy set to double and energy demand to rise by 1/3
Presentation of J.M. Barroso to the European Council, 22 May 2013
1
Prices affect competitiveness Trends in energy price indexes 2005-2012 Gas price index
Industry
EU
35%
US
-66%
Electricity price index
Industry
EU
38%
US
-4%
Presentation of J.M. Barroso to the European Council, 22 May 2013
Gas price index
Households
EU
45%
US 3%
Electricity price index
Households
EU
22%
US 8%
Source: IEA
2
Energy-intensive industries are most exposed Share of energy in % of production costs – selected sectors in Germany (2010) Cement, lime and plaster Clay building materials Basic iron and steel Pulp, paper and paperboard Glass Basic pharmaceuticals Non-ferrous metals (incl. aluminium) Wood and cork Average manufacturing Furniture Automotive Consumer electronics 0
5
10
15
20
25
% of total production costs
Presentation of J.M. Barroso to the European Council, 22 May 2013
Source: European Commission
3
Europe's dependence is set to increase Net oil and gas import dependence by region 2010 Gas imports
2035
Japan
100% 80%
European Union 60% 40% 20%
China
India United States
0%
Gas exports
20% 20%
40%
60%
80%
100%
Oil imports Presentation of J.M. Barroso to the European Council, 22 May 2013
Source: IEA
4
Our energy mix will evolve
EU gross inland consumption 2011
EU gross inland consumption 2030 (scenario) Renewables
Renewables Solid fuels
Solid fuels
10%
Nuclear
17%
14%
24% Gas
18%
Nuclear
12%
14%
35%
22% Oil
Presentation of J.M. Barroso to the European Council, 22 May 2013
Gas
33% Oil
Source: European Commission
5
Massive investments are required
Total energy investment needs between 2010-2020: over € 1 trillion
Power generation: ~ € 500 bn
Renewables: ~ € 310-370 bn
Transmission and distribution: ~ € 600 bn
Distribution: ~ € 400 bn Transmission: ~ € 200 bn
Presentation of J.M. Barroso to the European Council, 22 May 2013
Source: European Commission
6
Will there ever be cheap energy for Europe? Energy costs to rise in all scenarios but Europe will benefit most from decarbonisation (in % of GDP, annually until 2050)
Fuel imports
Other energy purchase (domestic)
Investment in infrastructure
Investment in energy efficiency
16% EU in 2050: energy costs at around 14% of GDP in both scenarios 14%
% of GDP
12%
EU today
-1.4% imports
10% 8% 6%
+1.9% investment in infrastructure and efficiency
4% 2%
0%
Business-as-usual Business-as-usual scenario
Decarbonisation Decarbonisation scenario
scenario 2050
scenario 2050
Presentation of J.M. Barroso to the European Council, 22 May 2013
Source: European Commission
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A "no regrets" scenario for Europe
Competitiveness
Smart infrastructure
Diversified supply
Security of supply
Competitive markets
Energy efficiency
Renewable sources
Presentation of J.M. Barroso to the European Council, 22 May 2013
Sustainability 8
Priority 1. Boosting energy efficiency Benefits of EU energy savings target of 20% by 2020
2.6 billion barrels
Barrels of oil the EU does not have to import per year
â‚Ź 193 billion
=
Money saved at conservative 73 EUR/barrel per year
Presentation of J.M. Barroso to the European Council, 22 May 2013
=
1 000 fewer coal power plants
=
GDP of Finland (in 2012)
9
Priority 2. Completing the internal energy market Estimated effects of opening gas & electricity markets (in % of GDP - ranges)
% of GDP
1,0% 0,8%
Effect on GDP
0,6% 0,4%
Effect on employment
0,2% 0,0% -0,2% -0,4%
Effect on inflation
-0,6% -0,8% After 1 year
After 5 years
Presentation of J.M. Barroso to the European Council, 22 May 2013
After 10 years
Source: European Commission
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Priority 3. Smarter infrastructure
Gas Country
Rank
Rank
Baltic Energy Market Interconnection Plan
North Seas Offshore Grid
Electricity Electricity and gas
Electricity & Gas
Oil and gas
Central / South Eastern Electricity Connections North-South Gas Corridor in Western Europe
Country
Smart grids for electricity in the EU
North-South Gas Interconnections & Oil Supply Southern Gas Corridor
South Western Electricity Interconnections
Presentation of J.M. Barroso to the European Council, 22 May 2013
Source: European Commission
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Priority 4. Cost-effective use of renewable sources Production costs versus subsidies for renewables (averages, in €/MWh, latest year available)
Production costs
Subsidies over production costs
Wind energy on-shore €/MWh
Subsidies below production costs
Solar energy (photovoltaics) €/MWh 500
140
450 120 400
100
350 300
80
250 60
200 150
40
100 20 50 0
0 SE UK IE LV DK NL EE MT RO ES CZ PL LT PT SI SK BG IT HU CY LU FI EL FR BE AT DE
Presentation of J.M. Barroso to the European Council, 22 May 2013
ES MT CY PT EL IT BG RO FR HU AT SI SK LV EE LT PL CZ DE IE LU DK NL UK BE SE FI
Source: Fraunhofer
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Priority 5. The external dimension The example of the Southern Corridor Corridor opening options (2018 - Shah Deniz II) Nabucco-West Trans-Adriatic Pipeline
Corridor enlargement Extension of transport routes & new transport routes
Trans-Anatolian Pipeline & South-Caucasus Pipeline
Presentation of J.M. Barroso to the European Council, 22 May 2013
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