Dispelling the regulatory myths about Nord Stream 2

Transcription

1 Dispelling the regulatory myths about Nord Stream 2 Alex Barnes, Head of Regulatory Affairs The European Gas Conference, 22 nd January 2016

2 Some say Nord Stream 2 does not comply with EU regulation Maroš Šefčovič, Vice-President of the EC for the Energy Union: Nord Stream 2 is not justified by the expansion of gas consumption in the EU. [...] It makes economic sense to modernise the Ukrainian gas grid. Miguel Arias Cañete, EU Commissioner for Energy and Climate Action: Nord Stream 2 cannot be a project of common interest and is not in line with the EU's energy priority of diversification. Klaus-Dieter Borchardt, Director for Internal Energy Market, DG Energy: The TEP applies to Nord Stream 2 as soon as the pipe enters an EU EEZ. Konrad Szymański, Minister for European Affairs of Poland: This project violates EU law. [ ] The pipeline undermines the EU s common energy policy and hampers diversification. Marek Gróbarczyk, Minister of Maritime Economy and Inland Navigation of Poland: Nord Stream 2 is not in line with the Third Energy Package, [ ] goes against the idea of diversification of energy supplies, particular for Eastern Europe. Vazil Hudák, Minister of Economic Affairs of Slovakia: The project does not meet the requirements of the Third Energy Package in the scope of access to different natural gas supplier. Gazprom Marketing & Trading Limited 2

3 Some say Nord Stream 2 does not comply with EU regulation Maroš Šefčovič, Vice-President of the EC for the Energy Union: Nord Stream 2 is not justified by the expansion of gas consumption in the EU. [...] It makes economic sense to modernise the Ukrainian gas grid. Konrad Szymański, Minister for European Affairs of Poland: This project violates EU law. [ ] The pipeline undermines the EU s common energy policy and hampers diversification. Miguel Arias Cañete, EU Commissioner for Energy and Climate Action: Nord Stream 2 cannot be a project of common interest and is not in line with the EU's energy priority of diversification. NOT TRUE Klaus-Dieter Borchardt, Director for Internal Energy Market, DG Energy: The TEP applies to Nord Stream 2 as soon as the pipe enters an EU EEZ. Marek Gróbarczyk, Minister of Maritime Economy and Inland Navigation of Poland: Nord Stream 2 is not in line with the Third Energy Package, [ ] goes against the idea of diversification of energy supplies, particular for Eastern Europe. Vazil Hudák, Minister of Economic Affairs of Slovakia: The project does not meet the requirements of the Third Energy Package in the scope of access to different natural gas supplier. Gazprom Marketing & Trading Limited 3

4 A better way of looking at things Diversification does not mean the end of importing Russian gas. As long as there is the possibility to switch sources, there is no issue. [ ] The EC should abstain from intervening beyond ensuring compliance with EU regulation. Stefan Moser, Head of Security of Supply Unit, DG Energy Gazprom Marketing & Trading Limited 4

5 A better way of looking at things Diversification does not mean the end of importing Russian gas. As long as there is the possibility to switch sources, there is no issue. [ ] The EC should abstain from intervening beyond ensuring compliance with EU regulation. Nord Stream 2 is compliant with EU regulation and will not prevent customers from switching sources Stefan Moser, Head of Security of Supply Unit, DG Energy Alex Barnes, Head of Regulatory Affairs, Gazprom Marketing & Trading Gazprom Marketing & Trading Limited 5

6 Energy Union has five pillars What is Energy Union? Energy security, solidarity and trust A fully integrated European energy market (Third Energy Package) Decarbonising the economy Energy efficiency contributing to moderation of demand Research, Innovation and Competitiveness Nord Stream 2 contributes to all of these Source: A Framework Strategy for a Resilient Energy Union with a Forward-Looking Climate Change Policy Gazprom Marketing & Trading Limited 6

7 Pillar 1: Energy security, solidarity and trust Gazprom s continuing contribution Energy Union calls for diversification of supplies and routes: Gazprom has a proud history of investing in infrastructure so that gas can reach Europe via different routes. Investments in storage close to customers further enhances security of supply. Nord Stream 2 is 100% privately funded. Nord Stream 2 ensures that Europe will have plenty of import capacity for gas as indigenous production declines. As now, Russian gas will have to compete with other sources of gas and energy the market will decide its share Current Gazprom underground gas storage facilities (UGSF), active capacity, bcm Potential Gazprom UGSFs, active capacity, bcm Pipelines built with Gazprom s participation, date of commissioning, annual capacity bcm Nord Stream 2 project, date of commissioning, annual capacity bcm Source: DG ENER Statistical Pocketbook 2015 with regards to 2013 Gazprom Marketing & Trading Limited 7

8 Pillar 1: Energy security, solidarity and trust EU s own policy will enable West East flows * Security of supply legislation requires EU countries to invest in more interconnections but not all countries have done this yet Source: European Commission website, Projects of common interest * CEF is Connecting Europe Facility, a fund meant to provide financing to PCI projects. Gazprom Marketing & Trading Limited 8

9 Pillar 2: A fully integrated European energy market The Third Energy Package (TEP) regulates the internal European market. Nord Stream 2 is an offshore import pipeline from a non EU / EEA / Energy Community Country. The EU has not applied the Third Gas Directive, to similar import pipelines - applying it to Nord Stream 2 would be discriminatory. Forcing a company to use a particular import route is contrary to the idea of a market the EU should encourage importers to compete to bring gas to the EU. Onshore connections for Nord Stream 2 will be subject to TEP and will enable further integration of the European energy market. The Third Energy Package does not apply to Nord Stream 2 Gazprom Marketing & Trading Limited 9

10 Pillar 2: A fully integrated European energy market The EU internal gas market Price Convergence across Europe* The Third Energy Package already enables gas to flow to where it is needed following price signals regardless of where the gas lands. Existing onshore capacity is available to all; new capacity will be built if the market requires it. The market will decide how much gas flows through Nord Stream 2 * Source: Oxford Institute of Energy Studies Paper NG 101 The cost of price de-linkages between European gas hubs by Beatrice Petrovich Gazprom Marketing & Trading Limited 10

11 Pillar 3: Decarbonising the economy Electricity mix in the EU member states by fuel types in 2014* 2014 Electricity mix in the EU28 by fuel types* Estonia Poland Greece 85% 82% 53% Wind 8% Biomass and waste Solar 6% 3% Coal 26% Germany Czech Republic 47% 46% Hydro 12% Bulgaria Denmark Netherlands 45% 35% 31% Oil 2% Gas 15% UK 30% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Nuclear 28% Coal Gas Renewables and waste Nuclear Oil Gas emits less CO 2 than coal is burning so much coal consistent with Energy Union? * Source: IHS Power Demand, Capacity, and Generation Outlook, Gazprom Marketing & Trading Limited 11

12 Gas can and should make a greater contribution to decarbonisation EU Electricity generation by fuel input * Generation Capacity Utilization by fuel type * mtoe Coal Gas Renewables Nuclear Oil % Coal Gas Current policies will mean Europe continues to burn a lot of coal. Annual emissions from power generation in Europe are 1.9 billion tonnes. Burning gas instead of coal could decrease overall emissions by 5.9 billion tonnes of CO 2 by 2040 * Source: IHS Power Demand, Capacity, and Generation Outlook Gazprom Marketing & Trading Limited 12

13 The benefits of burning gas instead of coal a UK example TWh of coal is needed to produce 101 TWh of electricity Coal 101 TWh 30% Natural gas 101 TWh 30% 215 TWh of natural gas is needed to produce 101 TWh of electricity 2.2bn (fuel) * + 2.3bn (CO 2 ) ** = 4.5bn 4bn (fuel) * + 1bn (CO 2 ) ** = 5bn ~ 90 million tonnes of CO 2 ~ 40 million tonnes of CO 2 * DECC Average prices of fuels purchased by the major UK power producers ** based on ETS of 6 per tonne of CO 2 and UK carbon price floor of 18 GBP per tonne of CO 2 % Change in load factor Coal-fired stations Combined cycle gas turbine stations 61 Sources: DUKES 2015: printed version Annex 2 to DECC Updated energy and emissions projections: 2014 DECC Press release Controlling the cost of renewable energy, July for 0.5bn ( 5bn - 4.5bn) decrease of 50 million tonnes of CO 2 compared to Renewables subsidies in the UK 2014/15 3.5bn 2015/16 4.3bn 2016/17 5.5bn 2017/18 6.2bn 2018/19 7.2bn 2019/20 8.4bn 2020/21 9.1bn Gazprom Marketing & Trading Limited 13

14 Pillar 4: Energy Efficiency and moderation of demand Advantages of CHP* Efficiency of over 80% Fuel savings of 20% Carbon emissions savings of 30% Reduces transmission and distribution losses Increases fuel security of supply Natural Gas is the ideal partner for highly efficient CHP Nord Stream 2 will help ensure that Europe has the gas it needs * Source: UK Department of Energy and Climate Change Gazprom Marketing & Trading Limited 14

15 Pillar 5: Research, Innovation and Competitiveness Gas is a more cost effective way of reducing carbon emissions 690 billion potential savings between now and 2030 by using more gas in the energy mix to meet EU 2050 targets billion in the power sector by using a gas and renewables mix instead of a coal and renewables mix billion in the residential sector by using more CHP and gas fired District heating instead of renewable based electrification billion in the transport sector though greater use of natural gas powered vehicles. Lower costs of transitioning to a low carbon economy will ensure the EU can continue to compete in world markets Greater use of natural gas could save up to 230 per household per year to 2030 Source: European Gas Forum 2012 Gazprom Marketing & Trading Limited 15

16 Conclusions Nord Stream 2 supports all five pillars of the Energy Union. Energy security, solidarity and trust A fully integrated European energy market (Third Energy Package) Energy efficiency contributing to moderation of demand Decarbonising the economy, and Research, Innovation and Competitiveness The Third Energy Package does not apply to Nord Stream Onshore connections will be subject to the Third Energy Package And Nord Stream 2 and associated investments will enhance an integrated internal EU energy market. The EU should be encouraging privately funded investment in new infrastructure such as Nord Stream 2. Gazprom Marketing & Trading Limited 16

17 Thank you for your attention! Any questions? Gazprom Marketing & Trading Limited 17