The European Energy Forum – Discussing Europe’s Energy Future

The world’s energy map is ever changing. With the shale revolution across the Atlantic, the plans for a Southern Gas Corridor connecting the Caspian and the Middle East with the European energy market, and explorations for gas in the Eastern Mediterranean, Europe experiences a time of manifold opportunities and challenges regarding its energy security.


Consequently, IBDE in partnership with EUCERS (European Centre for Energy and Recourse Security) organised ‘The European Energy Forum’, which took place on 16 January at King’s College London, to give multiple parties and interest groups the ability to discuss the challenges and potentials of future European energy security and infrastructure. The forum brought together members of academia, relevant businesses, the media, and government officials representing various national interests, as well as the greater European idea.


The Energy Forum was generally divided into three panels, the first consisting of the ambassadors of Greece, Austria, and the First Secretary to the Embassy of Azerbaijan in London, as well as the Head of the European Commission Representation in the UK. The second panel discussed the topic of how Europe can achieve diverse, secure and sustainable energy supply, while the third dealt with the opportunities for Europe through the Southern Gas Corridor and natural gas in the Eastern Mediterranean.


At the heart of the forum lay the keynote speech by the Rt Hon Michael Fallon MP, Minister of State for Business and Energy. Regarding the challenges that Europe is currently facing with respect to its energy security, the minister stressed that one must consider the facilitation of affordable energy prices, the increase in economic growth and competitiveness, as well as the creation of a sustainable, low-carbon energy system not as mere aspirations, but as imperatives. In order to achieve an energy secure future, Europe would have to utilise all available energy technologies from unconventional resources, Carbon Capture and Storage, nuclear power, to renewables, as well as improve energy efficiency. All this was to be combined with the benefits of a common European energy market and a transformed EU emission trading system, so the Minister. Since the future would remain unpredictable, the Rt Hon Michael Fallon concluded with the need for ambitious objectives while remaining flexible in the ways to meet them.


During the first panel, His Excellency Konstantinos Bikas, the ambassador of Greece to the UK, commenced the day by outlining the potential impacts of a common European energy market for the Greek economy, and also highlighted the direct and indirect effects of the Trans-Adriatic Pipeline (TAP) on the Greek job market. Following the ambassador, Jacqueline Minor, Head of the European Commission Representation in the UK, continued the discussion by reminding the audience that production and diversification of energy sources were only one aspect of energy security, with the other one being consumption, in which the transport sector was posing the greatest challenge. The Forum benefited also from the presence of the Embassy of Azerbaijan and its First Secretary Mr Vusal Abdulayev, who outlined the role of Azerbaijan gas resources to the European energy security. His Excellency Emil Brix, the ambassador of Austria to the UK, concluded the first panel by outlining two important aspects hindering effective energy security for Europe: Firstly, the incoherence of energy politics among the 28 member states, which had led to an inconsistency of European energy markets, thereby hampering comprehensive investments. And secondly, the ambassador exclaimed that true energy security could only be achieved through renewable energies, for which subsidies for fossil fuels and nuclear power were the greatest hindrance.


Following the keynote speech, the speakers of the second panel, dealing with Europe’s energy security, outlined both opportunities and challenges from newly discovered energy sources, as well as infrastructural matters within the EU. Mehmet Sepil, president of Genel Energy commenced the round by outlining his company’s experience in Northern Iraq. Together with the explorations taking place at the coasts of Israel, Lebanon, and Cyprus, Sepil pointed out the potential political as well as economic implications for Europe and the region regarding energy security and overall stability.


With respect to the internal energy security matters of the EU, Livio Bettoschi, CEO of BIP UK and New Markets, outlined the challenges caused by the European energy transition, especially regarding infrastructural matters, such as the shift from a few large scale power plants towards a multitude of low scale renewable farms. James Pay, Partner at Clifford Chance, continued to talk about different energy sources for Europe and focused on gas, renewables, and nuclear power in particular. For the former, he hinted at the unforeseeable effects of the shale revolution across the Atlantic, yet also pointed out the great potential of LNG trade, as well as the need for Europe to find an own approach in the exploration of unconventional resources that would not be too restrictive, nor too inflexible. For the renewable sector, Pay saw the greatest issue in the meeting of the capital investment costs, which he considered also an issue for the nuclear power sector since the Fukushima disaster had made investors uneasy in this regard.


Graham Meeks, Director of Policy at Green Investment Bank followed this line of thought regarding the need for large amounts of investments. Looking from a security of supply perspective, and by comparing the UK with Germany, Meeks displayed the similar yet differently caused challenges for the two countries. The UK on the one side had to deal with an ageing energy infrastructure as well as the shutting down of a multitude of coal power plants crucially decreasing energy reserves. Germany on the other side had to deal with the absence of its nuclear power generation due to the moratorium following the Fukushima disaster, as well as the shutting down of 28 GW worth of power plants by 2017 and hence would probably be experiencing similar energy bottlenecks, with both countries requiring further investments for future security. Meeks estimated the total necessary investments for the EU to be around 1.1€ trillion.


As the last speaker of the second panel, Dr Petra Dolata, Lecturer at King’s College London and Research Director of EUCERS looked at the current developments from an academic perspective stressing the fact that Europe was not the centre of International Relations anymore and that the 21st century was marked by complex power dynamics and shifts. She stressed that energy security remained a contested concept meaning different things to different actors, depending on their perception of energy as a mere commodity or as a strategic good.


The third and last panel dealt with the opportunities for Europe of the Southern Gas Corridor and natural gas in the Eastern Mediterranean. Dorian Ducka, Deputy Minister from the Ministry of Energy and Industry of Albania outlined the benefits for his country through the TAP project, which would not only integrate Albania into the European gas network but make the country a South Eastern energy hub. Group Political Adviser of BP, John Baldwin, continued along these positive sentiments by outlining the difficult yet successful process of negotiations and presented the most recent results of the final investment decision agreement, entailing the unlocking of several important aspects for the future potential of the pipeline. He stressed the importance of the economic viability of the project combined with the political acceptability, however also conceded that compromise would be inevitable.


Dr Frank Umbach, Associate Director of EUCERS continued the list of speakers by representing a more critical stance regarding the Southern Gas Corridor, pointing to the fact that 80% of the gas would enter the Italian instead of the Balkan market, which however was in greater need for diversified gas sources. He then moved on to stress the uncertainty of gas demand in Europe, referring to the most recent IEA World Energy Outlook forecasting a stagnating demand for the continent. In context of his analysis of Russia's competing South Stream project towards TAP, Dr. Umbach has questioned the economic rational of the South Steam project. Its costs alone of building of new gas infrastructure to circumvent Ukraine and to connect the South Stream pipeline with Russia's own Southern Gas Connectors on Russia's own territory have officially been doubled to more than US$22 billion last December and which are not included in any official costs analyses. In response to this critical viewpoint, Brendan Devlin, Advisor at the DG Energy at the European Commission, stressed the fact that the Southern Corridor was first and foremost a connector to supplying countries rather than an inter-European pipeline. While the Balkan might not be the primary customer of the gas, this was due to its proportionately low need in gas, and the real problem would lie with the politics of Gazprom regarding its client companies in the region. He further claimed the success of the project, being an example of international diplomacy balancing the interests of industries and countries. Also Michael Hoffmann, External Affairs Director of TAP, went back to the point of gas distribution within Europe and pointed particularly to the extension opportunities of TAP, referring to the availability of gas delivery contracts with Bulgaria and Romania, as well as the possibility to pump gas further north towards Germany, Belgium and the UK through the EU’s reverse flow system. This would imply a far larger possible end market.


Looking more broadly at European energy demand, Dr Ibrahim Palaz, Senior Fellow at the Caspian Strategy Institute, considered the Southern Corridor as only one way of diversification of Europe’s security of supply. He stated that the EU’s dependence on foreign energy sources, currently standing at 64%, was bound to increase to about 80% by 2030, of which gas was to make up 30%. Considering Europe’s dependence on primarily Russian gas, Palaz considered diversification through further routes key, pointing at the possibility of an increased LNG capacity. Finally, Androulla Kaminara, Academic Visitor at St Antony's College at the University of Oxford, added another potential candidate for the EU’s diversification in energy sources, namely the Eastern Mediterranean, where the estimated amount of reserves would be able to supply 20% of Europe’s gas demand. While this could become a game changer for Europe in itself, another one could be a Turkish-Iraqi Agreement for the gas and oil reserves in Kurdistan, from which the EU could benefit immensely.


Overall, the Energy Forum had been a great success, giving all participants plenty of opportunity to network and exchange ideas while listening to insightful and engaging debates. The Q&A sessions following each panel gave further breadth to the discussions and left the audience with an idea of the challenges and prospects for future European energy security.

Prepared by Jan-Justus Andreas, KAS Fellow at EUCERS