No. 5 (42) ▪ May 2016

www.ceep.be ▪ No. 5 (42) ▪ May 2016

ALSO IN THIS ISSUE Jadwiga Wiśniewska, MEP The European steel sector in a crisis: from ambition to absurdity in the labyrinth of reforms▪page 2

COVER STORY Infrastructure is central to all of our energy objectives

Dominique Ristori Europe can only be achi eved through better cross-border co- Director General at the , DG Energy operation. To implem ent the Energy Union, it will be essential to en- “The development of infrastructure networks is essential sure that action at EU, regional and national level is cohesive to complete and in particular to and defined with common objectives in mind. Enhanced better connect economies of Central Europe with the rest regional cooperation between Member States will also be of the ,” Dominique Ristori, Director important for achieving the objectives of the Energy Union as General at the European Commission, DG Energy, wrote highlighted in the Energy Security Package adopted on Feb- in anexclusive message to CEEP members. ruary the 16th, 2016. More interconnections are still needed in specific regions. One of the priorities of the Junck er Commission is the There are several actions at European level to address the creation of a resilient European Energy Union with a forward infrastructure challenge. The second list of Projects of Com- looking climate change policy. In February 2015 the European mon Interest (PCIs) adopted in November 2015 sets out those Commission presented the Energy Union Strategy with a full projec ts that are urgently needed to achi eve our energy list of actions to be taken over the next five years. The funda- policy targets.1 Many of these PCIs are of direct rel evanc e to mental goal of the Energy Union is to ensure that the EU con- enhancing energy security in Central and Eastern Europe. sumers – businesses and citizens – will have acc ess to secure, These projects will enable the gradual build-up of the sustainable, competitive and affordable energy. Energy Union by integrating the energy markets and diver- Infrastructure is central to all of our energy objectives. This sifying the energy sources. PCIs benefit from accelerated per- is the case for energy security, or to provide affordable energy mitting proc edures and im proved regulatory conditions and to all or to meet our renewable energy targets. That is why may also be eligible for financial support from the Connecting modern energy infrastructure and interconnections are a k ey Europe Facility (CEF). They will also begi n to see benefits from element of this strategy. the instruments developed under the European Fund for Stra- To upgrade Europe's infrastructure, it has been estimated tegic Investments in 2016. that around EUR 200 billion is needed during the current In such a process, involvement of rel evant stak eholders is decade for transmission grids and gas pipelines. Not all inves- also important. CEEP is well plac ed to provide detail ed ana- tments are commercially viable how ever and the market alo- lyses on how industrial consumers see the bottl enecks in ne is likely to only provide half of the necessary investment. infrastructure development, in particular concerning projec t The developm ent of infrastructure networks is essential to and financial engineering, and the possibility of investm ent complete European integration and in particular to better con- project pooling at a regional scale. ■ nect economies of Central Europe with the rest of the Euro- 1 In November 2015, the Commission adopted the updated list of (195) Projects of Common pean Union. The large scale infrastructure projects needed in Interest (PCIs) (108 for electricity, 77 for gas, 7 for oil and 3 for smart grids projects)

1 No. 5 (42) ▪ May 2016

OPINION The European steel sector in a crisis: from ambition to absurdity in the labyrinth of reforms

Jadwiga Wiśniewska of China as the main causes of this situation. In the face of Member of the such policies, the steel sector is rather powerless, and grant- ing China the status of a market economy – which Beijing has The reform of the EU Emissions Trading Scheme (ETS), been seeking for a long time – would only further deepen which is to take place in the next decade, will mean only this crisis. In practice, such a decision would relieve the Euro- a deepening of the current problems for the steel sector pean Commission of its right to impose hi gher tariffs on Chi- throughout the European Union. nese goods, whereas 80% of current European anti-dumping actions are tak en against China. Previously, even photovoltaic An unrealistic ambition panels that are used for the production of green energy ‘Ambitious’ is a special word for the European Union’s cli- across the EU, were covered by one of these proceedi ngs. mate policy. Not only due to its declension in the EU’s docu- The irony is the fact that during production of these PV panels ments, but also because it usually stands for ‘unrealistic’. For in China, emissions are twice as high as in European factories. over 20 years, the EU concept to create the most environ- mentally-fri endly economy in the world has not changed, and assumes that building its position will be based on more and more abstract goals to reduce carbon dioxide emissions. The EU does not see that the global climate summit in Paris res- tored the two-pillar format, which is the only scientifically le- gitimate, way of thinking about the protection of the atmos- phere. In Paris, it was agreed that the necessary actions would involve both the reduction of emissions, as w ell as the natural absorption of CO2. Meanwhile, the EU's climate policy obses- sively focuses on solutions of the first group. As a result, the pace at which the EU is running for the title of ‘green l eader’ turns out to be truly lethal, and European industry bec omes its main victim.

The British warning The European producers operating in the energy-inten- sive industries have long since come to terms with the idea that the increase in costs, associated with restrictive climate policy, will not allow them to becom e global leaders in this Without reflection on the industry. The data leaves no illusions: between 1995 and 2015, industrialisation shifted from Europe to the United Sta- consequences of actions taken, tes and Asia, whilst global emissions increased during this pe- the European Union runs riod by one-third. When strict environmental requirem ents are paired with difficult market conditions, the situation beco- the risk that its climate policy, mes dramatic. R ecent news from the UK mentions closing steel mills which provided 15,000 work plac es. It is impossible instead of being regarded as not to draw conclusions from these events. In comparison, ‘ambitious’, will be referred to the whole of the Polish steel industry directly employs 22,000 people, and one job in the steel industry creates another 5 in as ‘absurd’. The only question related sectors, such as mining, transport, and the coke indus- try. In Poland, this translates into a further 100,000 jobs. is whether or not it is too late

Chinese free market? A selective image The reasons for the decision to close steel mills in the UK It is surprising that the EU is still not ready to openly admit have never been a secret: these are over-production and high that ideas have consequences, and the fight against global imports of Chinese steel, as w ell as the costs of climate policy warming is not a glorious exc eption among them. R epre- and high energy prices. Meanwhil e, the European Union, as sentatives of the European Commission in public statem ents always in the case of compl ex economic phenomena, perce- selectively present the effects of climate policy, denying at ives the entire situation in the most typical way – unilaterally. every juncture that the competitiveness of the EU economy is During the last m eeting of the European Parliament, Jean- weakened. At the same tim e, in the rec ent communication of Claude Junck er assured everyone that he recognises the se- the European Commission, we read that one of the reasons rious problems faced by the European steel industry, but for the price advantage of steel products imported from Chi- simultaneously, he pointed at the aggressive pricing policies na, is the ”less ambitious climate policy of some countries ▶

2 No. 5 (42) ▪ May 2016

OPINION

CONTINUED further restrictions. Sectors at risk of carbon leakage outside the Union – that is, among others, the steel sec tor – are to outside the EU.” It is also worth noting that calling China a receive free allowances by ref erenc e to the results of some of country with ”not a particularly ambitious” approach to envi- the most efficient installations (i.e. system of benchmarking). ronmental protection, is an understatem ent with regard to it Their emissions are generally lower than the EU average, and being the largest CO2 produc er in the world, and the main thus, do not reflect the capabilities of the entire sector. Even a ‘brakeman’ of a global climate agreem ent. Without a real, and cursory analysis, shows that the regulatory system of the EU's not specifically declared, reduction of carbon emissions, climate policy is ‘byzantine’. Its consequenc es have a real China’s shameful position will not change. financial dimension. The entry into force of the proposal in its present form, will lead to the steel industry receiving 40% less Labyrinth of ambitious reforms emissions permits by the end of 2030. The sum of all direct The reform of the EU Emissions Trading Schem e (ETS), and indirect costs this sector will have to bear across the which is to take place in the next decade, will mean only a continent, reaches 34 billion euros. deepening of the current problems for the steel sector throughout the European Union. Its assumptions are terribly Combining the effect with the cause simple – Europe, in spite of the worldwide agreem ent, in- With regard to the crisis that affects the EU steel sector, tends to combat global warming only by reducing emissions. the European Commission sees all the el em ents separately, To make matters worse, it hangs the bar higher and higher, and avoids a clear cause and effect link. Does it see the weak- closing its eyes to the fact that it is technologically impossible ening condition of the EU economy, to which climate policy, to reach it, and that global meaningfulness is declining – imposed on industry over many years, has contri buted? Does today, the EU is responsible for approx. 10% of global emi- it consider China as a reliable partner in the fight against ssions, and in 2030, it will be l ess than 5%. The number of climate change? Are the emissions from the production pro- allowances allocated free of charge continues to decline, and cess important enough for the EU to include it in the shaping in the next decade, the pace of reduction will increase. The of future trade relations with the largest producers of carbon only solution for manufacturers is to purchase additional dioxide in the world? The gap in the positions of the Commi- allowances, the pric es of which, are also not free from inter- ssion, observed in a number of exam ples, is becoming inc rea- ferenc e. While the EU Court of Justice does not accede to the singly alarming. In early April, I made a formal inquiry on complaint of the Polish governm ent regarding the decision these matters to the Commission. Without reflection on the to establish a market stability reserve, at the beginning of consequences of actions taken, the European Union runs the 2019 - even during the current stage of the settlement – the risk that its climate policy, instead of being regarded as ‘ambi- price of permits will be artificially raised by withdrawing some tious’, will be referred to as ‘absurd’. The only question is whether of them from the market. The year, 2021, is set to introduce or not it is too late... ■

EDITORIAL Pacta sunt servanda? Let’s make sure that is the case

Bogdan Janicki the EU. The discussion demonstrated that at l east 100,000 Editor-in-Chief jobs, concerning this sec tor in the whole European Union, are seriously endangered by the process of carbon and invest- In the EU, May has been especially abundant, when it ment l eakage, which, in turn, are generated by ETS m echa- comes to high-level debates, meetings, and conferences, nisms. The answ er to that challenge is better targeting of dedicated to the topic of energy. In this issue of our those sectors that are most exposed to the risk of carbon leakage. monthly magazine, we are reporting to you about some We have also continued our efforts to promote the North– of the most interesting events, which were organised South Corridor among the EU’s decision-mak ers. We may be or co-hosted by CEEP during the busy month. satisfied with this goal, as we have now reached a position, in which questions of what this i dea m eans have been replaced The schedule of proc eedings opened with an important by those of when and how the Corridor could indeed be hearing at the European Parliament, devoted to the revision completed. It is important for us to raise the general aware- of the ETS directive. The bitter irony lies in the fact that, although ness of the need to enhance our energy security, not only the official aim of this revision is to make the ETS system com- through better legislation, but also due to modern, w ell-deve- pliant with the ’s conclusions, the reality is loped, and holistically approached infrastructure. the total opposite. This is clearly visible in the formula of the As always, you will find in the CEEP R eport a handful of Modernisation Fund, which is moving in a compl etely reverse analyses and opinions regarding the energy market and the direction, when com pared to the original agreem ent, with energy-intensive industries. An issue which concerns the the role of B eneficiary States strictly limited. Pacta sunt ser- mining industry is the case of exposure limits for nitrogen, and vanda? Let’s make sure that is the case. this is considered in CEEP’s Position Paper. News from the global The notion of the ETS was also central to another debate, and local energy mark ets, as well as from CEEP members, are this time dedicated to the future of the fertilizer industry across also available for your perusal. Have a good read! ■

3 No. 5 (42) ▪ May 2016

POSITION PAPER CEEP Position Paper on the proposal on occupational exposure limits for nitrogen monoxide (NO)

. for those employees who are employed on regular 7.5-hour shifts – about 5 hours, . for those employees who are employed on reduced 6-hour shifts – about 4 hours.

The duration of professional activity of those employees who work underground on regular shifts is limited in many Mem ber States to 25 years, and thus, the duration of their exposure to hazardous agents is also limited. The professional activity of the em ployees em ployed outside mining, is usually 15 years longer. Moreover, in the past 50 years of copper mining, there has been a general shift in the fi eld of the technological l evel and applied tec hnologi es. New machines and equipm ent , fitted with modern, low-emission combustion engines have been put into operation. New emulsive explosive materials with lower emissions of harmful gases, including NOx , in relation to the traditional, nitroglycerine-based ones which were pre- viously used, have been introduced into the process of mining. The existi ng exploration systems have been modified, collective and individual protection m easures are commonly used, and modern labour organisation solutions have been implem ented, as w ell as work safety m anagem ent systems, etc., which in total, translates into a significant improvem ent of work conditions, benefitting the employees’ health. A proposal is being made to introduce a transitional period, of not less than 10 years, to allow the mining industry to Remarks: implement the European Union’s proposals regarding the 1. The results of medical tests, made for exampl e in KGHM decrease of the highest admissible level of nitrogen oxide Polska Miedź S.A, on the efficiency of the respiratory system s concentration to 2,5 mg/m³ (2 ppm). of about 860 employees of the mines employed in a work environment, in which exposure to nitrogen oxides lasts for The position of CEEP regarding the European Union’s pro- periods of 20 or 25 years, do not confirm their negative impact posal to dec rease the highest admissible l evel of nitrogen oxi- on human health. de concentration to 2,5 mg/m3 (2 ppm) is not applicable to 2. The underground mining industry, despite the applica- underground mining in European Union, where this level is tion of the most modern machinery and equipm ent, techno- much higher in many Mem ber States whereas in some l ead- logy, and best prac tices in the field of NO mitigation, is cur- ing countries is currently set at 5,0 mg/m3 (according to the rently, unable to comply with the norms recom mended by legal regulations for underground mining). As a result, wefeel the SCOEL. obliged to express a critical position regarding the presented 3. The introduction of new , restrictive norms, related to proposals of the highest admissible l evels of occupational the admissible NO concentration levels, can have a direct im- exposure. pact on the nec essity to limit or halt mineral extractions The proposed l evel by the European Commission is not which could result in a significant reduction of the revenues acceptabl e, due to the lack of sufficient scientific, social, and of the state and local authorities, which are generated by taxes economic impact research on the impl em entation of the (corporate income taxes, personal income tax es, local taxes planned regulations. In the mining sector, despite the use of (for example for only cooper industry in Poland it amounts to the most advanc ed machinery and equipm ent , tec hnologi es, around 800 million Euro per year) about PLN 3.4 billion per and best practic es in the field of NO emissions reduc tion, it is year, according to data from 2014), currently impossible to ensure compliance with the norms 4. At present, there is no alternative technology, to reach which are recomm ended by the Scientific Committee on the Commission’s proposal. Replacing self-propelled mining Occupational Exposure Limits (SCOEL). machines powered by engines, in line with the TIER (STAGE Furthermore, the level of the highest admissible concen- IV) standard, would be extrem ely costly. There are ongoing tration of hazardous agents, is determi ned for an eight-hour research works related to the use of mining machines po- working day, and for the entire period of professional activity. wered by electrical engines, in room and pillar systems, and The actual time of exposure of the mining employees to their adoption to the existing geological-mining conditions. It these agents, throughout the day, is lower than that which is is expected that these solutions could be applied by the established in the eight-hour norm, and it totals: mines but not earlier than the next 10 years. ■

4 No. 5 (42) ▪ May 2016

CEEP ACTIVITY CEEP at the European Parliament: The Modernisation Fund must follow the objectives of the national energy markets

On May the 4th, 2016, CEEP’s CEO spoke at a hearing at pect for the Lisbon Treaty. Therefore, when it com es to inves- the European Parliament, which was devoted to the tment decisions, the Modernisation Fund should be managed revision of the 2003/87/EC directive. Mr. Bodio stressed independently by eac h Beneficiary State.” The way Mr. Bodio that the new proposal regarding the directive may not presented it in the European Parliament, there is no need for change the formula of the Modernisation Fund, by additional administrative structures and bodi es, in order to reducing the role of Member States, when it comes effectively manage the Fund. to investment decisions in the energy sector. Mr. Bodio declared that CEEP, alongside other industry organisations, is committed to working out a formula for the The aim of the works, which are now taking place in the European Commission, is to make the ETS system compliant with the European Council’s conclusions. In October, 2014, The selection of investment heads of governm ents reac hed an agreem ent in relation to the climate and energy policy framework post-2030. The CEO projects should be carried out, of CEEP reminded the audi enc e at the European Parliament taking into account the that part of the compromise was the establishm ent of the Modernisation Fund for those Member States, where GDP per specificity of the energy mix capita does not exceed 60% of the EU average. “The Fund was to be managed by the B eneficiary States, in each Member State, with due with an advisory – and not decisive – role of the European In- respect for the Lisbon Treaty vestm ent Bank (EIB). Yet, what we now see on the table goes in a totally opposite direction, with the role of Beneficiary States strictly limited, when compared to the original agree- Modernisation Fund, that would guarantee its full transpa- ment,” Mr. Bodio stressed. rency. “We believe that the Fund’s managem ent procedures The current proposal from the European Commission pro- should resem ble those, which proved effective when it vides the EIB and Non-B eneficiary Mem ber States with a deci- comes to the EU’s structural and investment funds. That sive role concerning the selection of specific investment pro- means that eac h Member State should have dedicated funds jects. This could lead to the blocking of financial support for to be spent on a specific purpose,” he explained. modern energy technologi es, whose only ‘fault’ is making use In conclusion, Mr. Bodio stated that CEEP is ready to of coal. support all Mem ber States in their efforts to modernise their According to CEEP’s CEO, “the sel ection of investment energy systems and increase energy efficiency, in accordance projec ts should be carried out, taking into account the speci- with the needs of individual nations participating in the Euro- ficity of the energy mix in eac h Mem ber State, with due res- pean Community. ■

5 No. 5 (42) ▪ May 2016

CEEP ACTIVITY A high-level debate: The North–South Corridor: bolstering the EU’s connectivity, competitiveness, and security

During the European Parliamentary session in Strasbourg tions, the speakers discussed their vi ews with attendees of on May the 10th, 2016, CEEP hosted a high-level debate on: the debate, and the European Commission. ’Bridging Europe’s energy divide – How to link Central Mr. Al ejandro Ulzurrun, Head of Unit for Inter-Institutional and Western Europe?’ It was organised as a part of the Relations at DG ENER , European Commission, confirmed that European Energy Forum’s special platform, dedicated to the North-South Corridor had becom e one of the most impo- presenting energy related issues within the EU. rtant elements for the integration of the European Union. Bearing in mind the actual situation on the security of supply The main them e of the debate was how to link, in terms of issues, and aspects regarding the creation of the internal energy energy, Western and Central Europe. The discussion, chaired by the ITRE Committee Chairman, who is also President of the European Energy Forum, focused on presenting the vast po- The North–South Corridor litical, economic, and social benefits that would be brought to the whole continent, by linking energy, transport, and digital would connect Central infrastructure in c ountri es from the Central European , European markets, both with with other Member States from Western Europe. During the discourse, Heiko Ammerman, Senior Partner at each other, and the Western Roland B erger Strategy Consultants, explained how imple- mentation of the North–South Corridor would be a possible part of the continent. It can also solution to bridging Europe’s energy divide. Mr. Ammerman comprise a set of interrelated underlined that the construction of the North–South Corridor, by bolsteri ng the connectivity, competitiveness, and security gas, electricity, and oil of the EU-11, and the EU overall, was one of the key enablers for completing the European integration process, paired with transmission infrastructure a new approach to energy infrastructure projects. It would connect Central European markets, both with each other, and market, this is an ideal project for our times. the Western part of the continent. This project could also com- What needs to be underlined is that numerous MEPs prise a set of inter-related gas, electricity, and oil transmission attended, and a broad discussion on energy infrastructure, infrastructure projects within the Central European region. from many perspectives, took place. R epresentatives of West The participants, on their behalf, confirm ed that there was European Member States confirm ed, along with those from a strong political rationale for the North-South Corridor – it Central Europe, that if we wish to have one internal energy will integrate, diversify, and secure the supply for Central and market, then better integration of all Member States is defi- Eastern European energy mark ets. Following the presenta- nitely needed. ■

6 No. 5 (42) ▪ May 2016

CEEP ACTIVITY A high-level debate: The European fertilizer sector is seriously endangered by the EU Emissions Trading System

As the European Commission is working on a revision of Debate participants agreed that, should a correction factor the EU emissions trading system for the period post-2020, be applied equally to all sectors, the fertilizer industry would CEEP and Fertilizers Europe organised a timely debate on be hit three times as hard, due to the process emissions. Ma- that issue. Both organisations called for better targeting rian-Jean Marinescu, MEP , stated that “it is obvious that va- on those sectors that are most exposed to carbon leakage rious sectors are different, and we need to find a solution as risk, so they can continue to increase production and jobs to how we can differentiate the allocation of free allowances in Europe, whilst sustaining their competitiveness. to these sectors.” He also elaborated on how important the fertilizer sector is for Central and Eastern Europe. “Due to poli- The debate took place on May the 11th, 2016, in Stras- bourg. It demonstrated that the risk of carbon leakage varies greatly betw een different sectors, and the fertilizer industry is At least 100,000 jobs, one of the most ex posed to that threat. According to Marcin Bodio, the CEO of CEEP, at least 100,000 jobs, concerning the concerning the fertilizer industry fertilizer industry in the whole European Union, are seriously in the whole European Union, endangered by the process of carbon and investm ent leakage, which, in turn, are generated by ETS mechanisms. are seriously endangered by “This industry plays an important role in the EU’s economic growth, as well as its food security, as half of the food the process of carbon and consum ed today is produc ed via the use of fertilizers,” Mr. investment leakage, which, Bodio stressed. Both CEEP and Fertilizers Europe representatives pointed in turn, are generated by out that, as a result of specific technological situations, a proper targeting or differentiation of the ETS system is highly ETS mechanisms needed. Jacob Hansen, Director General of Fertilizers Europe, underlined that, as two-thirds of emissions generated by the tical and economic transformations, major investments have fertilizer industry are process emissions, they are unavoidable, been made, and further are planned by the fertilizer industry, and therefore technically impossible to reduc e. “If we conti- in such countries as Romania, Poland, and Slovakia.” nue to allow the whole emissions reduc tion burden to fall on It should further be notic ed that, since 2005, the European the remaining one-third of emissions, which can be affected, fertilizer industry has achi eved over 50% of emissions reduc - we will end up with all of the fertilizer capacities moved out tions. It has been possible due to investing more than EUR of the EU to regions where environm ental regulations are less 1 billion, annually, at 120 production sites across the conti- stringent,” he warned. nent. ■

7 No. 5 (42) ▪ May 2016

ANALYSIS Why does the European Commission want to investigate intergovernmental agreements in energy?

Karolina Golonka, Joanna Rycerz Lesław A. Paga Foundation Alumni

In order to avoid problems resulting from interaction between EU law and international commitments, that may have an impact on the EU’s energy market, in 2012, a compl ete draft of new or am ended IGAs, as w ell as a com- the EC adopted the so- called “IGA Decision” (Decision mercial contract of a non-binding document. Drafts (without No 994/2012/EU of the European Parliament and of the confidential el em ents) will be shared with other MSs, and Council of 25 October 2012). signing the non-compliant document will em pow er the EC to start an infringement procedure against MSs at the European The IGA Decision obliged Member States to submit to the Court of Justice. The new IGA Decision to come into force has EC, existing IGAs up till the 17th of February, 2013, as well as to be adopted in the co-decision procedure by the Council to share information about IGAs, relating to all energy com- and the European Parliament. modities, exc ept nuclear. MSs, on a voluntary basis, have Those big changes m ean that under the new IGA been entitl ed to invite the EC into ongoing negotiations, and Decision, the EC, in practice, will be the necessary player in ask for compatibility of the IGA with EU law. The obligation the negotiations and will have the tools to pressure MSs, to settl ed under the IGA Decision, applies only to the contracts provide compliance of docum ents that may have an impact betw een MSs and third countries. . Comm ercial agreem ents on the EU’s energy mark et. From the perspec tive of countries or non-binding docum ents, such as m emoranda of under- with a weaker bargaining position, the presenc e of the EC in standing, are excluded. Nonethel ess, IGAs are very often negotiations on contracts for energy infrastruc ture/energy perc eived as ‘the guarantee’ for commercial contractors to supplies, may be beneficial. The approach presented in the make an investment decision. Building an internal energy new IGA Decision, may bring greater transparency in energy market requires full compliance of national regulations with contracts with third countries. the Third Energy Package. The aim of the IGA Decision was to give the EC a tool with which to gain this goal. Time has shown that the IGA Decision has been insuffi- Under the new IGA Decision, cient to provide compliance of IGAs with EU energy law. Du- ring the past 3 years, the EC assessed 124 IGAs, and one-third the European Commission will of them raised doubts about their compliance (due to e.g. be the necessary player in the destination clauses or formulas breaching the third energy package). On the basis of the IGA Decision, the EC could only negotiations and will have the provide ex-post control of IGAs, and in case of doubts, MSs did not have any intention to re-open questioned IGAs (but some tools to pressure Member States of them , e.g. those related to South Stream were not execu- to provide compliance of ted). Another exam ple is 2, which due to the an- nouncement as being a strictly commercial projec t betw een documents that may have an the companies involved, has not been covered by the IGA Decision (it was submitted in the regime of SoS Regulation). impact on the EU’s energy market The issues arose in relation to infrastructural projects (in the above South Stream and Nord Stream 2, as w ell as with The future impact of the new IGA Decision might be TAP), and when c ombined with climate policy and decreasing weakened by the on-going trend to switch gas supplies from EU internal gas production, resulted in c oncrete EC proposals. IGAs to commercial agreem ents. D eveloping the gas market Solidarity, a regional, instead of a national approach, and (and especially gas exchanges, e.g. CEGH, EEX, PolPX) also competitiveness are the watchwords of the Energy Union does not favour the signing of new IGAs, concerning gas concept. . The new IGA Decision is a part of the so-called EC supplies. It is highly probable that, in future, IGAs will be winter package – which is perceived as an EC vision of the fu- mainly concluded to secure investments in large infras- ture European energy market. tructural projects. Therefore, the adequacy of an IGA Decision, Under the scenario proposed within the new IGA D eci- will mainly depend upon establishing a proper equivalent sion, the role of the EC will increase at early stages of nego- system for the control of commercial contracts. Otherwise, an tiations. The EC will provide ex-ante control of energy-related IGA Decision might be bypassed, as it was in the Nord Stream documents – by the obligation of MSs to provide the EC with 2 case. ■

8 No. 5 (42) ▪ May 2016

ANALYSIS

Judgment of the Year Cross sectoral correction factor 2013 94.272151%

European Court 2014 92.634731% of Justice 2015 90.978052% dated the 28th of April, 2016, in joined 2016 89.304105% cases C-191/14, C 192/14, C-295/14, 2017 87.612124% C-389/14 and from C391/14 to C-393/14 2018 85.903685%

Marek Dolatowski 2019 84.173950% Advocate, Energy Sector Advisory Practice, Wardyński & Partners Agnieszka Kraińska 2020 82.438204% Legal adviser, European Practice, Wardyński & Partners

This month’s legal report follows items concerning the were obliged to specify emissions from installations included ongoing ETS reforms, and in particular, the greenhouse gas in the Community scheme from 2013 onwards. Member Sta- emission allowance trading system in the European Union tes did not, however, uniformly interpret the provision con- – interpreting article 10a sec. 5 Directive 2003/87/EC – cerning the addition of emissions from installations included the method for calculating the uniform cross-sectoral in the Community scheme, commencing from 2013. Some correction factor. Mem ber States (including France and Bel gium), relying on the wording of the Frenc h language version of the Directive, Firstly, though, we should look at the analysis regarding gave the European Commission data taking account of emi- Directive 2003/87/EC, as the ECJ found irregularities in the ssions from 2013, not only from installations included in the way the Commission calculates the maximum number of free Community schem e from that year, but also all emissions emission allowances, allocated on the basis of art. 10a (to so- from installations included in the Community schem e before called industrial installations as part of the desire to counter that year, but taken into account from 2013. carbon leakage. The divergent interpretation of art.10a sec. 5 b) Directive Pursuant to sec. 5 of this article, the maximum num ber of 2003/87/EC by Member States, and the lack of verification of allowances may not exceed: submitted data by the European Commission, led to an over- i. the annual Community-wide total quantity of allowan- stating of the maximum annual num ber of allowances, and ces, multiplied by the share of emissions from installations thus, to specification of the correction factor at an incorrect not covered by paragraph 3 [exclusion of electric pow er ge- level. nerators, CO2 capture installations, CO2 transport pipeline The ECJ limited the effects of the ruling in tim e, due to installations, and CO2 storage sites] in the total average overriding considerations of certainty of law, and ordered the verified emissions from 2005–2007, originating from insta- European Commission to rectify the erroneously calculated llations covered by the Community scheme from 2008–2012, values within 10 months from the ruling’s pronounc em ent. and Thus, actions undertaken on the basis of invalid provisions ii. the total average annual verified emissions for 2005– cannot be questioned, and remai n valid to the end of this 2007 from installations which are included in the Community period. schem e from 2013 onwards, and are not covered by para- It should be em phasised that the ruling was rendered on graph 3, adjusted by the linear factor, as ref erred to in Article the basis of pre-judicial questions presented by Member Sta- 9 of the Directive. tes' courts, resolving disputes of enterprises emitting green- If initial allowance allocations for industrial installations house gases with the rel evant national authorities. Energy exceeded the maximum num ber of allowances for allocation compani es probably intended to obtain uniform interpre- (total of point i) and (ii), then the correction factor should tation within the EU of art. 10a sec. 5 b) Directive 2003/87/EC, have been objectively and uniformly applied to each indus- reflecting a method, favourable to them, for calculating trial installation, adapting the number of initially allocated emissions contained in the French language version of the allowances to the maximum quantity of allowances. This directive. How ever, the ECJ acknowledged the argum ents of actually occurred, and based on the data available to it from the complainant as being contrary to the systemic intent of EU Member States, the European Commission indicated the Directive 2003/87/EC, since b) of the said regulation, was maximum number of allowances, and calculated the appli- intended to increase the maximum num ber of free allowa- cable correction factor (art. 4 Decision 2013/448/EU and Exhi- nces conferred upon industrial installations in the Community bit II to this decision), as shown below, in the following chart. schem e, only by emissions from the new sectors included in The court declared invalid – art. 4 Decision 2013/448/EU, the system from 2013. and included a sliding downward scale of values for the cross- Since the ECJ held that the judgement only evokes effects sectoral correction factor in Exhibit II (see the table). after the expiry of 10 months from its publication, in other words The problem raised in the case conc erned the data on the from the 1st of March, 2017, and the allowances in the given quantity of average, annual verified emissions for 2005–2007, year should be issued by the 28th of February of this year, the from installations that are included in the Community sche- new calculations of the correction factor should only impact me from 2013 onwards (point ii)) above). EU Mem ber States on the allocation of free emissions allowances after 2018. ■

9 No. 5 (42) ▪ May 2016

SUCCESS STORY

dium tin oxide). For many years, ITO was the standard, ful- filling its role in most applications. How ever, due to the unsta- XTPL – Polish ble price of indium, limited resources, and the dynamic deve- lopment of flexible elec tronics, ITO is no longer sufficient. technology with Currently, the price of ITO layers is approx. $18-22/m2, which is a significant proportion of the total production cost of the cell or display. Manufacturers are thus looking for cheaper a global reach solutions, which will also allow them to becom e i ndependent from indium, which is mainly controlled by China,” explai ned Filip Granek, co-creator of XTPL's technology. XTPL was founded in 2015. After several months, the Factors shaping the development of the mark et, overlap company developed a technology that has won over with the expectations of customers for home electronics, the biggest players in the global PV market. Today, the who have become used to the continuous im provem ent of Polish scientists' idea is applied on a laboratory scale. the performance of equipment, without an increase in pric es, XTPL's goal is to move as quickly as possible, to the level as well as the continuing work on increasing the efficiency of of readiness to implement, because there are already photovoltaic cells. Due to its crystalline structure, ITO layers many companies interested in the technology. crack when bent, making it impossible to adapt them to the growing market of flexible solar cells. The XTPL company develops transparent conductive films Research and laboratory tests confirm that XTPL's techno- (TCF), which are used as transparent el ectrodes in thin-film logy has a higher transparency than ITO, greater flexibility solar cells and LCD displays. XTPL technology enables the than ITO, and higher electrical resistance than ITO. To put it production of ultra-precise structures, using a m ethod that is more clearly, it will allow an increase in efficiency, and reduce scalable and can be inexpensive. Figuratively speaking, scien- the production costs of solar cells. In the area of LCD displays, tists create and imprint a grid of very thin wires on foil or XTPL's technology mak es it possible to reduce the power glass, which are one hundred tim es thinner than a human consumption of the display and improve the visual properties hair and conduct electricity. With this size, the line light stops of the colour saturation of the image. The revolution in the reflecting off them, and thus, becom es transparent. At the market is, therefore, within reach. same time they conduct electricity. The material – glass or film – on which this type of a grid is printed, is also transpa- New energy, not only for Europe rent and electrically conductive. It is mainly companies, who are engaged in the produc- tion of photovoltaic panels, that are interested in XTPL's Novelty or revolution, who will benefit technology, today. The num ber of solar panels used through- from the new technology? out the world continues to grow , as well as their share in the Today, the technology works in laboratory conditions, but energy supply. Other European countri es – even cloudy ones in a few years, transparent conductors may become compo- as the United Kingdom – are joining the world's l eading nents of solar cells and LCD displays. Thanks to XTPL's techn- producers of energy from the sun. Soon, they will be able to ology, solar cells may be more efficient, c heaper and manu- take advantage of technology, which will reduc e the factured on flexible surfaces. Displays can consume l ess ener- production costs of solar panels. gy, and have a higher luminance of image and colour. “The use of this technology is global. How ever, XTPL does Manufacturers will also be able to make larger screens. not deliver ready-made final products, but one of their com- “Currently, the TCF market is dominated by ITO layers (in- ponents, so it is not up to us, but to the manufacturer how ▶

THE COURT OF JUSTICE OF THE EU ny of shares in a joint (Romanian-Turkish) company, equi- Prepared by Wardynski & Partners, valent to State aid, subject to the obligation to notify? CEEP member Can it be held that such a shareholding by a publicly- owned pow er-producing company infringes the principle Judgment of the General Court of separating transmission systems from transmission sys- tem operators, established by Article 9 of Directive 2009/ T-47/15 v Commission 72, concerning rul es adopted for the internal market in el e- The Commission was correct in taking the view that ctricity? the reduc tion in surcharge for electricity-intensive undertakings provided by Germ an law on renewabl e C-80/16 ArcelorMittal Atlantique et Lorraine energy of 2012, conferred upon them an advantage within In its Decision 2011/278/EU, did the European Com- the m eaning of the EU’s law on State aid. That reduc tion mission, by excluding emissions from recycl ed waste released them from a c harge, which they would normally gases, used in the production of electricity from the have had to bear. The grounds underlying an aid m easure, benchmark value for hot metal, contravene Article 10a(1) do not suffice to exclude the measure at the outset, from of Directive 2003/87, establishing a schem e for green- classification as aid. house gas emission allowance trading within the Commu- nity, concerning the rules for establishing ex-ante benc h- Preliminary questions marks, and in particular, the objective of efficient energy recovery of waste gases, and the option of allocating allo- C-22/16 Fondul Proprietatea SA v SC Hidroelectrica SA wances, free of charge, in the case of electricity produc ed Is the holding by a Romanian publicly-funded compa- from waste gases?

10 No. 5 (42) ▪ May 2016

SUCCESS STORY

CONTINUED technology have already convinced many manufacturers around the world. XTPL has rec eived several letters of intent, includ- they’ll use our technology. We must rem ember that the so- ing one from the largest manufacturer of photovoltaic modu- lution we're working on, covers only a fraction of the whole les – Trina Solar. technological process of the manufacture of solar cells and Trina Solar – a photovoltaic industry giant, listed on the displays. Our goal is to provide the manufacturers of these New York Stock Exchange, monitors and analyses new tech- final devices, with a m ethod that will enable them to signi- nologies that may affect the formation, developm ent, and ficantly improve the param eters of one of the k ey compo- performance of solar panels. This company has also analysed nents. They have been looking for this type of solution, so the XTPL's technology, developed by Polish scientists, and the chance that they will take advantage of this technology on a letter of intent confirms the serious interest in the invention. wide scale is high. XTPL fits in well with the identified market “XTPL’s technology, allowing for the printing of extrem ely need in these industries,” claimed Filip Granek. narrow, electrically conductive lines, can have a significant The m ethod developed by XTPL, mak es it possible to pro- impact on the global production technology of silicon solar duce such layers, which will not lose their properties when cells, because it enables a significant reduction of power los- bending. Therefore, XTPL's solution to some extent, enables ses, associated with the metallisation of these solar cells. Now , the manufacturers of solar cells and displays to transition to a further developm ent of XTPL's technology from a laboratory flexible surface. R emember, however, that other constituent scale to a high level of production readiness is necessary. components in the construction of solar cells and displays, XTPL's technology, in the case of its successful scaling to must also be adapted to flexible surfaces. Today, global tech- industrial conditions, fits very w ell with the so-called tech- nology is already going in this direction, so the manufacturers nological roadmap for silicon solar cells at Trina Solar. We look will soon have acc ess to all the necessary elem ents to create forward to working with the XTPL team,” asserted Pi erre fully flexible displays and solar cells. Verlinden, Senior Vice-President and Chief Sci entist at Trina This m eans one thing: XTPL's technology will allow for the Solar. manufacture of a new type of solar c ell. Also, it will reduce the Polish scientists still need 2.5 years to scale the technology cost of their manufacture, and make them more efficient. This from the level of laboratory verification to the aforem en- combination of benefits may add to the popularisation of the tioned readiness for mass production. They would like to have use of energy coming from solar panels on a global scale. the first licensing agreem ents for the pilot implementation of XTPL's technology. Then, everything will depend on the The best are already convinced manufacturers of end products – they will decide when the Laboratory results and plans for the developm ent of the first products will appear on the market. ■

MEDIA PARTNER

Oleofuels 2016 brings together the industry’s leading nology Investors Ltd, Meo Carbon Solutions GmbH, LMC experts and executives from across the entire value chain International, PRIMA , SQ Con-sult, Stratégi egrains / Tallage, (biodiesel producers, trade and distribution, feedstock Rothamsted Research, and many more. experts, techno-logy providers, academia, and government During the afternoon of Monday the 20th of June, at Ol eo- and research institutes, amongst others) for two days of fuels 2016, a limited number of conferenc e attendees will informative presentations, interactive discussion and receive the unique opportunity to attend a site visit to Refuel excellent networking opportunities. Energy’s plant in Knowsley, Liverpool. ACI are pleased to offer members of CEEP a 20% discount The event will take place on the 21st & 22nd of June, at to attend Oleofuels 2016 CEEP members registration price: the Exhibition C entre, Liverpool. The list of confirmed £1,195 (standard conferenc e price: £1,495). To claim: quote speak ers includes those from: Petrotec, Bioeton Deutschland, the discount code: EAF9CEEP. For more information, and to Prio Energy, Neste, A&A Fratelli Parodi Spa, Bio Oil Group, register your attendance, pl ease contact Cheryl Williams on: EcoMotion GmbH, FiveBarGate Consultants Ltd, EWABA, BDI – +44 (0) 203 141 0623 or email: [email protected]. BioEnergy International AG, Departm ent for Transport, Spa- Oleofuels 2016 is an event within the Official IFB2016 pro- nish Ministry of Economy & Com petitiveness CIEMA T, Inter- gramme: https://www.ifb2016.com/en/festival/schedul e/225- national Council on Clean Transportation, Sustainable Tech- oleofuels-2016. ■

11 No. 5 (42) ▪ May 2016

MEMBERS NEWSFLASH ArcelorMittal Poland has stopped its blast furnace for repair

The modernisation of blast furnace no. 5, located in the Kraków Unit of ArcelorMittal Poland, started on April the 30th, 2016. The process will take 80 days and cost over EUR 40m. The investment will significantly improve the installation’s environmental footprint. Thanks to the new closed circuit cooling system, the plant will no longer take in water from the Vistula river for the purpose of blast furnace cooling. The modernisation of two new electrostatic precipitators (for the burdening house and the cast house) will allow the company to comply with BAT (best available techniques) requirem ents for emissions into the air, resulting from the Industrial Emissions Directive (IED). This will be possible in July this year, i.e. two years before the l egal requirement. Finally, the replac em ent and repair of hot stoves will allow the steel- maker to increase the temperature of hot blast by ca. 100 degrees celsius and, thus, lower coke consumption. “The repair of the blast furnace is only one of the invest- ment tasks we are c ompl eting at the Kraków plant this year. Others include the m odernisation of basic oxygen converter at the steel shop and investments in the hot rolling and cold rolling mill,” Geert Verbeeck, chief executive and deputy chair- man of the board of ArcelorMittal Poland, commented. (JJ)

Enea holds a successful Achema wants to pressure test in a new buy 21 LNG cargoes power plant over three years

A highly efficient coal power unit is being developed by Achema, Lithuania’s single largest natural gas consumer, Enea in K ozi enice, Poland. With more than 45% of efficiency plans to purchase 21 LNG cargoes, the equivalent of approx . and 1,075 MW of power, the block will be one of the pillars of 1.9 bcm of regasified natural gas, over the next three years. the country’s energy security. The successful pressure test is Achema began to import gas via the Klaipeda LNG termi nal an important milestone towards the completion of this EUR last February and has issued a short-term tender to buy up to 1.21b. worth investment. According to Mirosław Kowalik, the 21 LNG cargoes from January, 2017, to Dec em ber, 2019. The chief ex ecutive of Enea, the Kozi enic e unit will be one of the company aims to shortlist two LNG sellers, and award the most efficient facilities of this kind in the world. “This proves tender by the end of September this year. Using around 1.2 that there is room for modern-technology, highly-efficient bcm of gas annually, Achema signed a deal last February with and low-emission power units, which produce energy from Norway’s Statoil, whereby it purchased 700 mcm of gas by coal in an environmentally-friendly way,” he declared. (JJ) October. Prior to that, it only used ’s gas. (PW)

12 No. 5 (42) ▪ May 2016

REPORT The 73rd Energy Dialogue at the Reichstag

Alexandru Zegrea Consultant, Pflüger International

The 73rd Energy Dialogue at the Reichstag discussed the topic: ‘The Untapped Treasure of the Energiewende – The Heating Transition and Efficiency Revolution‘, and was held at the invitation of Prof. Dr. Friedbert Pflüger, Mr. Janusz Reiter, and CEEP on April the 29th, 2016.

Dr. Ing. Stefan Hartung, Chi ef Ex ecutive Officer, Robert Bosch GmbH, opened the dialogue by emphasising that, when thinking about CO2 emission reductions, we should not only concentrate on el ectricity generation, but also consi- der the heating sector, which is responsible for 40% of rage tec hnologi es would allow consumers to purchase power primary energy consumption. In the course of the ‘German and heat when the pric es are low, and employ them as need- Energiew ende’ (energy transition), consumers and industry ed. In Mr. Greis’s opinion, consumers will only be willing to alike have concentrated, significantly, more on renewable po- invest in new tec hnologies, if this can l ead to efficiency incre- wer generation than on efficiency and heating. This needs to ases and savings. change, as efficient technologies not only benefit the envi- Dr. Joachim Pfeiffer, Spokesperson for the Economy and ronment, they are also superior in term s of cost for Energy, CDU/CSU Parliamentary Group, German Parliament, consumers. agreed that – in addition to information and transparency – Manfred Greis, President, Federal Association of the Heat- consumers need regulatory inc entives that encourage upgra- ing Industry, added that beyond the Paris Agreement, decar- des of heating technology in existing buildings, and the use bonisation requires as a first step, a realistic timeline and a of the most efficient technology in new construction projects. focus on efficiency gains. Initially, natural gas has the highest The heating industry shares the responsibility to offer consu- potential here, due to the extensive infrastructure and stora- mers attractive amortisation tim es, through gains in efficiency ge capacity in Europe. In the next step, digitalisation and sto- and new approaches in sector linking. ■

NEWS FROM THE REGION

Bulgargaz to cut gas prices by nearly 10% no longer just about demonstrating future car techno- in the third quarter of 2016 logies, but more to do with the global transition process to Bulgargaz has proposed cutting the natural gas price alternative and renewabl e energy sources, though the for consumers by 9.97% for the3rd quarter of 2016, due to public are to be provided with the latest information about an expected drop in the price of gas supplies. The project- new and clean technologies. (Source: www.ukrinform.net) ed price of BGN 281.08 per 1,000 cubic metres, represents a decrease of BGN 31.13, when compared to the second Baltic Statesaim to set up quarter. The Bulgarian Energy Law requires the state-own- a single gas market ed company, to inform the public about planned changes Discussions are underway for the establishm ent of a in the price of natural gas, a month before submitting a single gas market in the Baltic States, with Estonia and formal proposal to the Bulgarian Water and Energy Regu- Lithuania very keen on the idea, whilst Latvia is more cau- lator, KEVR. The natural gas price in Bulgaria will have been tious. It appears likely that Finland will join the scheme, cut by 48%, since the c omm enc ement of 2016, despite the after it builds a gas interconnection to Estonia. A Baltic re- country’s almost 100% reliance on imports of Russian gas. gional task force has been form ed, and a Baltic regional (Source: www.novinite.com) study of the gas mark et was drafted last month. The main aims of the schem e would be to avoid additional payment 5th Electric Marathon on European Roads for gas transportation at each border, and to have the Bal- will start in Ukraine in June tic States and Finland treated as a single mark et. After pay- Ukraine will play host, for the second-year running, in ing once for gas entrance into the market, com pani es June, to the start of the Electric Marathon, which will ulti- would not have to pay any additional fees, as is the case mately cross the finish line in Monaco, after a long journey now. Pric es for consumers would be more similar in each across Europe. Lviv, will be a new venue for the race’s of the countri es. It was also envisaged that the Baltic States launch. The Marathon’s organisers wanted to show that, by could later link up with Poland, which consum es about 15 starting the race in Ukraine, the whole of Europe and its billion cubic m etres of gas, once a gas pipeline interconne- ally in Eastern Europe, are inseparable. The event itself, is ction with it is built in 2020. (Source: www.baltic-course.com)

13 No. 5 (42) ▪ May 2016

ENERGY ECHO

Discoveries of new oil reserves have dropped World’s largest floating windfarm to their lowest level for more than 60 years to be built off Scottish coast Oil exploration has been falling in rec ent years, but the Statoil, the Norwegian energy company has been gran- extent of the slump has reac hed surprising levels. In 2015, ted a seabed l ease, which will enable it to build the world’s oil explorers found 2.8 bn. barrels of crude and related largest floating windfarm, off Scotland’s east coast, near liquids, the lowest annual volume rec orded since 1954. Peterhead. It ex pects to have five 6MW turbines bobbing This figure represents a slowdown in exploration activity, in the North Sea, and generating el ectricity by the end of as oil compani es aim to conserve their cash supplies. Exis- 2017. ting oil fiel ds are still effectively producing oil, so the world The Hywind turbine is a leading force in the global race is not running out of oil, but Wood Mack enzie have clai- to develop flotillas of floating wind turbines. The base of med that if the rate of oil discoveries does not improve, each turbine is a floating steel tube containing ballast, there will be a shortfall in global supplies of about 4.5 m. which is tethered to the sea bed. Existing offshore wind barrels per day by 2035, and a subsequent upward trend in turbines, stand on concrete and steel foundations driven the price of oil. (PW) into the oc ean floor, but they becom e very costly when confronted with depths greater than 40 metres. Germany announces Electric Vehicle More than 90% of the world’s offshore wind capacity is incentive scheme installed in northern Europe, with the UK having the big- The German governm ent has just launched a 1 billion gest share. Offshore wind mak es up just 3% of all wind euro incentive plan designed to significantly increase the power. (PW) sales of elec tric vehicles. 12,363 fully electric vehicl es were sold in 2015, which represents a growth on 2014, of around Record temperaturesfor the seventh month in a row 45%, but ’s long-stated aim is to get one April, 2016, continued a rec ent disturbing trend – that million el ectric vehicl es on the roads by 2020, and that tar- of being the hottest April on record, dating back to the get appears to be a long way-off. 19th century. It was the seventh month in a row to break Under the new measures, buyers of fully-electric vehic- temperature records. As governments began work on a les can claim back up to 4,000 euros, whilst hybrid owners rule book to impl em ent the 2015 Paris Agreem ent to limit would be eligible for rebates of up to 3,000 euros. The 3- global warming, the United Nations urged stronger action. year sc hem e, due to begin in May, also includes making At the UN talks in Bonn, Germany, many government 100 million euros available to help local authorities pur- delegates expressed conc ern about the rising tem pera- chase EVs, as w ell as 300 million euros to establish 15,000 tures, and extrem e events, such as damage to tropical charging stations across the country. Carmakers are expec- coral reefs, wildfires in Canada, and drought in India. The ted to contribute 600 million euros to the plan, as w ell as UN’s Climate Chief, Christiana Figueres, declared that increase their investment in R&D for battery and electrifi- “there was no other option but to acc elerate action to limit cation technologies. warming”. She blam ed the natural warming effect of an El The goal is to move forward as quickly as possible on Nino w eather event in the Pacific Ocean, magnified by the electric vehicle sales, but a growth rate of approximately 140% build-up of man-made greenhouse gas emissions. “Certa- over the next 5 years is required, to reac h one million of inly, we are not yet on the path for the Paris tem perature such vehicles on German roads by 2020. (PW) targets”, she proclaimed. (PW)

The EPP condemns Nord Stream 2 Gazprom’s monopoly approaching a grand finale? The centre-right European Peoples’ Party (EPP), the World energy market experts perc eived ‘the beginning largest group in the European Parliament, has tak en a of the end’ for Gazprom’s monopoly in the European gas strong position against Nord Stream 2. The project was market, as the first shipment of liquefied natural gas (LNG) described by Manfred Weber, President of the EPP group, arrived in the Portuguese port of Sines on April the 26th, as being “incompatible with core EU principles and objec- 2016, from the US State of Louisiana. As the US em erges as tives”. a global supplier of energy, the export of natural gas Weber, an MEP from the Christian Social Union of Bava- means that there will be a full mobilisation of all six Ame- ria (CSU), is an important ally of Germany’s Chancellor, An- rican gas ports (three are still under construction) very gela Merk el, and her Christian Democratic Union Party of soon. Germ any (CDU). This mak es his intervention in the Nord Cheniere, the US company which sold the gas to the Stream 2 issue, very significant. In his rec ent letter to Portuguese, has already begun co-operation with many Energy Commissioner, Miguel Arias Canete, and to Ger- European countries, and this marks a warning signal to man Vice-Chancellor and Minister of the Economy, Sigmar Moscow. In response, Alexander Medvedev Gazprom’s Gabri el, he asserted that there would be a major increase Vice-President, has already indicated that prices will be in the EU’s dependency on Russia for its gas supply, if it lowered, to com pete with the Am erican LNG. Transpor- went ahead. tation, liquefaction, and regasification are factors which He also called for the exclusion of EU funds in relation make it difficult for LNG to be competitively pric ed. How e- to Nord Stream 2, and declared that the Third Energy Pac- ver, progress in advanc ed production and transport tec h- kage must fully apply to the project. Furthermore, he nology development, determines that it will be simply a claimed that Nord Stream 2 contradicts the EU’s forei gn matter of time before LNG is competitively priced. policy, security, and goals towards the Eastern partnership. Russia still meets 25% of Europe’s demand for natural The projec t would also have “detrim ental consequenc es gas, but gas is also supplied to Europe from Norway, Alge- for the gas supply in Central and Eastern Europe, including ria, and the Middle-East. In 2015, the num ber of LNG Ukraine, in particular, against the background of Gazprom’s exporti ng countries increased to 19, so the days of mono- announcement to stop gas deliveri es to Ukraine once poly of supply in Europe seem to be coming to a rapid Nord Stream 2 is finalised,” he added. (PW) end, and Gazprom may have to seek new markets. (PW)

14 No. 5 (42) ▪ May 2016

TWEETS OF THE MONTH

2016 27 May

2016 26 May

Follow CEEP on Twitter Engage with CEEP on at @CEEP_energy. LinkedIn and contribute Reply, re-tweet, mark as to shaping a network of favourite, join the debate! energy professionals! www.linkedin.com/company/ central-europe-energy-partners

15 No. 5 (42) ▪ May 2016

PICTURE OF THE MONTH

New pipes department launched at the Łabędy steelworks The Łabędy steelworks is part of the Węglokoks Group, a CEEP member. The company’s new pipes department is Poland’s most advanced facility for the production of longitudinally welded pipes. With an annual capacity of 100,000 tonnes, it is also one of the most advanced pipe mills in Europe.

© Photo: Janusz Pilszak

Central Europe Energy Partners (CEE P) represents 24 energy and energy-intensive CEEP REPORT companies and organisations from six Central E ur op ea n countries, employin g ov e r Editor-in-C hief: Bogdan Janicki 300,000 w or ke rs , with a total annual revenue of more than EUR 50 billion. CEEP is the Published byCentralEurope Energy Partners, AISBL first major body to represent the energy sector companies from the region at the EU Rue Froissart 123–133, 1040 Brussels level. The aim of CEEP is to strengthen the r egi on ’s energy security within the T: +32 2 880 72 97, E: [email protected] framework of a common EU energy and energy security policy. CEEP is an interna- TransparencyRegister No. 8773856374594 tional non-profit association with its headquartersin Brussels and a branch in Berlin. www.ceep.be

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