Will the construction of a nuclear power plant in Belarus exacerbate the country's energy dependence on Russia? OSW Commentary No. 87, 2012-07-23

During Russian PM Dmitry Medvedev’s working visit to Minsk on 18 July, Russia and Belarus signed a general contract for the construction of a nuclear power plant in Belarus. The signature brought to an end the complex negotiations which had been underway since January 2009 involving the leadership in Minsk, the Russian government and Atomstroyexport, the Russian company that will be the main contractor of the investment. However, the power plant’s future ownership structure, management arrangements and terms and conditions of profit sharing remain unclear. The Belarusian leadership hopes that with the launch of the nuclear power plant, it will be able to reduce gas imports from Russia, gas being the main resource used in producing heat and electricity in Belarus. This should in turn reduce the costs of energy generation. In addition, Minsk expects that the new investment will allow it to export electricity surpluses to the European Union, including Poland. Agreements concerning the power plant have been concluded over the last year or so and, according to these, Russia has acquired partial control of the Belarusian electricity grid, especially with regard to the transmission of energy to foreign markets. Russia is also the sole creditor and contractor for the investment, and the sole future provider of nuclear fuel. Therefore, implementation of the project will exacerbate Minsk’s already significant dependence on Moscow in energy and political terms.

The Energy Union: what is in a name? EPC Commentary, 18 March 2015

On 19-20 March, the EU Council will react to the Commission’s Communication on the Energy Union. Considering the high expectations, the reactions have been diverse so far, with complaints about the lack of attention for some specific interests or unsurprising credit as the document is vague enough to accommodate all wishes. However, a general consensus has emerged about the need for a holistic approach. States and stakeholders seem to recognise that the main challenges Europe faces in energy matters are deeply interconnected and can no longer be treated separately and without a larger role for the EU.

Between energy security and energy market integration. Guidelines for the future development of the EU’s external energy policy in Europe’s neighbourhood. OSW Report, June 2011

For many years the European Union has been improving the efficient use of energy resources and yet the demand for energy in the EU continues to increase. When Europe belonged to one of the world’s key energy markets with relatively easy access to energy resources, growing energy needs were not seen as a source of concern. Today, however, as the competition for energy resources is intensifying and the global position of the EU energy market is being challenged by growing economies in the developing countries, above all China and India, the EU needs to adopt bold policies to guarantee the sustainable supply of energy. This report argues the EU needs to develop a fully-fledged external energy policy; i.e. a common, coherent, strategic approach that build bridges between the interests and needs of the EU integrated energy market on the one hand and supplier countries on the other. The EU’s external energy policy has two main objectives. The first one is to ensure a sustainable, stable and cost-effective energy supply. The second is to promote energy market integration and regulatory convergence with neighbouring countries (often but not always this supports the achievement of the first objective). However, in order to improve its effectiveness, the EU’s external energy policy needs to be seen in a broader economic and political context. Any progress in energy cooperation with third countries is contingent upon the EU’s general stance and offer to those countries.

Energy Efficiency: Trends and Perspectives in the Southern Mediterranean. MEDPRO Technical Report No. 21/December 2012

This paper has two objectives. First, it attempts to establish the potential of policies on energy efficiency and energy demand-side management in the southern Mediterranean region. Second, by examining past trends in energy intensity and trends up to 2030, it analyses the prospects and costs of such policies, compared with expected developments in the price of energy resources. Based on both analyses (MEDPRO WP4) and on prospects for growth (MEDPRO WP8), it seems that energy intensity in the Mediterranean should fall perceptibly by approximately 13% in the next 20 years. But given the programmed energy mix, this will not limit emissions of CO2, which are likely to increase by more than 90%. The paper first presents the rationale for demand-side management (DSM) policies. After a general discussion of concepts, it tackles the question of instruments and measures for implementing such policies, before posing the question of the cost-efficiency approach for monitoring the measures the authorities introduce. Secondly, the paper assesses energy consumption and energy efficiency in the countries of the southern Mediterranean and the ways in which their main economic sectors have changed in recent decades. The third section outlines the demand management measures introduced and, taking Tunisia and Egypt as examples, estimates the cost of such policies. The fourth and last section offers a forecast analysis of energy consumption in the Mediterranean up to 2030, highlighting probable trends in terms of final consumption, energy intensity, energy mix and emissions of CO2. The section concludes with estimates in terms of cost, comparing objectives for lower intensity, results in terms of resource savings and the types of costs this approach represents.

Energy efficiency: the ever neglected priority of the European energy strategy. Egmont Paper No. 66, June 2014

Summary. Energy saving has been a stated policy objective of the EU since the 1970s. Presently, the 2020 target is a 20% reduction of EU energy consumption in comparison with current projections for 2020. This is one of the headline targets of the European Energy Strategy 2020 but efforts to achieve it remain slow and insufficient. The aim of this paper is to understand why this is happening. Firstly, this paper examines the reasons why public measures promoting energy efficiency are needed and what form these measures should optimally take (§ 1). Fortunately, over the last 20 years, much research has been done into the famous ‘energy efficiency gap’ (or ‘the energy efficiency paradox’), even if more remains to be done. Multiple explanations have been given: market failures, modelling flaws and behavioural obstacles. Each encompasses many complex aspects. Several types of instruments can be adopted to encourage energy efficiency: measures guaranteeing the correct pricing of energy are preferred, followed by taxes or tradable white certificates which in turn are preferred to standards or subsidies. Information programmes are also necessary. Secondly, the paper analyzes the evolution of the different programmes from 2000 onwards (§ 2). This reveals the extreme complexity of the subject. It deals with quite diverse topics: buildings, appliances, public sector, industry and transport. The market for energy efficiency is as diffuse as energy consumption patterns themselves. It is composed of many market actors who demand more efficient provision of energy services, and that suppliers of the necessary goods and know-how deliver this greater efficiency. Consumers in this market include individuals, businesses and governments, and market activities cover all energy-consuming sectors of the economy. Additionally, energy efficiency is the perfect example of a shared competence between the EU and the Member States. Lastly, the legal framework has steadily increased in complexity, and despite the successive energy efficiency programmes used to build this framework, it has become clear that the gap between the target and the results remains. The paper then examines whether the 2012/27/EU Directive adopted to improve the situation could bring better results. It briefly describes the content of this framework Directive, which accompanies and implements the latest energy efficiency programme (§ 3). Although the Directive is technically complex and maintains nonbinding energy efficiency targets, it certainly represents an improvement in several aspects. However, it is also saddled with a multiplicity of exemption clauses and interpretative documents (with no binding value) which weaken its provisions. Furthermore, alone, it will allow the achievement of only about 17.7% of final energy savings by 2020. The implementation process, which is essential, also remains fairly weak. The paper also gives a glimpse of the various EU instruments for financing energy efficiency projects (§ 4). Though useful, they do not indicate a strong priority. Fourthly, the paper tries to analyze the EU’s limited progress so far and gather a few suggestions for improvement. One thing seems to remain useful: targets which can be defined in various ways (§ 5). Basically, all this indicates that the EU energy efficiency strategy has so far failed to reach its targets, lacks coherence and remains ambiguous. In the new Commission’s proposals of 22 January 2014 – intended to define a new climate/energy package in the period from 2020 to 2030 – the approach to energy efficiency remains unclear. This is regrettable. Energy efficiency is the only instrument which allows the EU to reach simultaneously its three targets: sustainability, competitiveness and security. The final conclusion appears thus paradoxical. On the one hand, all existing studies indicate that the decarbonization of the EU economy will be absolutely impossible without some very serious improvements in energy efficiency. On the other hand, in reality energy efficiency has always been treated as a second zone priority. It is imperative to eliminate this contradiction.