Conclusions adopted at the

Energy Policy Consideration: Present State and Development conference

organized by the

 

Slovenian World Energy Council Member Committee and the Energy Industry Chamber of Sloveniain

Ljubljana on September 26, 2013

 

 

 

1) Energy policy needs to ensure that energy markets deliver

 

A decade ago, the prevalent reason for uncertainty in the world economy and on the energy market was the oil price. The economic uncertainty of today is defined by shorter investment cycles and increased complexity of decision making. This is therefore also a time of great uncertainty for the energy sector. The energy industry and with that the energy system have to follow substantial requirements for transformation leading to an increased level of uncertainty. We live in a time, when great investments are also needed in order to secure future energy supply and the fulfillment of defined sustainability goals. The energy policy will have to establish energy markets that allow all of the above, in certain circumstances also solidarity. This requires effective regulation and stable frameworks for investment decision making. In line with the World Energy Council’s mission since 1923, the most important factors for diminishment of supply uncertainty lie in efficient functioning of markets and energy supply for the benefit of all consumers.

 

The national energy policy must be an integral part of all relevant strategic and essential national policies, whereas its compatibility with the common EU energy policy and the national goals within the goals of the EU should be taken into account. A close supranational collaboration on energy issues within the EU as well as a prudent management of national energy systems is essential for national economies. For instance, the electric power generation in the past consisted of three pillars (the hydro, thermo and nuclear). Even today it presents an extraordinary opportunity for secure supply and the incorporation of renewables according to the technical, economical and sustainability criteria. It is a fact that domestic energy sources significantly contribute to the security of supply. Positive experiences with the nuclear power generation and its public acceptance are the basis for a further possible use of this energy source. Advanced use of energy and energy technology as well as energy services shall be integrated into the wider EU strategy scheme.

 

2) A clear vision for the future energy market design is needed

 

Frameworks for efficient and secure energy markets can only be developed if we share a common vision. To achieve this, more coherent and consistent cross-national energy market rules are needed as well as a prediction of global energy consumption and the behavior of markets. Greater harmonization in the EU is needed to make EU's existing target models for natural gas and electricity markets work. This includes existing market rules, particularly w.r.t. access to infrastructure, clear market rules, specifically aimed towards reducing the differences between national markets. This is a precondition to create a level field for all market participants. Politicians and energy market players need to consider how intense competition can lead to higher levels of security of supply. This is why a clear vision for future energy markets is needed. Such a vision needs to include a definition of roles 1for all stakeholders, including the introduction of a solidarity mechanism in cases of emergencies and monitoring mechanisms for functioning of markets that help to assess the degree of implantation of existing legislative requirements. It is essential and fundamental to control all relevant impacts and effects of global oil, gas and coal markets as well as the nuclear fuel market within the framework of the EU perspective.

 

National electricity and gas market are integrated into the regional market via an electricity and gas infrastructure that has existed for decades. Due to the establishment of an efficient national market, its active and equal role in the regional market and the necessary infrastructure expansion, further initiatives and activities of market participants, the government and an independent regulator are needed. Renewable energy, especially electricity, has to overtake market rules as soon as possible and replace existing principles with market-oriented ones to avoid national market distortion, especially in regard to price formation, increase of market unpredictability, unjustified burden on national economy and consequently the taxpayer.

 

3) Energy market integration needs to become more of a reality

 

Energy – be it gas or electricity – flows in networks, run by system operators under the umbrella bodies ENTSO-E and ENTSO-G. Meeting future energy demand is therefore neither a local nor national issue. Decisions taken in one part of the integrated network will have a great impact on national systems. Therefore greater promotion of regional market integration is needed to address the increasing complexity and growing interdependencies of all EU Member States. National energy policies need to become more regionally oriented. Governments, as holders of national energy policies, need to become more regionally oriented and active. Projects of Common Interest bear possibilities for national energy policy cooperation – in conjunction with national regulators and under the auspices of ACER – the Agency for the Cooperation of Energy Regulators. Such harmonized regulatory treatments should include the implementation of common rules to assess the strategic relevance and economic viability of future energy infrastructure projects that will ensure security of energy supply in Europe. Speaking with one voice shall be imperative for the realization of the Infrastructure package.

 

Relatively small national energy markets and their energy infrastructure could be crucially impacted from unpredicted and unannounced changes in neighbor markets and their systems. In the end, the consequences of such changes result in negative economic consequences within smaller systems and economies and are conferred upon the consumers, the taxpayers. National strategic concepts should be consolidated on a regional level to minimize the risk of threats for neighboring national energy scenarios and strategies. Energy infrastructure is crucial in the fulfillment of the national, regional and the EU energy policy. Transmission projects have to be planned on long-term, preventing them from turning into a national economic burden. The realization of regulative requirements from the Infrastructure package shall be applied to the full degree.

 

4) Energy infrastructure requires financial investment as well as human capital

 

In addition to physical investments into the energy system, ‘bright minds’ are needed to design, build and operate future energy infrastructures, to develop new technologies and carry out groundbreaking research in the energy field. In the time of declining demographics and a ‘war for talents’ for future graduates in core science subjects, the need to train and educate future generations of energy enthusiasts in order to make the “global energy revolution” happen is of utmost importance. These enthusiasts need to have the appetite for research in energy-related issues and a desire to find solutions to future energy problems – problems we are maybe unaware of today. This includes research into new technologies, e.g. energy storage technologies and efficient energy usage. New and more efficient energy storage technologies might help to solve the intermittency problem of renewable electricity generation. University – Industry research collaborations can serve as an important tool to create such an appetite for energy-related research.

 

A national strategy for energy knowledge, energy technologies development and their implementation needs to be defined and periodically upgraded in regard to the EU’s plans. The government is obliged to trigger all necessary actions on the basis of national specifics and requirements to support the industry by organizing and managing research and education as well as promote public-private partnerships in energy projects and green orders.

 

5) A reduction of CO2 and GHG emissions – and hence a mitigation of climate change – can only be effectively achieved through binding agreements on national and supranational level

 

The WEC’s world energy scenarios to 2050 show that climate change can only be mitigated if countries pass the Doha Gateway and if there is a binding agreement on emission targets in place. The WEC’s work on the assessment of the existing 2020 goals, in particular the reduction of CO2 and GHG emission as well as the amount of resources and energy efficiency has clearly shown that a three target system is too complex.

Environmental sustainability can only be achieved through a significant reduction of CO2 and GHG emissions up to 2050 in conjunction with 

• effective markets for CO2 and GHG emissions trading,

• effective markets for renewables (fewer subsidies and ultimately grid parity, i.e. fullcompetitiveness of all energy sources for electricity generation),

• and more energy efficiency: Energy efficiency is not purely a technical issue, consumerbehavior also needs to change in order to make energy conservation happen.

Ensuring environmental sustainability whilst at the same time securing energy supply and making affordable and sustainable energy available to all (energy equity) will be a challenge. Secure, reliable, affordable, clean and equitable energy supply is fundamental to global economic growth and human development and presents huge challenges for us. This is where the World Energy Council through its impartial and widely spread network of more than 3.000 member organizations in almost 95 countries can contribute: Through its activities the WEC can address each of the three dimensions of the “energy trilemma” by making relevant information available. This helps policy makers and leaders in the energy field to take well informed and conscious decisions that will determine how the energy landscape will look up to 2050.

 

National energy and environmental policies can be realized and their effort to reach targets supervised through clear, simple and harmonized targets. On national level it is of crucial importance to define a methodology for the governing of national policy, focused on reaching the targets based on macroeconomic models. It also has to take in account security of supply and energy market principles. Energy management and stimulation are of crucial importance. Therefore, a more constructive non-bureaucratic energy infrastructure and an environmental impact assessment approach are required. Realization of the energy infrastructure project, also of vital importance, is only possible if the fulfillment of environmental requirements is assured.