European Regional Energy Strategy

Country Overview: Germany

• Typical European energy layout: 34% oil, 23% natural gas, 26% coal 11% nuclear; 7% renewable energy

• Changes by 2030: Increase of renewable energy Decrease of nuclear energy and oil, But, increase of natural gas

• 80% of natural gas from Russia without changes• Diversification - LNG, Caspian Sea, Iran, North Africa

Country Overview: France

• Main source of energy: nuclear 121 Mtoe out of 137 Mtoe primary

production is nuclear 50.5% independence rate 5.1 Mtoe export of electricity LNG hub

• Changes by 2030: Renewable sources, gas and nuclear

expected to grow Oil remains steady

• CO2 and energy intensity objectives won‘t be met

• Oil exposure will remain high

Country Overview: Italy

• Current Energy Mix: Coal 9%; petroleum 44%; gas 37%; renewables 7% + 3% nuclear (from

France)

• 2030 BAU: CO2 +38% (1990) - TPES +25%: coal +28%; gas +40%; renewables

+70%; Nuclear +?

• Objectives(?): Security, Sustainability, Affordability

Country Overview: UK• Energy profile:

Ninth largest global consumer of energy (2008: 165M barrels of oil equivalent)• Shifts in fuel consumption/production:

Once an energy exporter, recently became net importer of petroleum (2005), gas (2004) and coal (2001)

Highly dependent on Norwegian petroleum (70+% of UK imports) Gas and renewables replacing coal

Country Overview: Norway

• Western Europe’s Producer Country Energy Profile

Self-sufficient to 2030 Consumes oil (44%) and electricity (42.3%) OIL Reserves – 6.7bn barrel / 2.47bpd produced, net exporter GAS Reserves – 81.7 tcf3 / 3.5tn cf3 produced for export ELECTRICITY – 50% European reservoir capacity / production = consumption

Economic Impact NORWAY – 25% GDP / 52% exports / 31% gov’t. revenue / 30,000 workers STATOIL – NOC, public in 2001, 62.5% state owned EU – Oil to U.K., NLD, FR, GER, BEL / Gas to GER, U.K., FR, BEL, NLD

Energy Vulnerability / Security PRODUCTION – Oil peaked in 2001 / Gas peaked in 2006…2010…2013 Will Norway run out of oil/gas before it can re-invent its economy?

Country Overview: Norway

• Creating wealth for future generations The Petroleum Fund

Estimated value of $400bn Could reach $1trn and provide a 15yr safety net

Drill, drill, drill…

Regional Comparison

• Commonalities• Same prospective 2030 trends for

renewable energy and natural gas• European directives regulatory

constraints : CO2, market deregulation

• High geopolitical importance of Russia in the gas and oil supply market

• EU integration of markets and policies in medium- to long-term

• Differences• Nuclear power• National resources• Domestic opinion towards

nuclear• Government incentives through

investment/tax (renewable vs nuclear)

Summary of country strategies

• Germany Technology change from oil to hydrogen Diversification of natural gas supply plus increase of efficiency &

renewables Markets and Institutions scenario: EU-Russia, EU-Caspian Sea, EU-Africa

• France– Short term: internal markets deregulation– Domestic public opinion: tax debates, nuclear – Diplomacy: Central Asia, Caucasia, Turkey, North Africa– EU integration of energy market and policy

• Italy Short term: Energy Efficiency Long term: Nuclear; Renewables, Gas (from North Africa, Russia, Caspian

Region and LNG from Middle East) EU integration of energy market and policy

Summary of country strategies

• United Kingdom Short-term: Implement CHP to increase energy efficiency and capture

waste Long-term: Expand nuclear energy program and increase use of

renewables to decrease dependency on foreign suppliers Overall: Increase cooperation with EU for EU-wide strategy

• Norway Expand resource base

Exploration and technology on the NCS International expansion Emphasize natural gas Develop off-shore wind / become an electricity exporter Leverage LNG success in Barents Sea

Grow wealth in petroleum fund - slow production Environmental sustainability – wind / CCS / smart grid

Impact of standalone strategies?

• Europe is a special case European Union was founded to centralize the national steel and coal

strategies of its member states Lisbon Treaty will further current integration Net consumers versus net producers

• Most strategies are complimentary All diversifying sources and moving away from fossil fuels to more

sustainable, cleaner forms of energy However, different national-level incentive structures and views on nuclear

energy

What EU action means

• Until now the only common energy policy was on Climate Change

• Eastern European Member States still in a “cold war” mode in their behavior toward Russia

With the Lisbon Treaty:• Solidarity among EU Member States (short-term)• Common Energy Market• Common Foreign Policy (and Energy Policy)• Buyer market power (?)

Critical geopolitical implications

• Regional balance of power Norway’s political stature increases in the region

• Delivers more gas/oil from CNS (Barents Sea) and feeds European electricity grid• Brings international resources to EU and U.S.• Balances U.S. / EU vs. Russian interests in the development of arctic region fields• As a fringe producer, Norway is not immune to OPEC or “energy weapon” politics

EU’s relationship with Russia • By 2030 Russia will provide about 50% of the EU's gas imports• Current focus on bilateral agreements with Russia versus common front – impact

of Lisbon Treaty?• Renewables offer freedom from dependency on Russia or other foreign powers

• Future of the EU Could EU expansion be driven by energy needs?

• E.g. Turkey, which is poised as an energy conduit to Europe New EU neighbors are increasingly energy producers EU comfort level with growth of nuclear power varies by country

Regional Takeaways

• EU cooperation is critical and the Lisbon Treaty should facilitate compromise and collaboration Common EU-strategy rather than individual country approach towards Russia,

Caspian Sea region, Iran Common energy market in the EU Potential common strategy for technology change to hydrogen?

• As net consumers, reducing EU dependence on foreign energy is critical – renewables are part of the solution

• Norway: “No” to EU, but integrated into EU/world markets