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23. 5. 2008 14:18

Energy as a topic of Czech EU Presidency

Remarks by A. Vondra, Vice Prime Minister for European Affairs, Prague, May 23rd, 2008

In 2009 Czech Republic will be presiding the Council of the EU. The challenge of the „new“ presidencies, those of EU-10 member states, is not only linked with the extent of their experience with the day to day „merry-go-round“ of the EU institutional and political practice. The task, that is far more important, is the one of adding real value to the EU and thus strengthening the legacy of enlargement. I believe that energy is precisely the topic through which the Czech Presidency can fulfill this mission.

My country can be seen as the petri dish of energy challenges that EU is facing in a large scale. We face an increasing energy dependency, especially in terms of gas and especially vis a vis Russia. We are a landlocked country, with limited geographical potential for renewables and no opportunity to build LNG terminals. Our industry is highly dependent on fossile energy resources which is particularly challenging in terms of tackling climate change and maintaining competitiveness at the same time. Our energy facilities are ageing and will require considerable investment.
Czechs are highly motivated to seek solutions – European solutions – to these problems, that European countries share to a greater or smaller extent.

What will be the priorities of the Czech Presidency in the domain of energy?
1) Balancing and reconciling three seemingly contradictory angles of the triangle „competitiveness – security – sustainability“
2) Addressing very concretely the challenge of interconnecting European energy networks and enhancing a functionning energy market
3) Tackling the question of energy security, and the security of supply in particular, in the context of rising energy prices

Striking a right balance between environmental ambitions and our economic and security interests will be one of the main challenges of current EU. It is true that energy consumption of an average European is 40-times higher than the one of an average Chinese. It is also true that an increasing standard of living in China and elsewhere increases also the demand for energy. As a result, this increasing world demand for energy, combined with speculations and scarcity of energy sources, leads to the price of energy skyrocketing high. At the same time the European leaders decided last year to assume a leading role in reducing the global CO2 emissions. The majority of politicians and people in Europe are convinced that while they made those commitments, they were not driven under the influence of a fashion or religion, but guided by wisdom of science and knowledge. However, we also know that those low-carbon policies will undoubtedly contribute to the further increase of energy prices. And we also know that scarce energy resources, maily fossile fuels, are mostly located in politically risky countries. And as a consequence of the current developments those countries are getting richer and are purchasing our assets, while we in Europe are exposed to a situation, in which we can further lose our competitiveness and thus become poorer. What should we do?

First of all, the excessive focus on the sustainable dimension of growth risks leading to losses of EU-competitiveness on an international level. The proposed solutions to tackle climate change make sense when the others follow. If European regulations are too rigid, they are less likely to be adopted by the EU´s main competitors, especially emerging countries such as China or India. EU should not abandon its plans to tackle the climate change, but also try to avoid formulating standards on a purely ethical basis. If we want to maintain our standard of living and security we have no other choice but to adapt EU policies taking due account of competitiveness of our industry. For example, preventing carbon leakages in energy intensive industries and phasing in of auctions in the new ETS after 2013 would enable our enterprises to get ready for new changes.

However, the hard task lies somewhere else. In order to reach ambitious goals set by the 2007 European Council, we have to use all modern non-emission energy sources. And nuclear energy is certainly a right medicine enabling us to protect the climate as well as our competitiveness. Here we see the main contribution of ENEF.

At the same time, the problem of EU energy market is not the fact that we lack energy. It is the fact that we cannot store energy. We are simply unable to send energy to that part of EU, where it is needed, whenever we need: genuine energy market functionning on the basis of demand and supply cannot work without an interconnected energy infrastructure of EU members. The Baltic States, forming an isolated energy island, can serve as a show-case. Moreover, we are unable to use the existing potential of our networks and prevent crises like blackouts, since there is no genuine coordination mechanism between the network operators.

We firmly believe, that it is necessary to pay the same level of attention to investment into transmission infrastructure as we do to enhancing our capacity to create renewable energy sources. The discrepancy between the two endangers the secure and reliable operation of interconnected transmission systems – the impossibility to transport wind energy within Germany is a show-case example of that.

B) Establishment of a NEW COmmunity MECHANISM for Transmission System OPERATORS / EUROPEAN TSO NETWORK
We also believe, that in line with the conclusions of the 2007 European Council, it is necessary to create a new body, a kind of a „dispatcher“ of European TSO´s, that would coordinate them and exchange information on a daily basis. An entity that would have precisely defined responsibilities and competences and that would have direct access to the EU institutions, as their advisory body.

Czech Republic, given its geographic location and composition of its energy mix, is particularly responsive to looming energy security threats. These are not only represented by a constant risk of volatility of prices of global commodities, such as oil, gas or lignite coal. In case of oil and gas the political risk has to be added, that is linked with countries controling the world reserves. Moreover, after 2012 the large combustion plant directive as well as auctions of CO2 emission permits may lead to shutting down significant energy capacities in Europe. The increase in price of energy, that is likely to result from this is, a selfstanding security threat. During the Czech presidency, we would like to adress this issue and seek adequate solutions in the European policy debate.

Therefore, the Czech Presidency is planning to organize a European high-level conference or possibly a summit addressing those challenges for energy security in EU countries. The EU should sit down with the supply countries and discuss appropriate measures.

We will also pay great attention to the next year´s European Nuclear Forum, that should take place in Prague during our Presidency in the Council. It will be a great opportunity to translate the expertise gathered by ENEF working groups into future EU policies.

In spring 2009, we will already have the new Strategic Energy Review (SER), that will serve as basis for the Energy Action plan for 2010 – 2012. We are ready to participate actively in shaping both documents and believe that nuclear energy should have a due place in both of them.

Taking a clear stance towards nuclear energy is particularly important: we must realise that, given the sky-rocketing prices of uranium, the expected world boom of nuclear power plants and limited construction resources, we have less and less time to take decisions that will influence the future of our children. If we want to ensure safe, effective and sustainable supplies of energy that will enable them to maintain our current standard of living, we may not hesitate to launch projects that will only bear fruits in 15-20 years-time. In this context, we must pay special attention to education of nuclear experts, which is crucial given our constantly decreasing engineering capacities.

I believe that European Nuclear Forum is doing a great job to raise the public and political awareness of these issues. I would like to use this opportunity to thank cordially both Dominique Ristori and the Commission, without whom this venture could not have taken place. Commission has once again proven in practice its responsibility of agenda setter, of a visionary, which is driven less by immediate short-term political demand and more by needs of European society. Thank you, once again and let me hope for a good continuation of our cooperation!

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