2nd EU-Norway Energy Conference

Tord Lien- Brussels 25 September 2014

Tord Lien- Brussels 25 September 2014 : Norway is an important partner for the EU when it comes to security of supply. This is reflected in today’s agenda where we highlight energy security in both gas and power markets.

”check against delivery”.Introduction 

 

  • Dear Vice President Oettinger, Excellencies and European energy friends.

 

  • I am happy to see such a great interest in our second EU – Norway energy conference here in Brussels. It seems like we might need a bigger room next year!

 

  • Norway is an important partner for the EU when it comes to security of supply. This is reflected in today’s agenda where we highlight energy security in both gas and power markets.

 

  • On the way in to this seminar today I got a copy of a new report that examines the EU – Norway relationship on oil and gas. The report underlines the close interaction between Norway and the EU.

 

  • More than 140 EU companies are active through the supply chain. EU oil and gas companies hold 40 per cent of Norway’s oil and gas resources, and the demand for goods and services creates around 100 000 jobs within the EU.

 

  • I would like to use this opportunity to thank our colleagues in DG Energy for an excellent cooperation - both on the political and administrative level. The energy dialogue between the EU and Norway is well established and well functioning.

 

  • Especially, I would like to thank Vice President Günther Oettinger. It has been a pleasure to work with you, and we are grateful for the interest you have shown in our common issues.

The 2030 framework

  • Back to today´s agenda. Next month, European leaders will meet to take a decision on the future energy and climate policy in Europe towards 2030.

 

  • This will obviously be of high importance to Norway. We are a large supplier of energy to the EU, and we are part of the internal energy market.

 

  • Norway also participates in the Emission Trading System, the ETS, and we share the EU’s climate ambitions towards the UN summit in Paris next year. We support a strong and efficient ETS.

 

  • We fully support the EU’s ambition of increased security of supply, improved competitiveness and a reduction of green house gas emissions.

 

  • The best way to achieve these goals is a well functioning energy market, combined with an ambitious ETS.

 

Natural gas

  • Globally we must overcome two major challenges: We need more energy and we need cleaner energy. Natural gas is an answer to both. It is abundant, available and flexible, and will be a vital source of energy for Europe for decades to come.

  • Gas is also important in a climate context: Replacing coal with gas in the power mix is the easiest, fastest and the most cost-effective way to reduce carbon emissions.

  • Norway is a large exporter of natural gas to the EU. Currently, gas from the Norwegian Continental Shelf covers more than 20 percent of the European gas consumption.

  • We have both the infrastructure and the resources to remain a stable supplier of natural gas to Europe for decades to come. Our production has grown more or less uninterrupted for 20 years. So far, less than one third of our expected gas resources have been produced.

  • Last year Norway produced nearly 110 billion cubic metres of gas; almost 100 per cent was exported to Europe. We expect our production to be steady or grow slightly in the years ahead.

  • The recent tragic events in Ukraine have put gas security on top of the energy agenda in Europe. Norway supports measures to strengthen European gas security as we have a shared interest with the EU on this issue.

  • We are pleased to see that the recent strategy on European energy security puts strong emphasis on infrastructure development, and continued efforts on market efficiency. 
     
  • We have noted the Commission’s request for new gas routes, new upstream developments, LNG flows and market transparency.

  • Norway is a good match. We have large remaining gas resources. We have existing infrastructure. We are well positioned to assist the Union in meeting their objectives as we wish to remain a reliable supplier in a long term perspective.
     
  • However, I must stress that decisions regarding marketing of Norwegian gas are made by the producing companies. The Norwegian State is not marketing gas.

Energy efficiency

  • Energy efficiency is increasingly becoming part of the EU’s policy to enhance energy security, including goals of reducing the Union’s gas imports substantially.

 

  • Like the EU, Norway has an ambitious policy on energy efficiency – and we have had such a policy in place for many years.

 

  • The Commission has recently proposed a binding energy efficiency target of 30 per cent by 2030. 

 

  • The main objective of setting an efficiency target appears to be to reduce energy import in general and gas import in particular.

 

  • The analysis shows that a target of 30 % could lead to substantial reductions in gas import to the EU.

 

  • A desire to reduce gas import on behalf of EU is understandable, particularly in the current geopolitical situation.

 

  • The Commission’s own assessment states that a 30 percent target is not cost effective. Such a target is still proposed as it enhances energy security through reduced import. 

 

  • The indicated willingness to move beyond cost-efficiency, raises concern that EU policies will rely less on efficient markets. This in turn, might make investments in some gas developments less attractive.

 

  • Gas supply security is also about new gas field developments, pipelines, gas storage and LNG terminals.

 

  • The energy industry needs clear market and policy signals to ensure that such long term investments are undertaken.

Renewable energy

  • When it comes to renewable energy, we have seen significant changes in Europe over the last few years. Power from renewable sources now play a greater role in the European energy mix.

 

  • This is partly caused by political measures – both on national and EU levels. We have also witnessed an impressive development within solar energy – making it more competitive in terms of both technology and cost-efficiency.

 

  • However, as much of this increased production comes from intermittent power sources –the need for a stable, but flexible source to counter the unpredictable nature of wind and solar power has increased.

 

  • Put simply: The customers need power, also when the sun is not shining, or when the wind does not blow.

 

  • To manage the increasing share of intermittent power, we need investments in stronger grids, smart grids, new solutions for storage, as well as flexible capacity generation.

 

  • The purpose of efficient infrastructure is to facilitate trade of electricity between countries - and regions of Europe. Such a trade is of benefit to all countries involved.

 

  • Allow me to use Norway as an example. Our power production is totally dominated by hydropower. A significant part of this renewable power is flexible, as the water is stored in reservoirs and can be put into action when needed.

 

  • In seasons with little rain, excess demand is covered by imported power. In rainy seasons, we export considerably.

 

  • For Norway, the power trade through interconnectors to other countries in northern Europe, especially Sweden, have been of great importance to the efficiency of our power systems and our security of supply.

 

  • In this context, we are currently reviewing the applications for two new interconnectors, to Germany and the UK respectively.

 

  • Whether these interconnectors will be a good investment in the long run will depend on the evolution in the European energy markets.

 

  • We strongly believe electricity trade have to be facilitated through well functioning markets. To function well, markets need prices that reflect real cost. This includes the cost of emitting CO2.

 

  • Markets also need a predictable policy framework, including an understanding of how different policy measures will work together.

 

  • How can we implement our goals, while at the same time preserving a well functioning market, efficiency and profitability in the energy sector as well as security of supply?

 

  • In my view, these are the core issues that have to be addressed in the energy and climate framework for 2030.

CCS

  • I would also like to say a few words about Carbon Capture and Storage – CSS.

 

  • In the 2030 framework discussions, we are pleased to see that the Commission regards CCS as an important technology towards a low-emission future.

 

  • This technology is essential if we are to succeed combating the global climate challenge.

 

  • This is confirmed by both the Intergovernmental Panel on Climate Change – the IPCC, and the International Energy Agency – the IEA.

 

  • Norway fully shares this view and participates in the international efforts to develop cost-effective technologies for CCS.

 

  • In this context, our Technology Center at Mongstad is world class, and a place where new technologies are being tested and developed.

 

  • The Government has also decided that Norway can contribute financially to the realization of a full-scale CCS demonstration project in Europe through participating in a new ERA-NET.

Summary

  • Vice President Oettinger, Excellencies, and European energy friends;

 

  • Norway agrees with the EU’s ambition of achieving increased security of supply, improved competitiveness and a reduction of green house gas emissions.

 

  • We believe a well-functioning and integrated energy market is the single most important factor to strengthen security of supply in Europe.

 

  • To function well, markets need prices that reflect real cost. This includes the cost of CO2. Hence, an ambitious ETS is crucial.

 

  • This is valid for both the gas – and the renewable power market.

 

  • We also need to work together for a continued progress on CCS-technology.

 

  • Thank you for your attention!