Energy politics and security in the Baltic region (Siddi)

Geopolitics, EU Energy Policy andEnergy Security in the B altic Sea Region18 March 2024Dr. Marco SiddiCordelia Buchanan PonczekEnergy geopolitics: The ‘fossil fuel world’Energy ( oil) price and conflict in the fossil fuel eraThe geopolitics of renewable energyImportant factors : access to technology /patents, power lines , rare earth and criticalmaterials , storage and dispatch ( Paltsev 2016)More decentralized energy production (wind,solar power) → this will increase self-sufficiency , reduce import needs and relatedgeopolitical tensions (compare to pipelinesand other physical infrastructure)Intermittent production → storage anddistribution ( power grids ) essential‘Smart grids ’ using digital tech to quickly reactto local changes in usage will be essentialGeopolitics of renewables : issues•Control of major power lines/grid networksgeopolitically important (similar to but different from‘transit’ pipelines?)•cybersecurity risks for smart grids•New competition over access to rare earths and keyelements for storage technology (NIMBY vs. self -sufficiency vs. decarbonization priorities)•Bioenergy: contribution to decarbonization vs criticismthat it may compete (esp. in Global South) with foodproduction, risks related to poverty and malnutrition,deforestation•Tech leaders in clean technology will emerge aspolitical/economic winners (sometimes aided byindustrial policy)•Available sources of financing (industrial policy, PPPs)and access of poor countries to technologies?•Locking in new infrastructure projects —a recipe forlong -term gains or more geopolitics?Impact of the war in Ukraine on EU energy systems•Affirmed politicisation and Russia’sweaponisation of energy•EU embargo on Russian coal, oil,phaseout of gas —pushed manycountries to speed uptheirdecarbonisation projects•Price cap on R ussian oil and petroleumproducts•Aggregate EU gas purchasing(tentative)•Rise in energy prices —politicallyunpalatableThe War in Ukraine and the Green Agenda: REPowerEU•RePowerEU Plan presented by the European Commission on18 May 2022•Accelerating the energy transition by→ Reducing gas imports (from Russia), new ren target (42,5%)?→ Focusing on energy efficiency and saving→ Increasing solar photovoltaic capacity, wind power, instalheat pumps, increasing biofuels and hydrogen production..But also new investments in fossil fuels ?→ New LNG terminals for 50 bcm of additional imports, newsupply contracts with Qatar, US and other suppliers, expand theSouthern Gas Corridor (TAP) pipeline.. A temporary return tocoal?Increased role for nuclear power : political discussions vs.opportunities (US)The EU and the Energy Transition•European Battery Alliance (2017)•Industry , Member States and the European Investment Bank•secure access to raw materials for batteries from countries outside the EUand boost production within the Union•European Green Deal (2020)•EU Critical Raw Materials Action Plan (2020)•EU over 95% dependent on imports for 17 out of 24 CRMsidentified in 2020 EU list•EU Hydrogen Strategy (2020)•phased increase in green hydrogen production, so that it is deployed at alarge scale across hard -to-decarbonise sectors after 2030•Fit for 55 (2021), REPowerEU (2022)•Funding: 30% of MFF 2021 -2027 and NextGenEU•Partnerships with Canada, US...EU Green Deal Industrial Plan (2023)Critical Raw Materials ActBenchmarks for strategic raw materials:•At least 10% of the EU's annual consumptionfor extraction,•At least 40% of the EU's annual consumptionfor processing,•At least 15% of the EU's annual consumptionfor recycling,•Max. 65% of the EU yearly consumption ofeach strategic raw material at any relevantstage of processing from a single 3rd country.Net Zero Industry Act•Enhance EU manufacturing capacity ofstrategic net -zero technologies to at least 40%of the Union’s deployment needs by 2030•Simplifying permit granting, facilitating accessto markets•Net-zero techs: solar photovoltaic, onshorewind and offshore renewable energy,batteries and storage, heat pumps andgeothermal energy, electrolysers and fuelcells, biogas/biomethane, carbon captureutilization and storage, grid technologies,sustainable fuels technologies, advancedtechnologies to produce energy from nuclearprocesses, small modular reactorsEU Electricity Market ReformTo incentivise longer term contracts with non -fossilproducers, price stability, more clean flexible solutionsin the systemNatural gas: a bridge to decarbonization or long -termrisk and dependencies?Nord Stream sabotage, 26.9.20232022 war in Ukraine: impact on RU gas supplies to EUBalticconnector damage, 8 October 2023DenmarkSwedenFinlandEstonia LatviaLithuaniaPolandGermanyThings to watch (out) for•Interconnectivity and regional cohesion (vs. single country, bi -ormulti -lateral projects )•Availability for joint funding/financing to develop and maintain (esp. from EU)•PL pipeline w/ reverse flow capacity to Denmark•Risks posed by such connectivity; Baltic Sea as a “NATO sea ”now with critical infrastructure•Electrification grid security•Rise of nuclear (PL, Baltics , Fin, Ger delayed phase -outuntil April 2023 )•Opportunies for blue hydrogren•Increased cooperation with US•Connectivity with Visegrad countries via PL•EU funding —definition of nuclear as ”sustainable ” (ornot)•Continued riseof LNG•Est-Fin floating storage and regasification unit•Souring issues from US, Qatar, competing for demand with Asian markets ; joint purchases•Managing different country decarbonisation starting points and strategies to make sure no one isleftbehind