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It Is Time to Act, Against the Backdrop of a Financial and Economic Crises, says EU Energy Commissioner

[κλικ δεξιά στην ελληνική σημαία για μετάφραση εάν απαιτείται]

“It is necessary to decide and implement investment projects required to ensure the functioning of the internal energy market, the transition to a low carbon economy, and greater energy security for the EU”, said the EU Energy Commissioner Andris Piebalgs as he addressed 180 delegates which attended the conference “Can Europe Finance Secure, Clean Energy in the Future?” jointly hosted by EURELECTRIC and EUROGAS in Brussels on 26 May.

However, “the task is not easy and the question you ask is not easy either”, Mr Piebalgs warned. Nevertheless, the Energy Commisionner welcomed the fact that experts from the electricity and gas sectors, together with representatives from the banking sector, were meeting to collectively reflect on this topic. “This joint event is illustrative of a new energy era” he said, as “it is no longer possible to consider the energy sector in isolation”.

Setting the scene for the panel discussions to follow, Mr Piebalgs pointed again to new regulatory framework established by the Energy and Climate Package and the Third Internal Market Package, which together with the Second Strategic Energy Review “should improve investment conditions”.

He explained that the investment climate in the EU has been undermined by several “big shocks”. Firstly, volatile prices have followed the unprecedented fall in the oil price. Secondly, he highlighted the “current trend towards resource nationalism”, the issue of non-EU producer and transit countries with “geopolitical complexities, lack of system transparency and assertive governments”. Thirdly, the ongoing financial and economic crises and the credit crunch have resulted in stricter lending terms and bank conditions, he explained. Lastly, he pointed to the falling demand for energy which has caused wholesale electricity and gas prices to drop, thereby decreasing significantly the profits of many energy companies and thus reducing their cash flows and their pre-financing possibilities. As a result, “in the EU, it seems that the costly and risky projects have been delayed or withdrawn”, he explained “with the most visible impact” being on renewable energy investments.

In particular, the Energy Commissioner underlined the risk of a short term focus for making energy investments. “I am concerned that delays or withdrawal of investment projects could result in a capacity crunch when the economy recovers and when demand is back again. These risks cannot be underestimated and it would be the worst case scenario were an energy crisis to be added to a financial crisis”, he warned.

“The challenges we are facing cannot be met by the market alone” and the EU together with the Member States “must continue to restore macro-economic confidence and promote investment for a secure and sustainable energy investment”, he therefore stressed. Already, an “unprecedented step” has been the European Recovery Program, which assigns a sum of 3.98 billion for energy projects and implied a review of the EU’s Financial Perspectives unseen before. Moreover, a new Sustainable Energy Financing Initiative is currently being prepared by the Commission together with the European Investment Bank and other financial organizations in order to activate large-scale funding for capital markets for investments in clean energies. In addition, the Commission is also considering a new EU infrastructure instrument which could replace the Trans-European Energy networks program (TEN-E) after 2013.

As the European Union is trying to develop “a new generation of energy interdependence” by engaging in dialogue with producer countries, particularly with Russia and the Caspian countries, Mr Piebalgs explained, it is important to consider that “investment needs are not limited to the EU”.. Moreover “we can be successful only in cooperation with the industry”, he told the audience.

Additionally, “we will continue to support energy efficiency”, the Energy Commissioner went on, as it is an important contributor to energy security and to mitigating global warming.

Speaking of investments in the field of nuclear energy, he stressed that they were “complicated investments” and that the EU could not deviate from using nuclear power in the future. He insisted that there would be room for the EU to act more in this field. He also invited the industry to communicate the challenges posed by nuclear energy to the Commission. “We really need good guidance from you.

In his final remarks, the EU Energy Commissioner said “I am confident that we will reach the targets”, reducing CO2 emissions by 20%, sourcing 20% of total energy from renewables and improving energy efficiency by 20%. He acknowledged however that there was a risk of higher prices and recognized that customers are not ready to “pay excessive prices”. “I hope that this conference will help to grasp the problems and identify the solutions”, he concluded.

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