Energy Security in the Baltic Sea Region:

Challenges and Opportunities

4 July 2013, Vilnius, Lithuanian Academy of Sciences

Alexandros Yannis,

European External Action Service, European Union

  • Great pleasure to be at Vilnius, the beating heart of Europe over the next six months.
  • Energy Security is one of the mega-themes of our times and a major political challenge for the European Union and its Member States.
  • It is one of the four objectives of the European Union’s energy policy according to Art. 194 of the Treaty of the European Union.
  • It is also one of the priorities of the Lithuanian Presidency. And it is the topic of this high-level event to which I am grateful to have been invited to represent the European External Action Service.
  • The hard fact about energy security is that the European Union is far from being self-reliant on energy.
  • Today we rely on imported energy for close to 60% of our energy. And this is likely to increase even further. Under current conditions, our imports of gas and oil may go up to over 80%.
  • The numbers are also high in the Baltic region, albeit in different degrees, underscoring even more the importance of energy security in this region.
  • We all know that to address this challenge we need concerted efforts both internally and externally.
  • For example, internally we need to complete the internal energy market, develop our indigenous resources, increase energy efficiency and reliance on renewables as well as inter-connectivity within the EU. Others have spoken or will speak about the internal dimension. I will not say more on this.
  • As I represent here the European External Action Service my comments will focus on the external dimension and particularly how foreign policy and diplomacy can support our energy security.
  • First, we should look into the context of the current energy geopolitics. The world energy landscape is changing drastically. The 2012 World Energy Outlook issued few months ago by the International Energy Agency stressed that “a new global energy landscape is emerging. The global energy map is changing, with potentially far-reaching consequences”.
  • Key elements of these major changes are: 1. new market dynamics (e.g. the unconventional oil and gas ‘revolution’ in North America, or the increasing role of LNG), 2. new players (e.g. US poised to become the leading gas and oil producer next decade while Southeastern Mediterranean, Africa and others are emerging as new important energy suppliers), and 3. new energy mix (e.g. gas is rising, while the development of energy efficiency and renewables is also intensifying).
  • All these developments have the potential to reshuffle the energy geopolitics game both in a positive and a negative way and the European Union must stay ahead of the curve.
  • But there is another important trend which is more worrisome,the increased global demandfor energy and more generally for natural resources,fuelled mainly bythe economic developmentin the emerging economies.
  • Let me give you two telling figures. First, the International Energy Agency forecasts increase of global energy demand by a third by 2030 mainly coming from China and India.
  • Second, according to UNDP the world middle class population will rise from 1.8 billion in 2009 to 3.2 billion in 2020 and 4.8 billion in 2030 and with the vast majority of this - up to 90% - coming outside of the West and Europe.
  • The potential stress on energy resources and implications on international security by the rising demand for energy are obvious and an early warning to all of us.
  • Add now to these important trends the more traditional threats to energy security such as political instability and conflicts in areas of the world that can affect supplies and routes, e.g. The Middle East and North Africaor “energy nationalism” or other politically motivated disruptive acts, and the concerns about energy security can only rise further.
  • For the EU the implicationsof these mega-trends are clear. Together we are stronger. In order to maximise the effectiveness of our responses we need to continue coordinating better among ourselves and to build more coherent policies.Strengthening our EU external energy policy is therefore essential.
  • The European Commission and the European External Action Service are increasinglyworking together in helping to develop our EU external energy policy.
  • The European Commission issued a Communication in September 2011 and the Energy Council of the European Union adopted Council Conclusions shortly afterwards on the EU External Energy Policy. A review is underway to be completed later this year during the Lithuanian Presidency. We are working closely with the Commission on this as well as with the Member States.
  • The pillars of the External Energy Policy are 1. strengthening coordination and coherence within the EU, 2. strengthening EU cooperation with third countries building on our internal market, 3. deepening energy partnerships and 4. supporting the developing economies to establish sustainable and climate friendly energy policies.
  • But our Foreign Ministers are also actively engaged. Over the last year there have been two strategic discussions on energy security at the Foreign Affairs Council in Brussels chaired by the High Representative and Vice President of the European Commission Catherine Ashton - A third such discussion is to take place in Autumn.
  • The purpose of these Foreign Affairs Council energy discussions is to coordinate positions and messages on important energy security issues. The last meeting, in April, focused on the support of the EU diplomacy to the realisation of the Southern Corridor and on coordination of messages to our key partners in this project such as Azerbaijan, Turkey or Iraq.
  • On the Southern Corridor, the decisions taken last week from the Shah Deniz II Consortium regarding the European route is an important step in the right direction for the implementation of this important project and for the diversification of our energy supplies.
  • Establishing this new corridor is hopefully only the beginning of a process which will enable in the future even bigger amounts of gas to reach Europe through the Southern Corridor and to reach even a greater number of countries and peoples in Europe.
  • Diversification of our sources, supplies and routes is a major pillar of our energy diplomacy. It is about new routes and suppliers as the Southern Corridor best illustrates, but it is also about new potential suppliers as new opportunities are emerging,e.g. Southeastern Mediterranean, East Africa, North Africa, including renewables potential, Latin and North America.And there are also new technologies such as LNGwhich has had already an important impact over the last decade in helping the EU to diversify our supplies.
  • Another pillar of our external energy policy is maintaining stable relations and deepening cooperation with our current main energy partners. Russia, Norway, North Africa, particularly Algeria,are our key energy suppliers and partners (over 70% of both gas and oil). Deepening stable and rule-basedrelations with our partners remains essential to our energy security objectives.For example, this was the purpose of the recently agreed 2050 energy roadmap with Russia.
  • Ukraine is another important country regarding deepening energy cooperation and lots of effort is being put here, among others, for the implementation of the 2005 energy cooperation MoU. But also more broadly the European Council has stressed the importantlinks between energy security and the European Neighbourhood policy.
  • The Eastern Partnership Summit later this year here in Vilnius is another opportunity to further deepen our energy relations with the region. While the Union for the Mediterranean Ministerial meeting on energy in December in Brussels aims to deepen energy relations with our Southern neighbourhood focusing on cooperation on renewables and on the creation of a regional EU-South Mediterranean energy partnership.
  • Beyond our neighbourhood, energy diplomacy is also becoming part of the EU strategic partnerships with our key partners around the world. A major example of increased engagement on energy diplomacy by the EU is the annual EU-US Energy Council which started in 2010, with the last one taking place in Brussels few months ago co-chaired by the High Representative Catherine Ashton and Energy Commissioner Oettinger on our side and the former Secretary of State Hilary Clinton on the US side.
  • Energy dialogues are also intense with other key strategic partners such as China, India and Brazil to mention a few.
  • There is finally another important element where foreign policy can support energy security. This is through the promotion of the rule of law and good governance and the principles of open, transparent and competitive markets and the development of resources in a sustainable manner as major ways to promote long-term stability of energy markets, energy security and international security more widely.
  • Promoting further integration of emerging economies and new global players in the international energy governance structures (e.g. the “association” initiativeof the IEA to invite key players such as China) or regional integration and inter-connections in other parts of the world are all part of the building blocks for a more stable and secure future energy landscape from which the EU only stands to benefit.
  • Moreover, developing a global consensus on tackling climate change, a major EU priority, is also part of the same process of generating wider global commitment to stable and sustainable management of natural resources and therefore it is also an integral part of the building blocks for our energy security.
  • Let me conclude with a statement by the recent European Council discussions on energy on 22 May in Brussels. ”The EU's energy policy must ensure security of supply for households and companies at affordable and competitive prices and costs, in a safe and sustainable manner.This is particularly important for Europe's competitiveness in the light of increasing energy demand from major economies and high energy prices and costs”. It is this dimension of energy security, the link with competitiveness, that we should also pay more attention today also in the implementation of the EU external energy policy.
  • I thank you for listening.