Energy Forum in Budapest

Posted on November 17, 2009

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(Below in English my opening speech to the session: “On the Way to European Energy Security: What to Expect from the European Union?” and the text in Swedish)

The Energy Forum in Budapest was organized by the Foundation Institute for Eastern Studies in Warsaw, Poland and the Constellation Energy Institute in Budapest, Hungary. The fact that it was held in Hungary meant that the significance of central Europe was emphasized. The “gas war” of last winter between Russia and Ukraine was central to most panel discussions. One can state that the EU’s energy security was the central issue for the entire forum.

For the opening on Sunday evening Hans Larsen presented the report ”The intelligent energy system infrastructure for the future” that was put together by the Risø National Laboratory for Sustainable Energy at The Technical University of Denmark. The take home message was that introduction of renewable forms of energy requires that a combination of many forms are used so that the system can be in balance.

The opening panel discussion addressed ”Energy as a Factor of Prosperity and Sovereignty”. Political heavyweights from west to east discussed the importance of energy for society. Richard L. Morningstar from the USA Department of State was there. He is the Secretary of State’s “Special Envoy for Eurasian Energy”. The fact that the USA Department of State has an envoy for Eurasian energy, and Morningstar’s statement that Russia will always be important for European energy security, highlights the importance of this issue. Last autumn Russia passed Saudi Arabia as the world’s biggest oil producer and it has long been the world’s largest producer of natural gas. If one adds to this that Russia is one of the world’s largest producers of coal, that they have large deposits of uranium and if we realize that it is energy that controls the world then everyone should understand the extent to which Russia will be a world power in the future.

Today, the EU imports over 40% of its natural gas from Russia. In future they estimate that this percentage will increase. To break Russia’s dominance a new gas pipeline, Nabucco, is planned that will run through Turkey and further through Bulgaria, Rumania and Hungary to then join with the EU’s large network of gas pipelines. From Morningstar’s comments one can see that Nabucco is also a political play to reduce Russia’s dominance.

Russia was represented by Vice-Chairperson for Duman, Alexander Babakov. In my notes I have written down the quote, “We are absolutely right”. Before this Hungary’s and Czechia’s former prime ministers discussed last winter’s gas crisis when Russia closed the taps. From the Russian side, all blame was laid on Ukraine.

Mirek Topolánek drew the connection between national sovereignty and energy. He cited Andrei Sakharov who apparently said that Europe’s freedom must be built on the freedom that nuclear energy gives, i.e. nuclear power makes a nation in western Europe independent of Russia. Note that this statement was made during the Soviet period. Sweden is one of the few nations within the EU that is not dependent on natural gas from Russia and, of course, this is because of our investment in nuclear power.

The sessions that I followed dealt with various aspects of the EU’s energy security and mainly future secure imports of natural gas. Today, around 80% of Russian exports pass through Ukraine. The new gas pipelines that are now planned have been influenced by the conflict between Russia and Ukraine. There is “North Stream” that will pass through the Baltic Sea, “South Stream” that will pass through the Black Sea and both these pipelines are controlled by Russian interests while, as mentioned earlier, Nabucco that passes through Turkey is controlled by the EU.

My Ph.D. student Bengt Söderbergh is currently working on the conclusion to his thesis that, among other things, discusses natural gas security in Europe. I can only state that his thesis could not come at a more appropriate time. I showed some images that are included in the publications upon which the thesis is based and there was great interest from east to west. An energy consultant from Moscow asserted that what we had shown was completely correct. The list of people wanting a copy of the thesis is growing quickly. If you are interested in attending the thesis defense then mark February 19 in Uppsala in your diaries.

Finally we are approaching the heart of the matter, the Russian state-controlled energy company Gazprom. They asserted that, according to international law, the existence of state-controlled monopoly companies was completely legal. Gazprom has a right to exist. The pipelines that they are now planning are also completely legal, but the fact that Gazprom controls the pipelines gives them great power. Gasprom’s representatives promised that there would be no problems this winter as, for the moment, there were no problems with Ukraine. Some from Ukraine complained that, in their opinion, Gazprom was trying to influence the impending election while others asserted that the EU was doing the same thing through its actions. If all the new pipelines are built so that the Russian gas does not pass through Ukraine then Ukraine will lose a large amount of income. How this will influence the future remains to be seen.

Personally, I think that we must pose ourselves the question of whether Russia is a part of Europe or not. The choice of borders will be decisive for Europe’s future. If Russia is kept outside of the EU then the EU will do everything possible to become less dependent on Russian energy exports and Russia will turn towards China. At the same time we can state that, for the next 40 years, the EU will be dependent upon imports from Russia.

The other alternative is for Russia to be welcomed into the European family. From that relationship a unified democratic base can be created. Both solutions require a great deal of work.

The fact that the Swedish government has decided to create an Institute of Russian Studies at Uppsala University may be a step in the right direction. My written speech to the Energy Forum is shown below.

Opening speech to the session: On the Way to European Energy Security: What to Expect from the European Union?

Ladies and gentlemen and dear guests. It is an honour for me, and very stimulating, to be invited to the 4th Energy Forum here in Budapest and to have the possibility of presenting my personal viewpoints on Europe’s future energy security under the theme, ”On the Way to European Energy Security: What to Expect from the European Union?” I would like to point out that I base my viewpoints on the research that we conduct into global energy systems at Uppsala University in Sweden.

The first question we must ask ourselves is, ”What is Europe?” Before my journey to Budapest I dug out my old history atlas from my high school days. Within it is clearly shown that the Ural Mountains were Europe’s eastern border. Furthermore it showed that, historically, Budapest was a political centre in Europe.

Having been born in Sweden in the spring of 1945 I realise that, just at that moment, a new border was created in Europe, an iron curtain that marked the boundary between western and eastern Europe. It was an ideological border between the peoples of the east and west where the west was democratic while the east was controlled by dictators. The border ran straight through Berlin. We have just recently celebrated that this artificial boundary was torn down 20 years ago.

20 years ago the European Union had grown sufficiently strong that membership in the EU was regarded as synonymous with membership in ”Europe”. Sweden applied for membership and when, for the first time, it held the EU presidency the question of the EU’s eastern border became a leading issue for the Swedish government. One of the nations that were welcomed into the community was Hungary. From my school days I remember when we received new classmates that had then been forced to leave Hungary. I am proud of the fact that Sweden offered them a home and that Sweden has fought for Hungarian membership of the EU.

We shall now discuss European energy security and what the European Union should do in the future. I need only to open my old history atlas from high school to realise what should be done. In it Europe’s eastern border is marked as the Ural Mountains. Russia is part of Europe and the EU should now actively work to re-establish the Urals as Europe’s eastern boundary. At the moment this question is much more important for Europe than to attempt to negotiate a climate treaty in Copenhagen in December.

Today, energy security has a number of components. They are, most importantly, coal, oil, natural gas and uranium but there are also renewable forms of energy such as hydroelectricity, windpower, waverpower, and solar energy. Europe’s energy security is a combination of all these. Carbon security is a security that is determined by political decisions – how much carbon dioxide we shall release from coal-fired power stations in future.

When it comes to oil the West Europe has three nations among the 40 largest oil producing nations on Earth. They are Norway, the UK and Denmark. Every time I mention Denmark everyone is surprised but the fact is that Sweden imports 30% of its oil from Denmark and 100% of its natural gas, although this presents a problem in future.

The analyses that my research group has performed show that, by 2030, these three nations will only be able to produce oil for their own use. There is no energy security for the European Union with its current borders.

According to the EU’s future scenarios, natural gas is the future form that our energy supply should take. By 2030 our consumption of natural gas should increase by 50%. The main reason for the increase is that the EU needs natural gas as a component in regulation of its electricity production. To examine natural gas production in the EU we must turn to Denmark, Holland and the UK. If we examine the volume that these nations currently produce it covers a limited amount of what is needed and that volume will fall in future. The fact is that Norway is not part of the EU and that the EU’s natural gas security is completely dependent on Algeria, Norway and Russia.

Uranium today is an internationally traded commodity that flows freely over national borders but there is a problem. Nations with known deposits of uranium ore need to have a positive attitude to its future exploitation. Currently the EU’s nuclear reactors consume fissionable material that was originally set aside for nuclear weapons. The number of nuclear weapons is declining and we will soon have used up the reserve of available weapons of mass destruction. I hope that we can continue and consume the reminder of the weapons of mass destruction that still exist, but the fact is that, internationally, we are facing an increased need for uranium mining.

Europe’s most pressing energy security issue has, in recent years, crystallised into a matter of our stance on whether or not Russia is to be welcomed into the European family. This is a question that is decisive for the EU but also a question that is important for Sweden. Today Sweden imports 90% of its oil from three nations, Denmark, Norway and Russia – about 30% from each source. However, in 2030 only Russia will be able to export oil.

Today, the EU’s imports of natural gas by pipeline come mainly from Algeria, Norway and Russia. In 2030 Norwegian exports will be less than today. The same applies to Algeria whose exports derives from one giant gas field and will have declined markedly by 2030. Russia and Kazakhstan remain but a question exists about whether or not Kazakhstan has sold its gas three times over – to Russia, to China and to the EU via Nabucco. To be accurate we should note that there is currently no contract with the EU, but the EU acts as though one existed.

Today, the EU imports 40% of its natural gas from Russia. Future Russian gas production and exports require enormous investments in order to commence production from the fields on the Yamal Peninsula and from Stockman in the Barents Sea. To secure this production is essential for the EU’s energy security. Russia needs long-term contracts with the EU and one can only state that the EU’s politicians do not realise this.

If we gaze into the future to see what the EU should do for Europe’s energy security there is a decision to make and it is to say, ”Russia, welcome to the European community!” This will also strengthen democracy in Europe.

(Swedish)

Energy Forum i Budapest organiserades av ”Foundation Institute for Eastern Studies” i Warszawa, Polen, och ”Energy Constellation Institute” i Budapest, Ungern, och det faktum att vi var i Ungen medförde att Centraleuropas betydelse lyftes fram. Vinterns ”gaskriget” mellan Ryssland och Ukraina var i centrum för de flesta paneldiskussionerna och man kan påstå att EU:s energisäkerhet stod i centrum för hela forumet.

Inledningen på söndag kväll var en presentation där Hans Larsen presenterade rapporten ”The intelligent energy system infrastructure for the future” som arbetats fram av ”the System Analysis Division” vid den tekniska högskolan i Risö, Danmark. Slutklämmen var att introduktion av förnybara energislag medför att det behövs en blandning av allt för att få ett system i balans.

Inledningspanelen diskuterade ”Energy as a Factor of Prosperity and Sovereignty” och här diskuterade politiska tungviktare från väst till öst energins betydelse för samhället. Från utrikesdepartementet i USA kom Richard L. Morningstar, ambassadör och ”Special Envoy for Eurasian Energy”. Det faktum att amerikanska utrikesdepartementet har ett sändebud för Europa-Asisk energi och Morningstars uttalande att Ryssland kommer alltid att vara betydelsefull för Europeisk energisäkerhet markerar frågans betydelse. I höst har Ryssland passerat Saudiarabien som världens störta oljeproducent och sedan länge är man världens största producent av naturgas. Om man till detta lägger att Ryssland är en av världens största kolproducenter och att man har stora fyndigheter av uran och vet att det är energi som styr världen borde alla förstå vilken maktfaktor Ryssland kommer att bli i framtiden.

I dag importerar EU över 40 procent av sin naturgas från Ryssland och i framtiden räknar man med att det kommer att bli en ännu större faktor. För att bryta Rysslands dominans planeras en ny gasledning, Nabucco, som skall gå genom Turkiet och vidare genom Bulgarien, Rumänien och Ungern för att sedan kopplar ihop med EU:s stora nätverk av gasledningar. Från Morningstars kommentarer är Nabocco också ett politiskt spel för att minska Rysslands dominans.

Ryssland ställde upp med vice ordförande för Duman, Alexander Babakov. I mina anteckningar har jag citatet ”We are absolutly right”. Innan dess hade Ungens och Tjeckiens tidigare premiärministrar diskuterat vinterns gaskris då Ryssland stängde kranarna. Från Rysk sida läggs hela skulden på Ukraina.

Mirek Topolánek kopplade ihop nationellt oberoende och tillgång till energi. Han citerade Andrei Sakharov som lär ha sagt att Västeuropas frihet måste bygga på den frihet som kärnkraften ger, dvs kärnkraft gör ett land i Västeuropa oberoende av Ryssland. Notera att detta uttalande gjorde under Sovjetunionen tid. Sverige är ett av de få länderna inom EU som inte är beroende av naturgas från Ryssland och självfallet beror det på vår satsning på kärnkraft.

De sessionerna som jag följde behandlade olika aspekter på EU:s energisäkerhet och då framförallt säker import av naturgas i framtiden. I dag passerar ca 80 procent av den ryska exporten Ukraina och de nya gasledningar som nu planeras har påverkats av konflikterna mellan Ryssland och Ukraina. Vi har ”North Stream” som skall gå genom östersjön, vi har ”South Stream” som skall gå gen om Svarta havet och båda dessa ledningar kontrolleras av ryska intressen medan som tidigare nämnts Nabucco genom Turkiet kontrolleras av EU.

Min doktorand Bengt Söderbergh jobbar nu med slutklämmen på sin avhandling som bland annat behandlar naturgassäkerheten i Europa och det är bara att konstatera att den kan inte komma mer lämpligare än just nu. Jag visade några bilder som finns med i de publikationer som är basen för avhandlingen och intresset var stort från öst till väst. En energikonsult från Moskva hävdade att vad vi visade var helt riktigt. Listan på de som ville ha en kopia av avhandlingen växte snabbt. Är ni intresserade av försvaret av avhandlingen skall ni boka in den 19 februari i Uppsala.

Till slut närmar vi oss pudelns kärna, det ryska statskontrollerade energibolaget Gazprom. Man konstaterade att det enligt internationell lag var helt lagligt att det finns statliga monopolbolag. Gazprom har rätt att existera. De ledningar som man planerar är också helt lagliga, men det faktum att Gazprom kontrollerar ledningarna ger dem stor makt. Representanter för Gazprom lovade att det inte skulle bli några problem i vinter då det för tillfället inte fanns några problem med Ukraina. Några från Ukraina klagade på att Gazprom enligt deras åsikt la sig i det stundande valet medan andra menade att EU gjorde det samma genom sitt agerande. Om alla nya gasledningar byggs så att den ryska gasen inte passerar Ukraina kommer Ukraina att förlora stora inkomster och hur detta kommer att påverka framtiden återstår att se.

Personligen anser jag att vi måste ställa oss frågan om Ryssland tillhör Europa eller inte. Val av gräns kommer att bli avgörande för Europas framtid. Om Ryssland ställs utanför kommer EU att göra allt för att bli mindre beroende av rysk energiexport och Ryssland kommer att vända sig mot Kina. Samtidigt kan vi konstatera att vi de närmast 40 åren kommer EU att vara beroende av import från Ryssland.

Det andra alternativet är att välkomna Ryssland till den Europeiska familjen och utifrån den relationen skapa en gemensam demokratisk bas. Båda lösningarna kräver ett enormt ar bete.

Det faktum att regeringen bestämt sig för att skapa ett Rysslands institut vid Uppsala universitet kan vara ett steg i rätt riktning. Mitt skrivna anförande finns här nedan.

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