HIGH TATRAS, Slovakia – The European Union is ready to make another political push in resolving the Russian gas transit via Ukraine and wants to make sure that Nord Stream-2 and Turkish Stream, if the latter is extended to the European market, are fully compatible with EU law, European Commission Vice-President Maroš Šefčovič told New Europe in an exclusive interview on the sidelines of GLOBSEC’s Tatra Summit 2018 in Slovakia on October 6.
Speaking at a mountain resort on the scenic Štrbské Pleso in the High Tatras on October 6, Šefčovič also noted that the EU is leading the fight against climate change, having absorbed the blow from US President Donald J. Trump’s decision to pull out of the Paris Agreement. He stressed that better integration of renewables, smart grids and energy storage is a top priority for European researchers as well plans to develop new technologies for energy saved in batteries.
Regarding ongoing Russia-Ukraine-EU gas talks, Šefčovič reminded that there was “a quite constructive trilateral meeting on the level of ministers” before the summer break that included the CEOs of National Joint-Stock Company Naftogaz of Ukraine and Russian gas monopoly Gazprom.
“We agreed exactly to discuss the kind of contract mechanisms for tariff settings, then, of course, investments needed into the pipeline system and then we added one more and that was another look at gas demand in Europe because we had our own modeling results but, in this case, we wanted to ask companies how much gas they are ready to book for the next decade,” he said. “And then, we decided that just after the summer, we will have technical meetings on the level of experts. We had three rounds of these of meetings where we devoted quite some time to explain especially to Russian partners how the unbundling should take place, who might be the successor company to Naftogaz but also what is the tariff-setting mechanism according to the European parameters and we asked the Ukrainian side to present a formula how the prices would be calculated,” Šefčovič said.
“So all this was quite positive on the point of view of mutual explanations and understanding. But now I feel we would need another push on the political level. We’re going to send out the invitations hopefully next week (week of October 8) and we start to look for the date because we agreed that we should keep the pace reasonably high and we’re going to suggest dates late October, early November for additional meeting,” he said.
He stressed that in the meantime, the European Union plans to communicate with the Ukrainians and highlight the fact how important for the success of this exercise is unbundling of Naftogaz. “I understand that it’s a very complex process, but we need to proceed with that,” he said.
According to Šefčovič, the trilateral political meeting will probably include Russian Energy Minister Alexander Novak and Ukrainian Foreign Minister Pavlo Klimkin.
On Ukraine gas transit
The Commission Vice President said that the priority to have the continuation of the gas transit in post 2019 period was shared by both Ukraine and Russia. “For Ukraine, they’re highlighting the fact that what they need is commercially acceptable volumes, of course, and Russia is underlying the fact that this must be the agreement which would be economically interesting for them. But what is important is that we managed, I would say, to re-establish the trust especially on this issue and that the sides are ready to move on. I think another indication of how quickly we can proceed with the agreement would be when we see each other on the political level again,” Šefčovič said.
Gazprom sent 94-97 billion cubic meters through Ukraine to Europe last year, according to Šefčovič. The VP expressed his concern about the Nord Stream-2 pipeline that plans to transport 55 billion cubic meters from Russia to Germany bypassing Ukraine. “This is the concern even though it’s very rare because of different technical reasons that you use the whole volume of the pipeline. Therefore, what we’re looking for is the contract based on European law, transparent tariff setting, commercially acceptable and commercially interesting volumes and long-term booking because you need to have long-term perspective also from the point of view of investment into the system,” he said.
On Nord Stream-2
Šefčovič said the European Commission’s position on Nord Stream-2 has not changed. “We’re trying to use the instruments that we have on our disposal and the insistence on the European law is clearly one of them. We’ve said on several occasions that we really want to make sure that Nord Stream-2 should be fully compatible with EU law. So therefore we proposed the gas amendment which is now with the Council,” he said, referring to the Commission proposal to amend the Gas Directive. He argued that the proposal “is bringing additional clarity to the way how the gas law should be applied. I think that from the Commission side, we answered all the technical questions so it’s now really up to the Presidency to put it on the table and to decide. And I think there is a qualified majority for the decision so we’re discussing with the Austrians when they would like to put it on the table. I know that the member states, which are interested in these proposals, are also pushing the Presidency to put it on the table so we just have to wait to and see when it will make it to the agenda.”
Asked if by member states that are pushing this proposal are the countries that are also opposing Nord Stream-2, Šefčovič said, “More or less. But this amendment is not only about Nord Stream because it’s a precision formula for all pipelines which are being built or will be built because what we do there is that we’re clarifying the situation and clearly stating that if it comes to the gas law it’s fully applicable to all EU jurisdictions, meaning territorial waters, economic zones, which for me was the original intention of the legislator but because it is an issue of dispute we want to make 100 percent clear.”
During the Tatra Summit, Šefčovič also met with German’s Vice Chancellor and Minister of Finance Olaf Scholz. Asked if Nord Stream-2 was discussed, the Commission Vice President said, “We have been talking to each other but didn’t raise this one because I’m going to Berlin very soon. We’re going to inaugurate with (Economy and Energy Minister) Peter Altmaier the German battery alliance and then we also want to visit region Lausitz where we’re working with local authorities on carbon intensive platform and other transition programs for that region so I believe that it would be an occasion to get to this question as well.”
On Turkish Stream
Turning to Turkish Stream, Šefčovič said the situation is even more complicated than Nord Stream-2 because it’s a project that is bilateral between Turkey and Russia. “But we’re, of course, making very clear that if the intension is for Turkish Stream is to also supply also the European market because until now the pipeline from Russia to Turkey is for the supply of Turkey and it’s growing demand. But if they would like to supply the European market, here we are again in the area of Third Package, of compatibility with the EU law and all the conditions which have to be fulfilled by all gas operators in Europe,” Šefčovič said.
On Trump and climate change
Turning to climate change, Šefčovič said Europe is leading the way in the fight against climate change and advancing renewable energy. Asked about Trump’s decision to pull the US out of the 2015 Paris Agreement, an issue that the Commission Vice President had also discussed in an interview with New Europe on the High Tatras a year earlier, Šefčovič laughed, saying: “I think we somehow absorbed the blow as a boxer. We absorbed it and we continue our fight and we’re back at the top of our game because the unfortunate decision of the White House somehow energized the America – meaning the states, the business leaders, the mayors; it brought a new energy also to our Global Covenant of Mayors and I think that we have several occasions where the global community could reconfirm the commitment.”
He reminded that One Planet Summit in New York in late September, they accessed the progress made since the last meeting Paris. “I think that the progress was quite obvious. You see how the countries are gradually transposing the Paris commitments into the concrete policy decisions. Of course, the EU is the first major economy, which very clearly transposed the Paris Agreement into European laws and we are most advanced also in also future planning and so on and so forth. Now the whole world is geared towards Katowice or towards COP24 where we have to agree on this new rulebook, where the IPCC (Intergovernmental Panel on Climate Change) will present new assessment where we are and where we would also like to present our new long-term strategy with the horizon 2050,” Šefčovič said.
Asked if the EU has taken the helm in the fight against climate change, he said, “There’s clearly no doubt about it. Sometimes, I’m a little bit perplexed when I hear different commentaries, especially in American talk shows because we, of course, are glad to see the progress in China, in India, in some African countries. But if it comes to renewable power collection per capita, if it comes to the number of patents where 40 percent of all patents in renewable sector is with us, I would say that the policies that we’re all making and the overall drive of the economy which we put on the screen, low-carbon basis, there’s no question that Europe is leading the way and we’re not somehow trying to close in on this effort. We prepared this new investment fund for Africa, which is by far much bigger than anything that is there on the market and we’re aiming by 2020, which is in a few years time, to channel round 44 billion euro in these energy and renewable sectors. We want create new conditions on the ground for the people and we want to show that this time we do not need to build huge power centers, huge power plants, that you can really do miracles with micro-grids, with solar panels, with wind energy that that can really create new conditions. Especially in Africa, I think we still have 600 million people who do not have access to electricity, which is creating enormous problems for economic development.”
On energy storage and batteries
Turning to energy storage, Šefčovič cited energy experts, saying, “Batteries are the Holy Grail for renewables.” “Once you solve the challenge of storing intermittent storage from renewables and it’s a particular challenge for wind energy, then you have no problem going 100% renewable because you can really rely on energy stored in batteries or in these different new technologies, which are being developed right now,” he said.
“This is going to be clearly the top priority for energy European researchers: better integration of renewables, smart grids and the storage of energy for industrial purposes. But what we’re now pushing very hard across the Europe, these are the batteries for cars. Because if we’re so strong in renewables unfortunately I cannot say the same about the batteries because they’re clearly lagging behind and we have to do very, very quick catching up, otherwise our car industry, our bus industry will hugely suffer because governments, mayors, citizens, they want to go for cleaner transport. They want to see more electro-mobility and we can achieve it only if we would be able to manufacture high quality, competitive and, I hope, green batteries here in Europe,” he said.
Asked what happens if electric vehicles run on electricity generated from coal, Šefčovič noted how cleaner the electric car is even if it is fuelled by electricity that comes from dirtier sources. “We’re talking about different particles, we’re talking different levels of air pollution so even in that case it’s very beneficial for the environment and most importantly it’s much better for the health of the people which is becoming more and more important problem for the citizens especially living in the cities,” he said.
The European Commission Vice President stressed that the advantage of the EU Energy Union is that “we’re advancing different policies in a way that they’re compatible and they reinforce each other.” “We want to have the batteries in the car, which could not only power the car but if there is excessive energy stored so the energy could be sold back to the grid system so it could play the balancing, it could play the energy storage,” Šefčovič said. “But for this you need a new electricity market which we’re just approving and we expect that by all that introduction of renewables and energy efficiency into the energy mix of the EU already in 2030, we would have like 70 percent of electricity which would be low carbon which that would automatically translate into more clean energy used in electric cars which would then not pollute at all because it would be based in the non exhaustion systems.”