A comprehensive newsletter with insights from MSLGROUP experts on the state of the energy industry in Europe. Produced semi-annually. With the backdrop of socio-economic challenges facing other countries including climate change, growing fuel poverty and security of supply, MSLGROUP's dedicated energy team has to confront various issues every day on behalf of our clients and in this, our inaugural newsletter, we share our thoughts on these issues. MSLGROUP has a growing footprint across Europe and beyond, and a fantastic team in place to help our clients rise to the challenge of communicating effectively with stakeholders around the world on these and other critical issues.

1. ENERGY
NEWSLETTER
Volume 1 - Issue 1 | April 2012
Europe’s Energy - At A Crossroads
INSIDE THIS ISSUE
PAGE PAGE PAGE
03 04 06
Introduction MSLGROUP can Energy issues in Brussels – What’s in the pipeline?
make the difference A competitive internal energy market in the EU is paramount to give
European consumers a choice between different gas and electricity
suppliers and make the market accessible for all suppliers.
PAGE The European Energy Transition - PAGE Poland stands on shale
16 Who will pick up the bill?
In most European countries green energy sources currently
21 The Environment Ministry has so far granted over 100
concessions for shale gas exploration. The first drilling
provide a very small amount of electricity, generally results have been encouraging and Poles are very
contributing less than 2 to 5% to the overall pool. enthusiastic about this potential new energy source.

2. Contents
Introduction 03
MSLGROUP can make the difference 04
Where we are 05
Energy issues in Brussels – What’s in the pipeline? 06
Political Gains: Why Chancellor Angela Merkel
decided to phase out nuclear power in Germany 10
Renewable migration: What drives
financial investment in renewables around the world? 12
Back to the Future in Europe’s Offshore Centre 14
The European Energy Transition -
Who will pick up the bill? 16
What effect will the presidential elections have
on energy issues in France in 2012? 18
Why politics will control energy 19
Poland stands on shale 21
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3. Introduction
The world’s growing desire for energy is relentless and its safe and equitable
production and distribution is one of the key challenges for the world in the 21st
century. While in many parts of the globe the challenge is how to generate power
and deliver it to people, in Europe the challenge is how can we meet demand
cheaply in a climate of growing societal unease with some of the sources that have
powered our growth for the last century and more.
Many in developing markets still have no access to power, for example 45%
of Indians have no access to power at all, while in Europe we are highly energy
consumptive on a per capita basis. How can we help those countries to secure
the energy they need in the most sustainable way? The differing challenges
of climate change, growing fuel poverty and security of supply are testing the
resourcefulness of our leading energy companies to find affordable new solutions
while keeping the lights on.
As has been seen in recent years, no source of power has undisputed hegemony
over the market. There is no single answer to Europe and the world’s energy
needs. Post-Fukushima, we have seen Germany pull back dramatically from
nuclear power, creating a ripple of reflection across Europe – as even France,
Europe’s nuclear industry leader, paused to review its position. In the Netherlands,
we have seen a new coal fired plant blocked, while in Britain the concerns over
security of supply are growing, combined with a fear of over reliance on imported
gas. Meanwhile, although other European countries have banned fracking,
Poland has heartily embraced the shale gas revolution as a means of lessening
its reliance on energy from Russia. But, if we are to give up all these sources of
supply, what will fill the void they create?
It is not just the raw materials for the generation of power that is posing an
increasing headache for Europe’s leading politicians and companies, but also how
to get that power to the consumer. With ageing transmission grids, often situated
in the wrong location to accommodate new sources of power such as hydro in
Europe’s north, or solar from the south, or even wind from Europe’s Atlantic rim,
there is much rethinking and investment required if our dreams of a lower carbon
future are to be realised.
As communications professionals, MSLGROUP’s dedicated energy team has to
confront these issues every day on behalf of our clients and in this, our inaugural
newsletter, we wanted to share some of our thoughts on these issues. With a
growing footprint across Europe and beyond, MSLGROUP has a fantastic team in
place to help our clients rise to the challenge of communicating effectively with
stakeholders around the world on these and other critical issues.
Nick Bastin
Managing Director, Capital MSL,
Head of Energy, MSLGROUP EMEA
3
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Newsletter April 2012

4. Our team
Anders Kempe
Regional president
MSLGROUP EMEA
anders.kempe@
jklgroup.com
Nick Bastin
Head of Energy
MSLGROUP EMEA
nick.bastin@ MSLGROUP can make the difference
capitalmsl.com
Per Ola Bosson
Sweden
per.ola.bosson@
jklgroup.com
Alessandro MSLGROUP is one of the world’s top five PR and events networks,
Chiarmasso employing more than 3,400 people in 22 countries around the world.
Italy The Group offers the best regional and local cohesion and integration -
Alessandro.chiarmasso@ on-line and off-line - across a range of communications disciplines. We
mslgroup.com specialise in Social Media, Public Affairs, Brand and Talent, Financial
Communications, Corporate Comms and Reputation Management,
George Godsall Consumer and Events. We work for a quarter of the top-100 most
UK valuable brands globally.
George.godsall@
mslgroup.com MSL GROUP’s EMEA Energy Practice is a leader in advising companies
from Europe and around the world on communications issues in the
energy sector. Across 15 countries and 27 offices, our European network
Pierre-Samuel supports clients that range from large publicly listed Fortune 500
Guedj organisations, to small, privately held companies. We currently advise a
France third of the energy companies in the Eurotop 100.
guedj@
publicis.com From attracting the best talent, to communications with investors; from
crisis preparedness, to corporate reputation management; and from
Niklas Proksch nuclear to renewables: we understand the key communications issues
Germany
that keep energy companies awake at night.
Niklas.proksch@
mslgroup.com With both breadth and depth of energy communications expertise
across Europe’s key markets, we know that effective, best practice
communications can deliver value to stakeholders across the energy
Peter Steere value chain.
Belgium/ Sweden
Peter.steere@
If you want to find out more about the work we do, or enquire as to how
jklgroup.se we might be able to help, don’t hesitate to contact our team member in
your market – or contact Nick Bastin at nick.bastin@capitalmsl.com
Pawel Tomczuk
Poland
ptomczuk@
publicrelations.pl
Jan van Ingen
Netherlands
jan.van.ingen@
msl.nl
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5. Where we are
EMEA
NA 800
775 EMPLOYEES
EMPLOYEES
Helsinki
Warsaw
Stockholm (2)
ASIA
SWEDEN
Gothenburg FINLAND 1335
Oslo (2)
NORWAY
RUSSIAN
EMPLOYEES
FEDERATION
Boston CANADA Copenhagen (2) ESTONIA
LATVIA
DENMARK
New York (6)
LITHUANIA
UNITED
IRELAND KINGDOM
Breda BELARUS
Toronto GERMANY
POLAND
UKRAINE
CZECH
REPUBLIC
Seattle (2) FRANCE
AUSTRIA
HUNGARY MOLDOVA
KAZAKHSTAN
MONGOLIA
ROMANIA
London (5) SERBIA
MONTENEGRO
BULGARIA GEORGIA UZBEKISTAN
Chicago (2) UNITED STATES
Paris (8) PORTUGAL
ITALY ALBANIA
GREECE
TURKEY
BAKU
KYRGYZSTAN NORTH
KOREA
OF AMERICA SPAIN TURKMENISTAN JAPAN
TAJIKISTAN
SYRIA SOUTH
CHINA
KOREA
Brussels (2) MOROCCO
LEBANON
ISRAEL
JORDAN
IRAQ
IRAN
AFGHANISTAN
Tokyo (2)
Amsterdam PAKISTAN NEPAL Seoul (2)
ALGERIA
Geneva
WESTERN
SAHARA
LIBYA
EGYPT
SAUDI
ARABIA INDIA
BANGLADESH Taipei
MEXICO
PUERTO RICO MAURITANIA
BURMA
LAOS
Shanghai (4)
Beijing (4)
OMAN
Los Angeles (2) MALI NIGER
Monaco SENEGAL CHAD YAMEN
Hong Kong (2)
SUDAN VIETNAM
San Francisco BURKINA
CAMBODIA PHILIPPINES
VENEZUELA
Cologne GUINEA
TOGO
BENIN NIGERIA
ETHIOPIA
Dubai SHRI LANKA Chengdu
IVORY GHANA CENTRAL AFRICAN
Frankfurt
LIBERIA COAST
COLOMBIA
REPUBLIC
SOMALIA Abu Dhabi MALAYSIA
BRUNEI
Guangzhou (2)
Atlanta ECUADOR Hamburg GABON CONGO
UGANDA
KENYA
DEM. REP.
Detroit CONGO INDONESIA
Milan (2) TANZANIA Ahmedabad
PAPUA NEW
GUINEA
Arlington PERU
BRAZIL Munich Mumbai (2) Singapore
ANGOLA
Washington DC Rome
ZAMBIA
Pune (2) Kuala Lumpur
BOLIVIA MADAGASCAR
MOZAMBIQUE
Berlin NAMIBIA
ZIMBABWE
New Delhi (3)
BOTSWANA
Johannesburg
PARAGUAY
AUSTRALIA
CHILE
SWAZILAND
Bangalore (2)
URUGUAY
SOUTH AFRICA
Hyderabad (2)
ARGENTINA
Chennai (2) NEW
ZEALAND
Sao Paulo Kolkata
Buenos Aires
LA
65
EMPLOYEES
MSLGROUP Office Affiliate Office
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Energy Volume 1 issue
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6. Energy issues in Brussels –
What’s in the pipeline?
A competitive internal energy market in the EU is paramount to
give European consumers a choice between different gas and
electricity suppliers and make the market accessible for all suppliers.
According to the European consumption. Proposals included a
Commission, a competitive internal legal obligation to establish energy
Henrik Bernitz energy market in the EU is paramount saving schemes in all Member States,
MSL Brussels to give European consumers a choice major energy savings for consumers,
henrik.bernitz@jklgroup.com between different gas and electricity the Public sector to lead by example,
suppliers and make the market etc.
accessible for all suppliers, especially
the smallest and those investing in The draft EED was discussed at
renewable forms of energy. ministerial level in Brussels mid-
February 2012, at which point most
The first liberalisation Directives were Member States were politically willing
adopted in 1996 (electricity) and 1998 to commit to the movement, but
(gas), with the objective of opening unwilling to spend, refusing binding
up the electricity and gas markets by targets for energy savings, only
gradually introducing competition. accepting flexible “measures”.
The second liberalisation Directives
were adopted in 2003 and included However, after added pressure within
‘unbundling’, whereby energy the Parliament from MEP Claude
transmission networks have to be run Turmes (Greens, Luxembourg), the
The draft EED was discussed
independently from the production rapporteur for the draft Directive, the
at ministerial level in Brussels and supply side. These directives committee for Industry, Research and
mid-February 2012, at which have allowed businesses and private Energy (ITRE) voted on 28th February
customers to choose their power and to jump start negotiations with the
point most Member States were
gas suppliers freely in a competitive EU Council as soon as possible,
politically willing to commit to the marketplace. before the vote in the Parliamentary
movement, but unwilling to spend, plenary session mid-March. In order
However, a competition enquiry to succeed, the directive will have
refusing binding targets for energy
in the electricity sector, published to find ways of appeasing national
savings, only accepting flexible in January 2007, revealed some governments that are less supportive
“measures”. “serious malfunctions” in the market of binding efficiency legislation. The
for industrial consumers. After long Danish Presidency is then willing to find
negotiations, a new Directive on market a compromise at Council level before
liberalisation was adopted in 2009. This the end of June as it is one of its main
was to be transposed in Member States priorities.
by March 2011, but Bulgaria, Cyprus,
Spain, Luxembourg, the Netherlands, Energy Roadmap 2050 - Presented
Romania, Slovakia and Estonia are yet by Energy Commissioner Günther
to do so. Oettinger in December 2011, it aimed
at achieving the EU goal of reducing
Key dossiers in the pipeline greenhouse gas emissions by
80-95% from 1990 levels by 2050.
The Energy Efficiency Directive The Roadmap sends a strong message
(EED) - In June 2011 the European that decarbonisation efforts in the
Commission proposed a new set energy sector would be generally
of measures as a new Directive on beneficial, with a shift from imported
increased Energy Efficiency. This fossil fuels to domestic investments.
brought forward ways of stepping up The Roadmap 2050 puts forward
Member States’ efforts to use energy several illustrative scenarios combining
more efficiently at all stages of the the four main decarbonisation routes,
energy chain – from the transformation namely energy efficiency, renewable,
of energy and its distribution to its final nuclear and carbon capture and
photo by -Tripp- on flickr
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7. According to Davies, “even in the absence of a binding
international treaty of the kind that we seek, Parliament accepts
that the EU should accept the role of first mover, and must take
the steps necessary to build a low carbon economy by 2050.
storage (CCS); these include: stronger To reap the benefits of a low-carbon
commitments to high energy savings, economy, the EU would need to invest,
diversified supply technologies, high on average, an additional 1.5% of
renewable energy sources, delayed its GDP annually over the next four
CCS and no new nuclear reactors. decades. The extra investments will
spur growth within a wide range of
While the EC reiterates Member Europe’s sectors and services, and 1.5
States’ responsibility in determining million additional jobs could be created
their energy mix, it highlights the need by 2020.
for an effective and greater policy
framework to ensure a solid ground for The European Parliament’s committee
energy security and competiveness. for Environment, Public Health and
Gas is seen as critical for the Food Safety (ENVI) recently adopted a
transformation of the energy system in report by MEP Chris Davies (ALDE, UK)
achieving emission reduction as it can backing the Commission’s low-carbon
be a substitute for coal and oil in the roadmap, before the vote in plenary in
short to medium term. March. According to Davies, “even in
the absence of a binding international
The Roadmap was criticized by some treaty of the kind that we seek,
at its publication for its lack of policy Parliament accepts that the EU should
recommendations and interim targets accept the role of first mover, and must
for 2030 (to be proposed by the EC take the steps necessary to build a low
in the coming months). The Energy carbon economy by 2050.”
Roadmap 2050 dossier is currently in
photo by ‫ | قرب ةكبش‬B.R.Q on flickr the preparatory phase at the European Energy Taxation - In April 2011, the
Parliament, under the responsibility of EC presented its proposal to revise
the committee for Industry, Research EU rules on the taxation of energy
and Energy (ITRE). products. They find the current Energy
Taxation Directive to be outdated and
Low Carbon Roadmap - The EC is of unable to address the EU’s higher
On 29th February, the proposal the position that Europe could cut most ambitions in energy and climate
was passed in the European of its greenhouse gas (GHG) emissions change policies. With the revised
by 2050, thus making the European Directive, the EC wants to promote
Parliament, with a majority vote economy more climate-friendly and energy efficiency and consumption of
in favour from the committee for less energy-consuming. Reducing more environmentally friendly products
Economic and Monetary Affairs GHG emissions to 20% is one of the and to avoid distortions of competition
EU’s goals by 2020. The Roadmap for in the Single Market.
(ECON). Moving to a Competitive Low-Carbon The revision to the Directive would
Economy in 2050 (March 2011) looks change the way energy products are
beyond this time period, setting out taxed, in order to eliminate current
a plan to meet the long-term target imbalances and take into account both
of reducing domestic emissions by CO2 emissions and energy content
80 to 95% by mid-century, as agreed of products. It would end diesel’s tax
by European Heads of State and advantage over petrol.
governments. It shows how the sectors
responsible for Europe’s emissions - On 29th February, the proposal was
power generation, industry, transport, passed in the European Parliament,
buildings and construction, as well as with a majority vote in favour from the
agriculture - can make the transition to committee for Economic and Monetary
a low-carbon economy over the coming
decades.
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Energy Volume 1 issue
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8. Affairs (ECON). As the new Directive When it comes to security of energy
would price diesel more highly than supply, even though the Commission
petrol (the opposite being the case for tries to reconcile Member States’
most EU countries) there have been diverging positions and ensure that
certain conflicts. The EPP abstained the principle of common interest is
from the vote, whereas the Socialists, maintained, it nonetheless proves to
Liberals and Greens have been more be a contentious topic. For instance,
supportive of the move. The EU Danish complications of rivalry exist
Presidency is expected to present fresh between supply channels, such as
compromise proposals to the Council the Nabucco project and the South
committee of national experts on Stream project. Furthermore, some
Monday 5th March. Member States’ agreements with third-
country suppliers are not necessarily
Infrastructure - A strong EU internal compatible with EU regulation. For
energy market with security of supply instance, the Commission is stressing
depends on a reliable and coherent the need for Russian oil to observe
energy network in Europe, and EU rules on competition and non-
therefore on infrastructure investment. discrimination. Moreover, among
When it comes to security of The Trans European Energy Networks the European community there are
(TEN-E) are considered important conflicting opinions as to the extent to
energy supply, even though the
to the EU’s overall energy policy which Europe should focus on moving
Commission tries to reconcile objectives, increasing competitiveness away from energy dependence on
Member States’ diverging in the electricity and gas markets, Russia, looking to domestic resources.
reinforcing security of supply, and
positions and ensure than the
protecting the environment. The EU is Unconventional Resources of
principle of common interest is currently financing electricity and gas energy - Over the past ten years or
maintained, it nonetheless proves transmission infrastructure projects of so, discoveries of unconventional
European interest. Most of the projects fuel sources, such as oil shale and tar
to be a contentious topic.
are cross-border or have an influence sands, look to revolutionise the global
on several Member States. Last energy market. There have been major
November, the European Commission discoveries in the USA of these kinds
presented its energy infrastructure of sources and extractions have already
priorities for the coming two decades been carried out on large commercial
which included: electricity grids (e.g. scales. In Europe, the matter is more
an offshore grid in the North Sea and complicated – many say this is because
interconnections in South Western of population density, which makes
Europe) and gas connections (e.g. the drilling problematic, and because of
Southern Corridor and the North-South stricter regulations around energy
corridor in Western Europe). production.
New guidelines for trans-European Discoveries of significant shale
energy networks list and rank resources have been made in certain
projects eligible for financing. The EU countries (Poland, Ireland, UK,
dossier is currently awaiting the first Bulgaria and Ukraine), but there has
Parliamentary reading, under the been a huge amount of opposition to
responsibility of the committee for the process of extraction – hydraulic
Industry, Research and Energy (ITRE), fracturing – believed by many to
with António Fernando CORREIA be dangerous for the environment
DE CAMPOS (S&D, Portugal) as and for human health. There has
rapporteur. been pressure on EU institutions to
photo by kismihok on flickr
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9. investigate further with the hope of tar sands are assigned a default
formulating tighter policy around shale greenhouse gas value of 107g of
gas exploration. The Commission carbon/MJ, advising buyers it has more
has carried out studies on current climate impact than conventional crude
regulatory frameworks on the matter with 87.5g.
in Member States and continues
to research the possible effects of Canada has engaged in a battle with
hydraulic fracturing, and the Parliament Europe over the proposal, as it is a
is also producing reports on the country rich in tar sand resources, and
subject. has been aggressively lobbying for the
plans to be rejected. The EU has also
Emissions Trading System - The been subject to heavy lobbying from
Commission believes the EU Emissions the other side of the debate. The vote
Trading System (EU ETS) to be a finally took place in the Fuel Quality
cornerstone of the European Union’s Committee on Thursday 23rd February,
objectives to combat climate change but there was no qualified majority,
and reduce industrial greenhouse which means the vote will be passed
gas emissions cost-effectively. It onto the Council of Environment
photo by ell brown on flickr covers some 11,000 power stations Ministers on 11th June.
and industrial plants in 30 countries
(the 27 EU Member States, Iceland,
Liechtenstein and Norway). The ETS
will be expanded to airlines in 2012
and the petrochemicals, ammonia and
A series of important changes aluminium industries in 2013.
will also be taking effect as to
A series of important changes will
the way the EU ETS works. For also be taking effect as to the way
instance, on 28th February, a vote the EU ETS works. For instance, on
28th February, a vote in the European
in the European Parliament for
Parliament for an amendment to the
an amendment to the EU Energy EU Energy Efficiency Directive will
Efficiency Directive will allow allow permits in the Emissions Trading
System (EU ETS) to be withheld. The
permits in the Emissions Trading
move is designed to reduce the surplus
System (EU ETS) to be withheld. of allowances currently on the carbon
market produced by a combination of
uncertainty over the eurozone crisis
and stalled economic activity as a result
of the recession.
Fuel Quality Directive - In October
2011 it was proposed that the EU Fuel
Quality Directive be revised, in terms
of the implementation of the labelling
and pricing of fuels according to their
carbon emission. One area that has
been particularly contentious has been
the treatment of tar and oil sands,
which are believed by many to be
highly polluting. Under the proposal,
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Energy Volume 1 issue
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10. Political Gains:
Why Chancellor Angela Merkel decided
to phase out nuclear power in Germany
Despite some initial criticism, Merkel’s decision proved to be a tactical masterpiece.
Merkel’s decision to It is inconceivable that any German
government would go back on the
accelerate the phasing-
Florian Wastl accelerated phase-out decision. Even if
MSL Germany out of nuclear energy in there were a significant shortfall in the
florian.wastl@mslgroup.com Germany energy supply, the government would
consider other options first (imports,
Within the industrialised world, fossil energy) before considering even
Germany’s energy policy is the odd a modest extension of the lifetime of
one out. While many industrialised the last remaining German reactors.
countries are extending their nuclear
programmes, Germany has not only A challenging way ahead
decided to stick to its original decision
to put an end to nuclear energy, but In addition to the decision to accelerate
last year it even opted to accelerate this the phasing-out of nuclear power, the
process. The decision sparked some government decided to implement a
initial criticism in Germany, but now a very ambitious programme designed
broad consensus has been reached. to transform Germany’s energy system,
commonly known in Germany as the
At the heart of the decision to do “Energy Shift” (“Energiewende”).
At the heart of the decision to do away with nuclear energy at an even The programme entails a substantial
away with nuclear energy at an earlier date than originally planned, increase in renewable energy,
was a successful tactic by Chancellor improving energy efficiency and, most
even earlier date than originally
Angela Merkel to snatch the topic away importantly, a considerable extension
planned, was a successful tactic from the Greens. Going against public of the energy grid. As it stands, the
by Chancellor Angela Merkel to opinion, Merkel’s conservative-liberal “Energy Shift” suffers from a number
coalition had extended the lifetime of of weaknesses which could endanger
snatch the topic away from the
Germany’s nuclear reactors by up to its chances for success.
Greens. 14 years in late 2010, thereby watering
down an earlier decision to phase The institutional challenge:
out nuclear power by the Schröder Uncertainty in the political process
government. With the Fukushima
nuclear accident in March 2011, Merkel Since Germany has still no energy
faced a massive media backlash and ministry, competences and
outpouring of popular sentiment. She responsibilities between the two
quickly declared a moratorium during ministries in charge (economics and
which the oldest nuclear reactors were environment) are not clear, leading
switched off. Within the following three to uncertainties and delays in the
months, the government decided to planning process. There is considerable
decommission all German nuclear wrangling between the liberal
plants by 2022. economics minister, Philipp Rösler
(FDP), and the “greener” and more
Despite some initial criticism, Merkel’s progressive environment minister,
decision proved to be a tactical Norbert Röttgen (CDU).
masterpiece: The Greens reached
unforeseen highs in the polls of up to
25 per cent shortly after the Fukushima
accident. However, they quickly
dropped back and now stand at 13 per
cent.
photo by World Economic Forum on flickr
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11. Once citizens themselves have
taken a democratic decision,
it will be far more difficult for
them to go back on it.
The logistical challenge: Huge
investments vs. long distances and
citizen protests
The proposed shift to renewable
energy relies heavily on offshore wind
power. The building of wind parks in the
North Sea and the Baltic Sea will be
very expensive and requires enormous
capital expenditure by investors.
The energy produced there will also
need to be transported to Germany’s
industrial centres in the south and west.
No precise and promising plan for the
large-scale construction of grids is yet photo by brewbooks on flickr
in place, and NIMBY-protests along
any new power lines could cause major mission or purpose which could give
delays and produce additional costs. it the status of a national project. A
national campaign needs to provide
The political challenge: Coal/lignite the necessary patriotic emotion to
photo by bagalute on flickr vs. natural gas serve as a unifying theme from above
and to provide momentum for the
The “Energy Shift” requires fossil political and regulatory process. This
“bridging” technologies such as coal/ would not just incline federal politics to
lignite and natural gas. There are continue to treat the “Energy Shift” as
significant differences between the a matter of national importance, but it
The “Energy Shift” requires fossil political parties over the way forward would also make it easier for individual
on this. While CDU und SPD favour politicians to sell hard choices and to
“bridging” technologies such as the building of new coal-fired power stand firm in the face of protest – all
coal/lignite and natural gas. There stations, the Greens are strictly against the way down to the local level, thereby
are significant differences between coal or lignite which they say is dirtier paving the way for the successful
and less flexible than natural gas completion of individual projects on
the political parties over the way when combining it with power from the ground.
forward on this. renewable energy sources.
However, communication is also key at
The role for the local level itself. To prevent endless
stalemates with regard to important
Communication building projects, local citizens need
to be involved in the planning process
While communication is only part of the
at an early stage. There needs to be
problem and can therefore only be part
clear, transparent and continuous
of the solution, it is key to the success
information, and participatory elements
of Germany’s “Energy Shift” in two
throughout the entire process are
important ways: Communication needs
essential. While citizens cannot be
to provide momentum from above, and
involved in every detail, they must be
it is important in facilitating progress on
given the opportunity to participate
the ground.
in real decisions. Once citizens
themselves have taken a democratic
While there is much talk of the “Energy
decision, it will be far more difficult for
Shift” in the media and politics, the
them to go back on it.
term has not so far been filled with a
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Energy Volume 1 issue
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12. Renewable migration:
What drives financial investment in
renewables around the world?
Within this global revolution there are plenty of spaces for the participation of
private investors alongside governments and international institutions.
The General Assembly of the United energies and the environmental
Nations has designated 2012 as awareness of the population has grown
Alessandro Chiarmasso International Year of sustainable significantly in a few years.
MSL Italia energy. According to Secretary General
alessandro.chiarmasso@ Ban Ki-moon, we need a global clean The energy mix of each country is
mslgroup.com energy revolution: a revolution to make also important because it determines
energy available and accessible to the payback period required for the
all; to minimize climate risks; to fight investment. For example, while
poverty and improve the health of the biomass is a good choice in the
planet, enhancing economic growth, absence of other resources, particularly
peace and security. as it stimulates employment in
economically weak rural areas, and it
Within this global revolution there are is essential in reducing greenhouse
plenty of spaces for the participation emissions, the technology is slower in
of private investors alongside producing profits.
governments and international
institutions. But how are investors Thirdly, the geopolitical position of
being encouraged to support this the country is important. The financial
collective effort to transform the community knows that any country
The energy mix of each country planet? What are the factors which which relies on Middle Eastern oil,
is also important because it affect their preference of one country Russian gas or Algerian methane
or a geopolitical area over another? may suffer supply constraints due
determines the payback period
to the evolution of the geopolitical
required for the investment. Firstly, it is important that there is a environment. The political instability of
credible and stable regulatory and some countries in the Mediterranean,
political environment, to give investors Persian Gulf, and Central Asia has
comfort that if there is a change in plunged Europe into periods of energy
government the rules and regulations crisis before – in 1973 for example. It
will not be rewritten over night. The was from moments such as this that
financial community needs to know the interest in renewable energy, and
that the decision to support alternative its promise of energy self-sufficiency
energy is robust and is firmly supported initially developed.
by the wider community, and that
there is an attractive investment Fourthly, the attractiveness of a
environment. country’s regulatory environment
and the incentives for investment
Secondly, investors will consider the are critical. Let’s take for example
geography of the country and how three countries that have maintained
this will impact the mix of energy - a balance between economic
renewable and traditional - in which development and the environment,
they will invest. For example, wind and which have considered a blend of
power is attractive in France, while traditional and new sources of energy.
solar is attractive in Italy and Spain and
hydro in the Nordic countries. Turkey To meet its energy needs, South
has developed an energy plan, which Africa launched a development
is considered to be very attractive, as it plan for 50,000 MW by 2030. 42
includes assistance for infrastructure percent of which will be covered
modernisation. The geological nature by renewable energy across wind,
of Turkey offers the opportunity to solar / photovoltaic, biomass and
develop all the main renewable hydroelectric power. This is against a
photo by mjmonty on flickr
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13. photo by Magharebia on flickr
backdrop of political stability, economic The challenge for Governments is
growth and attractive regulatory to balance incentives with a clear
framework. industrial direction, to help sustain
the young industries born around
Bulgaria is now attracting capital for renewables and stimulate the market
solar and wind power, with a focus on for greater investment in R&D. This
solar. While the duration of incentives not only helps to make the further
are only decided at the time of development of plants more cost
construction of the plant, the typical effective, but also helps to generate
rate is 25 years for solar compared with profits by exporting technology to other
15 years for wind. developing markets.
Within four years, Italy has become a
European leader for solar power, due
to the incentives within the Energy
Bill (Conto Energia). While much
investment is focused on installing
equipment; that is imported from
Germany and China, Italy is clearly
building growing expertise in this
area. Italy currently has about 159,895
renewable energy plants, of which
there are 2,729 hydroelectric, 487 wind,
155,977 solar, 33 geothermal, 669
bioenergy. Collectively, these produce
almost the same amount of energy as
two nuclear power plants.
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14. Back to the Future in
Europe’s Offshore Centre
Europe and the UK needs to continue to develop the potential of the North Sea,
which is going to remain a global centre of excellence for some time to come.
Much has been written about the long of Shetland at Clair Ridge and Kinnoull
standing demise of the North Sea as are two examples of where technology
Nick Bastin an oil and gas production centre. With has helped to make production not
Capital MSL peak production reached as far back as just possible but attractive, despite
nick.bastin@capitalmsl.com 1999, the North Sea has increasingly the challenges of the location. As
seemed like yesterday’s story. With more sophisticated sub-sea drilling
many of the oil majors choosing to techniques are deployed, more and
focus their investments elsewhere more opportunities will emerge.
in exciting new finds as far afield as
Angola, Azerbaijan and Brazil, it is In 2008, when the Abu Dhabi National
not surprising that the North Sea has Energy Company (TAQA) bought a
seemed somewhat unattractive by range of fields and assets from Shell
comparison. In addition, the continuous and Exxon, many commentators
development of new technologies and questioned the logic behind the
techniques has meant that resources investment. However, the last few years
from shale and tar sands, that were has seen TAQA double production from
There is no doubt that advances previously unattainable, can now its portfolio and bring new discoveries
in technology have opened be accessed more readily than ever on line in record time. By investing in
before. renovating its platforms and leveraging
up areas of the North Sea that its sub-surface infrastructure, TAQA
were previously too difficult or A recent study by Oil & Gas UK, the has been able to bring new wells into
expensive to target. UK’s trade body, highlighted that production rapidly and cost effectively.
the decline in production in the UK
North Sea had accelerated from With continuous production in the
an average of 6% in recent years to North Sea since the 1970s some
18% in 2011 – despite a backdrop of may think that the seabed has been
high oil prices. Given concerns over sliced and diced with seismic by many
UK energy security, it was doubly operators, many times over. One
ironic that George Osborne MP, the might assume therefore that there
Chancellor of the Exchequer, decided can be nothing new to learn, no new
to target North Sea producers for a fields to be identified. However, on the
higher tax contribution in 2011, further contrary, recent advances in seismic
destabilising the investment case. technology are allowing explorers
to see through tricky structures and
Does this mean that it is the end of formations, particularly salt, to the oil
the road for the North Sea? With an and gas lying beneath in a way never
estimated 24bn boe still remaining, considered possible before. This ever
and with the unknown potential that evolving understanding of the geology
new technology keeps opening up, of the North Sea, and emerging
many commentators believe that knowledge of the North Atlantic,
a huge amount more could still be combined with better technology for
extracted. But what are the drivers for extracting hydrocarbons, means that
accessing this and are they sufficiently once unattractive acreage is now being
attractive. brought into production.
There is no doubt that advances in The key macro driver for this trend is
technology have opened up areas of – unsurprisingly - the oil price. With a
the North Sea that were previously too high and relatively stable oil price, it is
difficult or expensive to target. Recent possible for significant investment to
new investments by BP in the area west be made and to still turn a profit even
photo by Ken Lund on flickr
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15. photo by jkirkhart35 on flickr
in a tough location like the North Sea. Global demand for energy remains
When the oil price was below US$70 insatiable. The International Energy
a barrel, the commercial rationale for Agency predicts that demand for
investing significantly in the North Sea energy will grow by some 40% by
was limited, but with prices remaining 2030, and, despite major investments
over the US$100 a barrel mark it is in developing alternatives, fossil fuels
clearly a lot easier to take those long are expected to make up some 80%
term investment decisions. of this demand. Europe, and the UK
in particular, needs to continue to
Despite the smash and grab raid by the develop the potential of the North Sea.
UK’s Chancellor, most producers seem It is clear is that it is going to remain a
to have swallowed the increase and are global offshore centre of excellence
continuing with their investment plans for some time to come and that the
– the ability to produce significant continuous evolution of technology
quantities of oil close to key markets, will allow an ever greater proportion of
in a stable political environment is just hydrocarbons to be extracted.
too attractive.
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