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Energy Security in Transition Region
1. ENERGY SECURITY IN
TRANSITION REGION
Chloé Le Coq Elena Paltseva
SITE SITE
Paris II-Panthéon-Assas New Economic School, Moscow
SITE Development Day
The Long Shadow of Transition: The State of Democracy in Eastern Europe
Nov 12 2019
2. Our Focus
• Energy security = continuous availability of energy at affordable prices
• This talk
A subset of transition countries:
• 10 EU member states (entrants of 2004 and 2007) – Bulgaria, Czechia, Estonia, Latvia,
Lithuania, Hungary, Poland, Romania, Slovenia, Slovakia
• 4 European CIS countries: Ukraine, Georgia, Moldova and Belarus
concentrating on the link between energy security and natural gas dependency
3. Energy security and natural gas
Natural gas: a strategic energy commodity
§ Even with different share of gas in primary consumption
across the region : 7% for Estonia to 64% for Belarus
Russian gas: an eternal energy security concern
§ Transition region highly dependent on Russian gas
-Russia supplies more than 70% of gas imports in 2017
§ Transportation via pipeline - limited possibilities to switch
suppliers
• History of gas wars between Russia, Ukraine and
Belarus
0%
25%
50%
75%
100%
Bulgaria
Czechia
Estonia
Latvia
Lithuania
Hungary
Poland
Romania
Slovenia
Slovakia
Ukraine
Georgia
Moldova
Belarus
Russia's share of gas imports in
2010
Sources: Eurostat, Comtrade (Belarus, Georgia).
2010 data for Georgia is missing, so the 2015 data is used
7. Ukraine, the change of gas provider
Ukraine is buying from the European market using the reverse flow technology
- main suppliers in 2017: Switzerland and Germany
The European market strategy
§ limited direct dependency on Russia
BUT substantial part of gas in Europe has Russian origin – indirect dependency
§ benefits from EU bargaining power
-EU is a large gas consumer and trade partner for Russia
-10 EU transition countries benefit from “buyer power” of the EU due to their membership
• Though benefits are incomplete due to inability of the EU to agree on common external energy
policy
-Ukraine gets some of this “buyer power” through market mechanism
(Active EU participation to the ongoing renegotiations of gas transit deal between Russia and Ukraine)
8. Poland and Lithuania, the investment choice
Poland and Lithuania built LNG (Liquified Natural Gas) terminals
Proactive approach
• limited direct dependency on Russia
• increase countries’ significance in regional gas trade
-Become local gas hub
BUT extremely costly strategy
9. Summing up
§ Better energy security of the region, in particular reduced exposure to Russian gas
§ Improvements made possible due to technological breakthroughs
-Reverse flow technology: Ukraine benefits from EU bargaining power via the market
-LNG: Poland and Lithuania diversify sources of imports
§ Downsides
-these solutions are costly to implement
-gas they provide is likely to be more expensive than the one from Russia
-LNG is only feasible for the countries with a sea access
-while gas is better than coal and oil in terms of CO2 emissions, the environmental concern is not
entirely absent (decarbonization)
10. Alternative ways to improve energy security
§ Use of other sources of gas from Turkey,
Azerbaijan, etc.
-Poland currently involved with the Baltic Pipeline
project
-has long been on agenda – think of Nabucco,
etc., but still delayed
§ More green energy in energy portfolio
-a few transition countries are lagging behind
including green energy into energy portfolio
Note: Includes biofuels (excluding traditional use), solar, wind, hydro, geothermal, marine
0%
10%
20%
30%
40%
EU-28,2017
Bulgaria
Czechia
Estonia
Latvia
Lithuania
Hungary
Poland
Romania
Slovenia
Slovakia
Ukraine
Georgia
Moldova
Belarus
Share of renewables in final energy consumption,
2016, IEA
11. Alternative ways to improve energy security (cont.)
Increased energy efficiency
§ Serious issue for some of the transition
states, especially the CIS countries
§ Improvements in energy efficiency are
likely to decrease energy consumption
/imports/dependency, thereby improving
energy security
0
0,1
0,2
0,3
EU-28,2017
Bulgaria
Czechia
Estonia
Latvia
Lithuania
Hungary
Poland
Romania
Slovenia
Slovakia
Ukraine
Georgia
Moldova
Belarus
Energy intensity, 2016, IEA
(primary energy supply/GDP, TOE/K$),