Energy and Climate Change
Internal Policies and EU Institutions

Speech by Professor Jerzy Buzek President of the European Parliament on the European Energy Community and Europe's energy policy

Clingendael, The Hague -
Tuesday, November 30, 2010

Dear Colleagues,
Dear Friends,

It is a pleasure for me to be here with you this afternoon. This conference is particularly timely since the world is meeting in Cancun to deal with climate change, and the decisions we will take both there and later next year in South Africa, will determine our energy policy for the next ten years.

If you allow me to I would like to start by saying a few words on where I think we are today as the EU, and where I think we should be going, in terms of energy policy.

Today we still have a fragmented market that operates on national lines with many bottle necks that do not allow us to finalise a single market in energy. After enlargement we have inherited poor East-West, but also North-South energy interconnections, which have only added to the fragmentation. We have also failed to implement many EU laws in this sector. Just to give one example, we still have not put in place many of the provisions of the second energy package even though we are now into the third!

I believe that the new Lisbon Treaty will help change this because it gives the EU a strong legal basis to act in this area. Article 194 is important because it underlines that energy is becoming a key policy of the Union. I am convinced that in the long run it will be just as important as agriculture or regional policy because of its impact on our economies. Energy is the lifeblood of the internal market because we need cheap and secure energy to power our growth.  

The new Treaty can be used to bring about secondary legislation in the energy sector. For example we can start looking at creating a European regulatory framework for energy wholesale markets, thus avoiding the risk of diverging national regulatory initiatives, which will help ensure more transparent pricing.

We can use the Treaty to push forward many joint investments such as the "North Sea offshore grid', and other regional initiatives such as the 'Mediterranean Ring' and the 'Baltic Interconnection Project', which should become the building blocks for developing a European Supergrid.

It will help with initiatives such as creating LNG terminals and investing in pipelines such as the Southern route which will enable us to diversify our gas sources. Many of these projects have been put forward in Commissioner Oettinger's recent paper on our energy strategy 2011-2020.

However, I believe we have reached a stage where we need something more than just a new chapter in the Treaty. I am convinced we need political momentum if we want to create a functioning single market in energy. This is why in May I proposed with Jacques Delors, the initiative to create a European Energy Community.

I see such a Community as a brand name co-owned by the European Parliament and the European Commission which will allow us to package together many ideas which are currently on the table. Similar to what was done with the 1992 Single Market programme which integrated many concepts in order to push them forward.

What we need to achieve is a political umbrella which will force us to think European when it comes to energy and will encourage synergies in investments, and greater cooperation at EU level, among member states and among private actors because we can no longer afford twenty-seven energy markets.

Dear Colleagues,
But if we really wish to create a credible European Energy Community we have to have the money to pay for it.  We will not achieve this only through regulation but through sustained, long-term investments.

The European Commission has calculated that over the next ten years, some €1 trillion is needed in overall energy infrastructure investments in the EU. These figures can only be generated with the help of the public sector and in today's economic climate, I would even say, the European public sector has to give the start signal and has to provide a secure environment for private investments. Our role as the EU should be to optimise the leverage of public and private financing sources and help to mitigate investors' risks.

Let me give you a recent example, almost € 4 billion in the European economic recovery plan was set aside to fund energy projects because they were at risk of delay due to the economic slow down. This went to 12 electricity interconnectors, and 31 gas line projects as well as offshore-wind-projects and projects in the field of CO2 Capture and Storage.

By co-financing up to 50% of these projects the EU brings leverage which allows us to multiply this amount up to 22 billion Euros in investments which is the largest amount of money ever spent by the Commission on Energy projects.

We should also think of risk-sharing facilities and loan schemes by public banks such as the EIB because many member states are starting to have difficulties to provide this co-financing.

I also believe we also need to look at new ways of investing in our energy sector. For example, instead of investing in one nuclear power station in Poland, and one in the Czech Republic and one in Sweden why don't we organise regional investments which will standardise the type of reactor we need and allow us to operate in economies of scale?

I have argued before that we should think of joint purchases of gas and oil, and if we have smart grids in place, also joint purchases of electricity from outside the EU. If we speak with one voice, we will be able to use our strength more effectively.

Why should we not extend EU internal energy market rules to neighbouring countries such as Russia and Ukraine and be able to purchase their nuclear and other electricity? Or receive energy from the Desertec project in North Africa?  In essence we need to start thinking of an energy policy without borders not just within the EU but also in our neighbourhood.

This is why I find the Caspian Development Cooperation such an interesting initiative, it may become the model which we copy with other regions of the world such as our Eastern partners, and those in the Mediterranean.

Dear Friends,
But before I now sketch out a complete scenario of how I see the future I would rather benefit from your presence and get to know how you think our future will look like. Today it is more important for me to listen to your views, the needs for the development of our energy industries than to preach about what politics has to do.

My final comment is that in today's world we must seek common action not just because we want to but because we have to. Energy resources are scarce and we have to compete for them. This is why I am convinced we need a European Energy Community because we need to europeanise energy policy by using economies of scale and greater cooperation among the twenty-seven. How effective we will be will determine how successful the EU will be in the 21st century.

Thank you, I look forward to your comments.