Well-functioning Energy Market Key to Europe

By MarEx 2014-04-04 12:42:00

There is a pressing need to change Europe's energy policy framework to make it more predictable and market oriented. This was a key message conveyed by Statoil natural gas senior vice president Rune Bjørnson at a conference in Brussels earlier this week.

Statoil is the second-largest supplier of gas to Europe.

“The good news is that it can be done. The ongoing process in Europe of establishing an energy and climate policy framework post-2020 is a golden opportunity to achieve this,” said Bjørnson.

“Our position is clear—we support a single CO2 target with at least 40% emission cuts in 2030, driven by a strengthened and more flexible CO2 emissions trading system. This will help drive emission reductions in the most cost-efficient way.”

Bjørnson underlined that if Europe is to succeed in reaching its decarbonization target of 85-90% reductions by 2050, Europe needs to get rid of coal. The current European CO2 price does not provide an incentive for such a change. In fact, low global coal prices combined with a low CO2 price has seen Europe increase its share of coal in the energy mix.

“Natural gas is one of Europe's most important and versatile sources of energy. In a low-carbon future, natural gas has to have a large share in the energy mix,” said Bjørnson.

He reflected that Europe's drive to diversify its energy sources is understandable. Yet, it is important to not lose sight of that Europe is very well supplied and diversified. Further, the region is surrounded by huge natural gas resources.

“A well-functioning market is the best way of attracting this gas to Europe,” said Bjørnson.

Norwegian gas, of which Statoil produces and markets a large share of, is and will remain an important source of gas supply to EU. It accounts for more than 20% of the demand. The resources are connected to Europe through an extensive and robust pipeline network.

“With this in mind, we think of Norwegian gas as part of European indigenous supply,” remarked Bjørnson. 

Europe’s energy objectives and 2030 process

• The EU is committed to an 80-95% greenhouse gas emission reduction by 2050. The 2009 energy and climate policy package set out the first steps towards decarbonization by means of targets to be reached by 2020 in emission reduction, renewables and energy efficiency.

• As the 2020 framework is nearing its end, in January of this year the European Commission proposed a policy framework for 2030, consisting of a 40% emission reduction as well as a 27% renewable target. This proposal serves as a starting point for negotiations that are currently taking place between EU member states.

• In a meeting at the end of March European heads of state and government committed to taking stock of progress of the negotiations in June, and taking the final decision on the 2030 framework no later than October 2014. Rapid agreement is necessary due to the EU’s commitment to put forward a pledge for the international climate negotiations by the first quarter of 2015.

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