Beyrer: End the EU’s energy dependence from Russia through shale gas

In the wake of the Ukrainian crisis, the European Union should put an end to its energy dependence, in particular from Russia, by being “less emotional” about shale gas exploration, says Markus J. Beyrer.

Markus J. Beyrer is the director general of BusinessEurope, which represents entreprises of all sizes in 35 European countries. He spoke to EURACTIV’s Tanja Milevska.

BusinessEurope has raised the issue of energy dependency towards Russia in the wake of the Ukrainian crisis. What are the aspects that worry your organisation the most?

You know that energy is very much in the centre of our work and first we think that we have to balance climate policy but also cost competitiveness and security of supply. And of course recently the issue of security of supply has been added an extra element of external dependency, something which is not new but I think it got a high urgency. And this is why we also have to maybe re-discuss the question of external dependency meaning that of course there is a set of things which have to be done – of course energy efficiency and renewables will play a role in this. But talking about the quantities, this will not be enough; so this means we will have to have a more rational, less emotional debate on other possibilities, starting with indigenous resources, including shale gas, but also others.

I think we have to rethink, we will have to give a high emphasis on our own possibilities to cover our energy needs in order to be less dependent on external resources.

This is not new, this is something we always said, but the developments of the last week clearly showed us that this is something we must surely not underestimate but rather be a little more persistent in moving in this direction.

You say “less emotional on issues like shale gas”, but the opposition to shale gas is not about emotions, it’s about security and safety…

Of course the opposition to shale gas is about security but looking at the debates I would say that 90% of the arguments you normally hear are far away from the reality. The point is that yes of course there is a risk you have to control but you cannot, like for instance it has been said in the German coalition agreement – we do not want to do any step in this direction until it is scientifically proven that there is no risk whatsoever. This is the stop of any progress. It’s not about excluding all risks ex-ante, it’s about controlling risks and we think there is a clear possibility to control risks but in order to go forward we at least need to explore.

Because, I mean in shale gas you need to know what you have there, you need to know whether it’s wet or dry, you have to know more about the geology and then you can find ways to tackle the problems. And we think lots of the debates we’re having starting with these things with methane coming from water taps, all this has nothing to do with reality. There are a number of questions you have to settle on water purification, on seals but we have to go forward, to explore and then find solutions to the problems.

Aren’t there other options you could propose except shale gas exploration that could help end Europe’s energy dependency?

It’s not about ideas, I think it’s about rethinking everything without taboos and being aware that we have to reduce our external dependency and of course the answer will be different from member state to member state but I think we must not oversee that we need to give more emphasis to this aspect.

The situation we have now {with Russia} is not a convenient situation to be heavily dependent and of course we hope that we will continue to have a good understanding with Russia because we are convinced that in the medium and long run, Europe and Russia need to be partners, and we have to find solutions. But the situation also shows us, and we’ve seen it in the Ukraine, that you must not be too heavily dependent on external sources.

We’ve seen in Ukraine that they tried to diversify their energy resources over the last years and then they got this rebate and they stopped a number of the actions they had been taking and now of course they are in a very difficult situation. What we are saying is that there is no reason for panic, the situation is much better than it has been in previous years because it’s warmer outside, the stocks are full and I think there is no big question mark for the time being. But it’s a clear sign in the medium and long run, there are good reasons for working in the direction of less dependency.

Don’t you think that the EU backing stronger binding targets in the 2030 climate and energy goals on energy efficiency and renewables would have been more helpful in that sense?

No! I mean first if we look at the quantities, and I’ve said it previously, this is part of the solution and we are very supportive but we have also seen that the triggers have been the wrong ones. What we produced in Europe via these broken down targets is a very distortive system, a very costly system and a system which is producing too little for too much money and has been the main drive for too high energy costs in Europe which is heavily undermining our global competitiveness and industry. This is why this was not the right way and this is why we are very much in favour of a single target because we think there should be clear signals from the carbon front and then of course the rest should be done by the markets. Of course we need energy efficiency, of course we need renewables but we’ve seen that these three targets have been mutually distorting and producing the wrong results.

As I said, one of the figures I tend to use in this respect is when you look at the cost of the reduction of one tonne of CO2 in Germany via solar panels, which is €600. Even if the carbon price would be 30 this would still be 20 times higher than the possible market price.

This is not a rational trigger. So, we say a clear yes to renewables but we say you can support early stage technologies but we don’t think it is feasible to have permanent transfers to system which apparently in some cases do not become market-proof.

So, this is a very clear sign.

You mentioned the burden of energy prices…

We had a rise in the European energy prices, in the US you had a drop of 4%, so this is something you first have to finance and what we are always running for is that in all the factors, which is labour markets, educated people, the internal market, energy prices and all the others, you have to have a mix where it is attractive to invest in Europe and you’ve seen in the last five years we lost 16 percentage points in our share in global investment flows which is relatively a loss of 40% and so there is a number of policy changes we have to make in order to make sure that Europe remains and will again become an attractive investment location.

We will need this to create jobs, we all want to create in order to make this slow recovery and not to leave it with the jobless aspect. And energy prices – I mean it is not the only factor – but it does play a role, and specifically you have to think in value chains. And to give you one example we have seen in the last five, six, seven years, we have lost more than 30% of the production in aluminum. Of course this is one sector but if you think in value chains, you always have to think what do you produce with aluminum? You produce cars, you produce planes, this does not mean that the production of cars and planes is automatically linked but of course it adds to the probability that the next investment can also be done elsewhere. So, this is why this is all interlinked and there are a number of things we have to tackle, but energy costs are certainly one that is very high on the list.

One last question on the discussions you held inside Business Europe on the Ukrainian crisis, you discussed it with the members, did you come up with a position on it?

We had an in-depth discussion and of course we are not a political organisation but of course we have to have a view and we defined five points alongside which we agreed we would do our communication, so the first point being that Europe has to play a strong role in resolving this situation, of course together with the US, but Europe cannot leave it to others, there’s a question of credibility, we have to play a strong role as Europe.

Second point being that we must not allow for any kind of default of the Ukraine and I think this is going into the right direction, the decision taken of €11 billion. Of course we know that only part of this is real money but I think it shows the commitment to not allow for economic consequences, of course we have not to allow for.

The third part is that we should not weaken whatever the Council is deciding. Of course there are different interests we have to have in mind the investment interest etc. But on the other hand this is rather a moment of unity and not a moment of division.

The fourth point is to keep of course all rational communication fields open with Russia, including our contacts with our friends in Russian business and industry, this is very important as we think that business has to play a key role in leaving the whole story on a rational field. And the fifth point, and we talked about this in-depth, is to give high emphasis within the question of security of supply of energy to the question of external energy dependence. These are the five points we agreed upon to do our communication around of course reassessing what is happening step by step.

If the EU goes on to impose stronger sanctions on Russia it might harm business communication between the two blocks?

Well, I think we have to bear all these possible consequences in mind and we have to very seriously assess the interests of the companies and businesses which are invested both in the Ukraine and also in Russia. But having said this, no player in the European Union must allow any external aspects to blackmail us and I think this is not a moment of division, this has to be a moment of unity. As I said, we agreed that we are not going to weaken anything the Council decides.