Gas industry chief: We cannot wait for a more ambitious energy policy

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The 22 May EU summit dedicated to energy issues should clearly transform the prevailing talking mode in the energy and climate framework into action mode, Jean-Claude Depail, tells EURACTIV.

Jean-Claude Depail, president of Gas Infrastructure Europe since 2010, is a member of the executive committee of GDF Suez.

He spoke to EURACTIV Senior Editor Georgi Gotev.

The GIE annual conference 2013 takes place simultaneously with a special EU summit dedicated to energy, on 22 May. This is probably a coincidence. What messages would you like to hear from the EU summit?

The fact that the European Council will again have an open debate about energy shows the importance energy issues on the European level, especially because a well functioning energy market is so vital for the competitiveness of Europe. The gas infrastructure industry faces several challenges currently of which the incomplete internal energy market and the lack of a long-term energy and climate framework are the most pressing. These developments hamper continued investments in a secure, reliable and clean energy future.

I would therefore welcome in the conclusions of the summit a transformation from the talking in which we are currently doing a lot to an action mode. We can’t afford to address the current challenges only after the next [European Parliament] elections and the formation of a new European Commission in 2014.

The Council should invite Barroso and his team to come forward still this year with legislative proposals on the 2030 energy and climate framework. On the internal market I find it disappointing that two years after the final implementation date of the third energy package, the Commission in the invitation for this meeting still calls for ‘transposition and implementation’ of the basic rules of the internal energy market. The leaders have set 2014 as a deadline for achieving the internal market. I think it is clear by now that we will not meet this deadline. Therefore I believe that also in this field the Council could ask the Commission to step up its efforts in this field as well.

Is the gas business affected by the crisis in Europe?

The crisis affects all sectors, so naturally also the gas business. We have seen how in several countries the gas consumption has decreased. We have noticed, for example, how the financial crisis has made it more difficult to have access to affordable financing and how the utilisation of our installations have also decreased.

Simultaneously, we experience how the US shale gas boom makes cheap coal available for Europe. Coal consumption for power generation has dramatically increased during the last two years, while gas consumption has decreased. This development is not fitting with the EU energy and climate objectives to move towards a low-carbon economy.

Talking on a longer term, I am convinced that gas has a brilliant future. The advantages of gas are almost self-explanatory. It is the cleanest fossil fuel able to deliver significant CO2 and other harmful emissions while bringing a high level of competitiveness to our market and enabling the integration of renewables. Up to 2020, almost a fifth of the EU’s total coal capacity, comparable to the total installed capacity for electricity in Poland, is due to be retired. This would be an excellent opportunity for replacing old coal plants by new, efficient flexible, cleaner and more competitive gas-fired power plants. This would reduce drastically the CO2 emissions without damaging the competitiveness or the security of supply of Europe.

Furthermore, the increasing the use of gas as fuel for both maritime and road transport as the Commission has recently proposed provides an opportunity to not only reduce CO2 emissions but also tackle air quality in the transport sector.

The EU only needs to take the uncertainty away about the future energy and climate framework. When I talk to EU officials all seem to agree that gas has a vital role in the EU energy mix. But as long as the industry has no [legal] certainty about the future energy and climate framework, taking an investment decision for new gas infrastructure in Europe today is quite a challenge.

How should the EU improve its relations with the gas producing countries? Judging from the recent EU-Russia Summit, the politicians don’t have the answer. Maybe people in the gas business have a better view?

GIE is in favour of close cooperation with gas-producing countries. The relationship between Europe and its main suppliers can be best categorised as one of interdependence, rather than asymmetric dependence. Excellent contacts exist between European and Russian companies. Many are involved in the various working groups established in the framework of the EU-Russia dialogue. Good work is being done there.

Therefore I’m optimistic about our future relation if both sides listen openly to each other’s concerns and look for ways to accommodate them where possible.

European leaders set a clear deadline of 2014 for completion of the internal energy market. Gas infrastructure is essential to achieve a full integrated internal market. You appear to doubt that this target can be achieved?

As I said before, from my point of view, it is clear that we will not achieve this target. I am afraid that we will not see a fully functioning, interconnected and integrated internal energy market by 2014, although we can’t deny that progress has been seen.

As you mentioned in your question, gas infrastructure is essential to achieve this target. Gas infrastructure, and especially the gas interconnectors, will integrate the markets, will promote competition, will increase security of supply and liquidity, will integrate the variable renewables and will give the flexibility and resilience the market needs. Therefore achieving the internal market is not just of importance for the energy sector but for our economical competitiveness.

Which areas of Europe are likely to concentrate the major number of investments?

To answer this question I should refer to the recently published Ten-Year Network Development Plant [TYNDP 2013-2022] developed by the European gas transmission operators [ENTSOG]. This non-binding report gives an excellent overview of gas transmission, storage and regasification projects for the next 10 years. The total estimated cost much higher than €70 billion which shows the importance of a stable legal regulatory framework to enable these investments.

From the total list of projects around 70% are making reference to investments in the pipelines while the rest is distributed equally between storage and LNG projects.

The report indeed clearly shows that Central and Eastern Europe are the areas where you can find a large part of the announced gas projects.

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