March 28, 2014 –
European access to US liquid natural gas (LNG) exports would be “much easier” with a Transatlantic Trade and Investment Partnership (TTIP) in place, US President Barack Obama said at an EU-US summit in Brussels on 26 March, at which energy concerns took centre stage. But the real energy action is likely to take place next week at the EU-US Energy Council on 2 April, when the EU’s High Representative for Foreign Affairs Catherine Ashton and Energy Commissioner Günther Oettinger will meet US Secretary of State John Kerry and Deputy Energy Minister Daniel Poneman. Sonja van Renssen, Brussels correspondent of Energy Post, saw the draft conclusions of that meeting and gives you an exclusive preview. Most interesting perhaps is the emphasis put by the EU-US Council on the importance of renewables and energy efficiency for energy security – which EU President Barroso did not even mention at the Summit with Obama.
Brussels had never seen anything like it. US President Barack Obama’s first visit ever on Wednesday 26 March brought the city to a standstill. His meeting with top EU diplomats lasted only just over an hour yet apparently they talked about everything from Ukraine, Syria and the Central African Republic to energy, climate change and the Transatlantic Trade and Investment Partnership (TTIP) to data protection and “data flows”, aka the NSA spying scandal – look at the EU-US post-summit joint statement and you get the idea.
Yet energy and more specifically energy security stood central at this summit. Europe is “our closest partner” and “the cornerstone of our engagement around the world” said Obama. And one of only two questions taken during the post-summit “press conference” was: “Given that the US has less to lose from economic sanctions against Russia, would it be appropriate to envisage support for European allies in the realm of energy?” The answer was: yes, the US can help but no, it’s not the only solution Europe should look to for energy security.
“The entire event [Ukraine crisis] I think has pointed to the need for Europe to look at how it can further diversify its energy sources,” Obama told journalists after the summit. He gave the good news first: “We’ve already licensed, authorised the export of as much natural gas as Europe uses each day. But, the president added, it’s going into the open market, not flowing straight to Europe. Then came the carrot: “Once we have a trade agreement in place, export licenses for projects for liquefied natural gas destined for Europe would be much easier.”
“We’ve already licensed, authorised the export of as much natural gas as Europe uses each day”
President Obama in Brussels
A Transatlantic Trade and Investment Partnership (TTIP) matters for the energy sector and always has. But with oil sands out of the picture (the European Commission has effectively said it will discontinue any attempt to single them out for their high carbon emissions after 2020), the full energy focus now is on how it might facilitate US LNG exports. Does that give the US the upper hand in the talks? Certainly, it has something the EU wants, badly. To appease NGOs which have repeatedly warned of the risk of deregulation, Obama added: “I have no interest in signing a trade agreement that weakens environmental standards.”
Difficult conversations over nuclear energy and shale gas
The President was quick to add however, that whichever way all this works out: “I think it is useful for Europe to look at its own energy assets, as well as how the United States can supply additional energy assets.” He appeared to suggest that Europe would have to pursue its own difficult conversations over nuclear energy and shale gas because “just as there’s no easy, free, simple way to defend ourselves, there’s no perfect, free, ideal, cheap energy sources. Every possible energy source has some inconveniences or downsides.”
G7 energy ministers have been mandated to look into diversification and “will meet on this soon” said President of the European Council Herman van Rompuy after the summit. Following Russia’s suspension from the G8 earlier this week, the G7 will meet in Brussels in June instead of as the G8 in Sochi in Russia.
But events are set to keep moving until then, with an EU-US Energy Council due in Brussels next week on 2 April. The EU-US Energy Council was established at the EU-US summit in November 2009 to “improve energy security and contribute to achieving our ambitious climate change goals”. It aims to promote “new and ongoing cooperation on energy security and markets, energy policy, energy technologies research, and the deployment of clean and sustainable energy technologies which we agree are critical to sustainable economic growth and development”.
On 2 April, the EU’s High Representative for Foreign Affairs Catherine Ashton, Energy Commissioner Günther Oettinger and Greek energy minister Yiannis Maniatis (since Greece currently holds the EU presidency) will meet US Secretary of State John Kerry and Deputy Energy Minister Daniel Poneman for the 5th EU-US Energy Council. Energy security is the main topic on the agenda, with a discussion over diversifying supplies, the situation in eastern neighbours (Ukraine, Moldova, Georgia and Southern Corridor countries), plus US energy developments and LNG exports comprising the agenda. EU-US cooperation on fuel diversification in emerging economies and climate change will be also discussed.
The EU-US Council notes the “strategic importance” of Turkey and Georgia for gas transport and says “the opportunity for Central Asian and Middle Eastern producers, notably Turkmenistan and Iraq.
Draft conclusions seen by Energy Post welcome commitments by the Ukrainian government to secure its energy sector, including addressing subsidised energy prices, which should enable IMF support to resume. The EU and US encourage Ukraine to meet the conditions for a first loan from international financial institutions such as the European Investment Bank, European Bank for Reconstruction and Development and World Bank, to accelerate work on modernising its gas transmission system and promote efficiency and renewables.
The EU-US Council notes the “strategic importance” of Turkey and Georgia for gas transport and says “the opportunity for Central Asian and Middle Eastern producers, notably Turkmenistan and Iraq, to link up to the Southern Gas Corridor is as valid as ever”. The Council is ready to cooperate with the whole Mediterranean region to develop and use their energy resources, including renewables, to benefit that region and the rest of Europe. The Council also highlights “the continued importance of energy relations with Russia” whilst repeating that “the current political crisis has also underlined the need to reduce Europe’s high gas import dependency rates”.
The draft conclusions focus too on efficiency and renewables. “Accelerating energy efficiency gains remains fundamental to the transition of the global energy system and to reaching energy security objectives, all the more in the light of recent events.” US natural gas and crude oil production have risen about 20% and 40% respectively in the last five years, they say, but the US has also accelerated the deployment of carbon capture and storage and renewables, including doubling electricity from a combination of wind, solar and geothermal from 2008-12.
In response to president Obama’s gentle reminder after the EU-US summit that Europe will also need to look to its own energy assets to ensure its future security of supply, European Commission President José Manual Barroso spoke about the Southern Corridor, internal energy market and reverse flows. He (again) failed to mention energy efficiency and renewables. The Ukraine crisis is having effects well beyond energy, notably now also on the TTIP negotiations. But it is also crucially linked to Europe’s long-term climate and renewable energy policies. It is a connection that most policymakers still seem unable to make. The EU is still badly in need of a big-picture vision to which all member states subscribe.
Please note that US President in Brussels on 26 March literally said: “we’ve already licensed, authorized the export of as much natural gas each day as Europe uses each day”.
You can check this out here.
This statement, however, appears incorrect. The US has of now licensed 7 projects totalling 9,3 bcf/day = 95 bcm/year. See here. Or check out this article on Oilprice.com:
9.3 bcf/day equals 0.2604 bcm/day, which is 95 bcm/year. Europe actually uses some 480 bcm/yr. (In 2012 Europe imported 125 bcm from Russia.)
In addition, note also that Obama’s statement that “Once we have a trade agreement in place, export licenses for projects for liquefied natural gas destined for Europe would be much easier”, is also rather doubtful. The US Department of Energy uses its own criteria to decide on export licences. In practice, the DOE does not even seem distinguish anymore between FTA and non-FTA countries.