1. Energy Supply in the European Union Daniel Erni and Stefan HorlacherHelsinki, 5th October 2005

2. Introduction EU Energy Policy Energy Sources Oil Natural Gas Solid Fuels Nuclear Energy Renewable Energy Sources Supply Security Reduction of Dependence Saving energy Alternative Sources Energy Supply in the EU A presentation by Daniel Erni and Stefan Horlacher Helsinki, October 5, 2005 Introduction 1951: European Coal and Steel Community (ECSC) Belgium, West Germany, France, Italy, Luxembourg, Netherlands First step of European integration 1957: European Atomic Energy Community (Euratom) ECSC-countries Article 1 of the treaty: «It shall be the task of the Community to contribute to the raising of the standard of living in the Member States and to the development of relations with the other countries by creating the conditions necessary for the speedy establishment and growth of nuclear industries.»

3. Introduction EU Energy Policy Energy Sources Oil Natural Gas Solid Fuels Nuclear Energy Renewable Energy Sources Supply Security Reduction of Dependence Saving energy Alternative Sources Energy Supply in the EU A presentation by Daniel Erni and Stefan Horlacher Helsinki, October 5, 2005 EU Energy Policy No common European responsibility except from ECSC and Euratom Impacts of other policies on energy sector Obstacles for a common energy policy: Different availability of energy sources The use of nuclear energy The degree of federal control over energy supply Crucial importance  Green Paper

4. Introduction EU Energy Policy Energy Sources Oil Natural Gas Solid Fuels Nuclear Energy Renewable Energy Sources Supply Security Reduction of Dependence Saving energy Alternative Sources Energy Supply in the EU A presentation by Daniel Erni and Stefan Horlacher Helsinki, October 5, 2005 Energy sources EU primary energy balance (1998) Source: European Commission, 2002.

5. Introduction EU Energy Policy Energy Sources Oil Natural Gas Solid Fuels Nuclear Energy Renewable Energy Sources Supply Security Reduction of Dependence Saving energy Alternative Sources Energy Supply in the EU A presentation by Daniel Erni and Stefan Horlacher Helsinki, October 5, 2005 Energy Sources: Oil Reserves Europe (incl. Norway): < 2% of the world‘s oil reserves Production Demand can‘t be covered by production in the Northern Sea Cost-intensive production Demand Rise in the last decades Transportation sector: ~100% dependence on oil Trend to replacement by alternative fuels Imports 80% of oil demand imported; share is expected to grow Weak position, high dependence Main suppliers: OPEC countries, Russia, Norway

6. Introduction EU Energy Policy Energy Sources Oil Natural Gas Solid Fuels Nuclear Energy Renewable Energy Sources Supply Security Reduction of Dependence Saving energy Alternative Sources Energy Supply in the EU A presentation by Daniel Erni and Stefan Horlacher Helsinki, October 5, 2005 Energy Sources: Oil Source: European Commission, 2005. Origin of oil imports in the EU

7. Introduction EU Energy Policy Energy Sources Oil Natural Gas Solid Fuels Nuclear Energy Renewable Energy Sources Supply Security Reduction of Dependence Saving energy Alternative Sources Energy Supply in the EU A presentation by Daniel Erni and Stefan Horlacher Helsinki, October 5, 2005 Energy Sources: Natural Gas Compared to coal/oil: High effectiveness, environment-friendly Reserves EU or close to it: 80% of the world‘s oil reserves Production Rising world wide, declining in the EU  dependence rises Prices are expected to increase (transportation costs) Demand Imports Main suppliers: Russia, Norway, Algeria Further suppliers have to be found  Higher prices Own diagram – Data source: European Commission (undated).

8. Introduction EU Energy Policy Energy Sources Oil Natural Gas Solid Fuels Nuclear Energy Renewable Energy Sources Supply Security Reduction of Dependence Saving energy Alternative Sources Energy Supply in the EU A presentation by Daniel Erni and Stefan Horlacher Helsinki, October 5, 2005 Energy Sources: Solid Fuels Reserves Huge reserves  important for supply security Source: Euracoal, 2005.

9. Introduction EU Energy Policy Energy Sources Oil Natural Gas Solid Fuels Nuclear Energy Renewable Energy Sources Supply Security Reduction of Dependence Saving energy Alternative Sources Energy Supply in the EU A presentation by Daniel Erni and Stefan Horlacher Helsinki, October 5, 2005 Energy Sources: Solid Fuels Production Rising world wide, declining in the EU Low productivity in Europe (mining in big depths) Price level above world market price Regain of attractivenews by new environment-friendly technologies Demand Demand decreasing Replacement by other energy sources in households Steel industry dropped its demand Medium term: Increase in demand possible after 2010 Imports Imported coal is cheaper Main exporters to the EU: Australia, Canada, USA

10. Introduction EU Energy Policy Energy Sources Oil Natural Gas Solid Fuels Nuclear Energy Renewable Energy Sources Supply Security Reduction of Dependence Saving energy Alternative Sources Energy Supply in the EU A presentation by Daniel Erni and Stefan Horlacher Helsinki, October 5, 2005 Energy Sources: Nuclear Energy Production 1/3 of electricity consumption produced by nuclear energy France: 75% of electricity produced by nuclear energy Important for many new Member States Finland is planning to build a new nuclear power station Source: Microsoft Corporation, 2005.

11. Introduction EU Energy Policy Energy Sources Oil Natural Gas Solid Fuels Nuclear Energy Renewable Energy Sources Supply Security Reduction of Dependence Saving energy Alternative Sources Energy Supply in the EU A presentation by Daniel Erni and Stefan Horlacher Helsinki, October 5, 2005 Energy Sources: Nuclear Energy Reserves Uranium reserves spread all over the world Long term production assured (extensive amounts of secondary sources) Demand EU demand is stable at 20.000 tons p.a. Future demand depends on development of renewable energy sources Imports In the short run: limited quantities in the EU In the long run: more imports required Largest suppliers: Russia, Niger, Australia, Canada Some Member States have taken the political decision to replace nuclear energy by alternative energy sources Reasons: storing of nuclear waste & possible accidents (cf. Chernobyl) But: alternative fuels are not easily available & cause higher pollution emissions

12. Introduction EU Energy Policy Energy Sources Oil Natural Gas Solid Fuels Nuclear Energy Renewable Energy Sources Supply Security Reduction of Dependence Saving energy Alternative Sources Energy Supply in the EU A presentation by Daniel Erni and Stefan Horlacher Helsinki, October 5, 2005 Energy Sources: Renewable Energy Sources (RES) Major sectors: wind, solar thermal, hydro and biomass Advantages: Naturally available or quickly replacable No imports needed Less damaging to the environment Unequal and insufficent use in the EU EU Commission: 12% (instead of 6%) of energy demand covered by RES in 2010 Early stadium of development  Incentives/Support required

13. Introduction EU Energy Policy Energy Sources Oil Natural Gas Solid Fuels Nuclear Energy Renewable Energy Sources Supply Security Reduction of Dependence Saving energy Alternative Sources Energy Supply in the EU A presentation by Daniel Erni and Stefan Horlacher Helsinki, October 5, 2005 Energy Sources: Renewable Energy Sources (RES) Hydropower 90% of total production out of RES 14% of electricity demand covered by hydropower Potential almost tapped Wind Fast growing technology Potential: covering 30% of electricity demand Problems: stable production, efficient saving, „visual landscape pollution“ Solar Thermal Often used in heating building and water Problems: high investment costs and seasonal fluctuations Biomass Agriculture as the main source Potential: covering 20% of current energy demand

14. Introduction EU Energy Policy Energy Sources Oil Natural Gas Solid Fuels Nuclear Energy Renewable Energy Sources Supply Security Reduction of Dependence Saving energy Alternative Sources Energy Supply in the EU A presentation by Daniel Erni and Stefan Horlacher Helsinki, October 5, 2005 Supply Security Several risks: political crises, technical incidents  supply interruptions Impacts on economy, society and living standard (cf. oil crises in 1970ies) Means to lower the risk of an energy shortage: Economically: mechanisms of pricing and tax law  decrease demand Technically: use of other energy sources to close the supply gap Politically: campaigns for energy saving or use of existing reserves Reserves Reserves for > 1 year recommended in the nuclear sector (Euratom) Harder competition and common market leads to a reduction of reserves Risk Reduction Dependence on a single sector has decreased (oil: 60% to 40%) Growing transport sector: high dependence on oil, intensive research on new technologies New networks and decentralised production Diversify energy sources and suppliers

15. Introduction EU Energy Policy Energy Sources Oil Natural Gas Solid Fuels Nuclear Energy Renewable Energy Sources Supply Security Reduction of Dependence Saving energy Alternative Sources Energy Supply in the EU A presentation by Daniel Erni and Stefan Horlacher Helsinki, October 5, 2005 Reduction of Dependence Energy balance of the EU-30 Source: European Commission, 2005.

16. Introduction EU Energy Policy Energy Sources Oil Natural Gas Solid Fuels Nuclear Energy Renewable Energy Sources Supply Security Reduction of Dependence Saving energy Alternative Sources Energy Supply in the EU A presentation by Daniel Erni and Stefan Horlacher Helsinki, October 5, 2005 Reduction of Dependence: Saving energy Lower consumption  smaller dependence on imports Global energy efficiency: just 25% European Commission: improve energy efficiency by 1% p.a. till 2010 > 40% of energy consumption is used in buildings  reduction by 22% till 2010 possible Lighting: 30 – 50% could be saved by energy saving bulbs Better balance of means of transport  shift from road to rail

17. Introduction EU Energy Policy Energy Sources Oil Natural Gas Solid Fuels Nuclear Energy Renewable Energy Sources Supply Security Reduction of Dependence Saving energy Alternative Sources Energy Supply in the EU A presentation by Daniel Erni and Stefan Horlacher Helsinki, October 5, 2005 Reduction of Dependence: Saving energy Source: European Commission, 2005.

18. Introduction EU Energy Policy Energy Sources Oil Natural Gas Solid Fuels Nuclear Energy Renewable Energy Sources Supply Security Reduction of Dependence Saving energy Alternative Sources Energy Supply in the EU A presentation by Daniel Erni and Stefan Horlacher Helsinki, October 5, 2005 Reduction of Dependence: Alternative Sources RES are safe, clean, affordable, not threatened by interruptions or depletion Aim of EU Commission: double the share of RES from 6% to 12% till 2010 Problems: technical and practical obstacles, high costs Subventions or taxes on externalities of conventional energy sources required With suitable investments (R&D, marketing), RES can contribute to solve many economical and ecological problems!

19. Thanks for your attention! Any questions? Daniel Erni and Stefan HorlacherHelsinki, 5th October 2005