1. UPEI Meeting Brussels, 2 April 2009 Ensuring European Security of Energy Supplies EUROPEAN COMMISSION Jan Panek Head of Unit “Coal and Oil” Directorate-General for Energy and Transport European Commission

2. | 2 Competitiveness “LISBON” Renewable energy Energy efficiency Nuclear Research and innovation Emission trading International Dialogue European stock management (oil/gas) Refining capacity and energy storage Diversification Internal Market Interconnections (Trans-European networks) European electricity and gas network Research and innovation Clean coal Carbon sequestration Alternative fuels Energy efficiency Nuclear Sustainable Development “KYOTO” Security of supply ? FULLYBALANCEDINTEGRATEDAND MUTUALLY REINFORCED The Three Angles of European Energy Policy

3. | 3 COAL Competitiveness “LISBON” Sustainable Development “KYOTO” Security of supply ? European Energy and Fossil Fuels’ Challenges OIL GAS

4. | 4 Coal – Sustainable with CCS?. Coal – 1/3 of EU’s electricity production. Abundant reserves, relatively moderate prices. Challenge: carbon intensity Solution: Carbon Capture and Storage (CCS). EU priority: 10-12 CCS demos by 2015, commercial viability by 2020. EC actions: legal framework and support/financing mechanism under preparation. Strong commitment needed from MS and industry

5. | 5 Oil – Security stocks and beyond. Oil: 37% of EU energy mix – 85% imported. Challenge: increasing import dependency as well as supply disruption risks. EC actions: » study on the sector’s competitive situation » commercial oil stocks data reporting (transparency) » alternative fuels, review of the taxation regimes » oil stocks – revision of legislation under way

6. | 6 Current oil stocks legislation. Origins dating back to 1968, no major change of substance since then » Amended in 1972 and 1998 » Codified in 2006. Circumstances changed over time » internal market: completion, enlargements » globalization of oil markets, role of financial markets » IEA established in 1970s » decreasing indigenous production »...

7. | 7 Change is needed. Current system: no hard proof of failure but some concerns about e.g.: » Availability of some stocks in a major crisis » Use of “tickets”; use of stocks as assets; etc. » Efficient interaction with IEA system. The March 2007 European Council called for the review of EU oil stocks mechanisms with emphasis on: » availability of stocks in the event of a crisis » complementarity with the IEA crisis mechanism

8. | 8 Main elements of the proposal. Adopting IEA methodology to maximum possible extent » 90-day obligation based on net imports (not consumption) » but retaining current obligation for producing countries. Underlining preference for government/agency stocks » though only an option for the moment (MS retain flexibility) » 3-year review clause. Clarification of the procedures for emergency situations » enabling the EU to contribute better to an IEA action. Reinforced verification » possibility of audits, spot checks. Provisions facilitating the weekly reporting of commercial stocks » implementing provisions after due diligence

9. | 9 State of Play. Legislative procedure based on Art. 100 TEC » QMV in the Council » Opinions of EP, EESC, EDPS requested. EP opinion – ITRE report adopted 31 March » Commercial oil stocks: weekly => monthly reporting » Emergency procedures: less autonomy for COM » Controls only in case of suspicion. Council discussion – expert level at present » Creation of agencies » Weekly reporting of commercial stocks » Use of tickets » Emergency procedures. Next steps » Adoption under CZ Presidency still possible

10. | 10 Gas – Security of supply highlighted by events. Gas: 25% of EU energy mix – 60% imported. Import dependency expected to increase. Some Member States rely on a single supplier or route for 100% of their gas needs. Gas storage is crucial but not a complete solution. Importance of internal market (IEM package), infrastructure (TEN-E), and solidarity. EU Directive on Security of Gas Supply (2004/76) – new legislation in preparation

11. | 11 New Gas Security Legislation. Need for revision of Gas Security Directive pointed out in SER II, confirmed by the Energy Council and EP following UA-RU gas dispute. New Regulation seems now more appropriate. Main theme: responsibility and solidarity. General goals: » SoS standards for market players (incl. TSOs, regulators, suppliers): to strengthen capacity to deal with crises » For crises beyond market’s capacity: MS emergency plans » Better transparency on gas flows, stocks, investments » Rapid response & coordination mechanism at EU level » Regional cooperation valuable

12. | 12 Security of supply standards – first thoughts 1.Principle of varied means but common responsibility » Measures/instruments reflecting situation of each MS » But increased coordination and transparency at EU level » National emergency plans: predefined and transparent 2.Infrastructure » Suitability of N-1 rule to be assessed » CEE appears most vulnerable 3.Gas availability requirements (suppliers) » Sufficiency in unusually heavy periods AND peaks » EU-wide criteria

13. | 13 New Gas Security Legislation - timing. Energy Council: first policy debate – 19 th February. European Council 19 th March - conclusions. Spring: Impact assessment, consultation through Gas Coordination Group, legislative drafting. A “summer package” envisaged: » Gas Security Regulation » Communication on gas infrastructures and diversification of supplies » Southern Corridor, LNG Action Plan, Baltic Interconnection Plan (gas) » Revision of Energy Investment Reporting Regulation

14. DG TREN: http://ec.europa.eu/dgs/energy_transport/index_en.html Thank you for your attention EUROPEAN COMMISSION