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Round table: Europe and Energy Security: The Coming Winter and Beyond
 
On 28 October 2014, the Center for Study of Democracy organized a round table with Dr. Theresa Sabonis-Helf, Professor at the US National War College. She gave presentation on “Europe and Energy Security: The Coming Winter and Beyond”, which was followed by a discussion with the participants.

Dr. Ognian Shentov, Chairman of the Center for the Study of Democracy, opened the round table by comparing the European and US approach to energy security issues. Dr. Shentov noted that while the US has been able to foster energy independence through unconventional energy resources, Europe has moved very slowly to develop its domestic resource potential. Central and Eastern Europe is a case study, where initiatives for resource diversification have stalled despite the raising energy influence of Russia in the region.

Dr. Sabonis-Helf opened her presentation with some definitions of the concept of energy security. Three main aspects of energy security were stressed: reliability, affordability and environmental friendliness. Dr. Sabonis-Helf argued that it is possible to achieve only two out of three at any given moment in time. The case of Europe is a good case study, as the EU Member States have focused largely on sustainability and poverty issues, while somewhat neglecting Europe’s security of supply. The level of energy security and the structure of your energy mix depend also on where you live. In Asia, coal is the dominant energy sources, while in Europe, natural gas has increasingly become the fuel of choice. The difference in the energy mix puts countries, hence, in different strategic environment.

Dr. Sabonis-Helf also raised the historical perspective as an additional explanatory factor for the current state of energy policy in Europe. She outlined the transformation in the energy dialogue between Russia and Europe from the Soviet Union to this day. Until 2006, Russia has been considered a reliable gas supplier despite changes in the structure of the international system during the 30 years of gas trade. Even today after two gas crises, Russia remains the most important gas supplier to Europe. In fact, one should not forget that energy dependency between Europe and Russia is mutual, with Europe remaining the largest export market for Gazprom. Furthermore, according to the Russian law, Gazprom has to sell 70% of its product internally at subsidized prices and only 30% internationally putting the company in financial trouble. Dr. Sabonis-Helf indicated also that the power balance is shifting in favor of Europe because EU countries simply do not need as much gas as before. Demand is going down in many parts of the EU due to the low economic growth and the transition to alternative energy sources.

During the second part of her presentation, Dr. Sabonis-Helf discussed the current energy security situation in Bulgaria. She noted that Russia has historically pressured Bulgaria not to diversify its energy supply sources through regional interconnectors and domestic gas production. Instead, consecutive governments had pursued the development of the South Stream gas pipeline despite its inconsistency with the EU energy law. The progress of the project, according to Dr. Sabonis-Helf, has been a showcase of state capture practices in the Bulgarian energy sector. Decisions seem to have been largely determined by both domestic private and foreign vested interests. Instead of developing large-scale energy infrastructure projects, Dr. Sabonis-Helf claimed that the Bulgarian government needs to invest in measures improving energy efficiency. She emphasized that Bulgaria does not need more electricity but has to limit the generation and transmission losses. According to her estimates, close to 70% of the produced power is being lost on its way to the final consumer.

Dr. Sabonis-Helf concluded her presentation with an analysis of Russia’s alternative gas export options. She maintained that despite the government’s claims to the contrary, the project is not economically viable and because of its immense investment costs is unlikely to be profitable if gas prices are not significantly higher than today’s levels.

The presentation was followed by a discussion on key issues related to the Russian involvement in the region, and some policy options available to increase the energy security of Bulgaria. Dr. Andrej Nosko, Program Manager at the Open Society Think Tank Fund in Hungary, warned that Russia has been pressuring Central European countries in halting the reverse gas flow to Ukraine and paying for the expansion of the gas storage volumes in Hungary as a preventive measure in case Ukraine stops the transit to the EU. He also gave examples of some domestic aspects of energy security initiatives including the implementation of near-zero energy buildings in Hungary. Dr. Todor Galev, Senior Analyst at the Center for the Study of Democracy, added that another soft measure is the fostering power generation decentralization using renewable energy sources. In general, the participants in the discussion united behind the idea that energy security policy should not be driven solely by geopolitical considerations but has to be based on sensible economic decisions.

Agenda (Adobe PDF, 39 KB)
Presentation by Dr. Theresa Sabonis-Helf, Professor at the US National War College (Adobe PDF, 3.53 KB)
 
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