"TRANSATLANTIC ENERGY SECURITY - THE CONCEPT AND THE MESSAGE" TRANSATLANTIC ENERGY SECURITY DIALOGUE, HOUSE OF THE ESTATES 16 September 2009

Julkaistu 16.9.2009

1) Climate Change is an integral aspect of energy security

When we speak of energy security we in effect speak of climate change. Our thirst, dare I say addiction, for fossil fuels feed the process. In worst case our steps to improve current energy security could actually spell out global insecurity for the future generations. Our urgent challenge is to lessen our reliance on these resources, while ensuring economic well being for a growing body of people on this planet

Three points connected to this:

We must succeed in Copenhagen
The EU-US cooperation must deepen
The Arctic will be a particular case in point

Copenhagen

Last week I met my British, French, Swedish and Danish colleagues in Copenhagen to rally support for the Copenhagen meeting this December. The Finnish government and I are strongly committed to making Copenhagen a success. We cannot afford to fail.

Central issues of funding and technological transfers can be resolved. This will require a convincing and hard bargaining. It is a tall order, but is doable.

Politically, we need all the major players in the agreement. The EU and the US cannot do this alone but we also need China, India and Russia to be on board, to name but the three of the biggest players outside the transatlantic context. That said, I am convinced that in the final instance it is the EU and the US that have by far the largest clout and responsibility in steering the process to a happy ending.

The EU-US

I see US and the EU at the heart of the emerging global arrangement on climate change. The US and EU are necessary partners, but not sufficient for the global deal.
At the same time it is important to bear in mind that the climate change is more than just high politics and big global deals. Equally, if not more important, is the work done at the grass root level to set common standards, benchmarks and best practices in clean technologies and other aspects of mitigating climate change. Here the transatlantic community has both an opportunity and obligation to take the lead as well
In this respect I am pleased that the EU is welcoming the proposal for a special forum dedicated to global energy issues, the proposed EU-US Energy Council. Our coordinated effort will enable us to support and complement joint efforts to successfully address the challenges in the energy and climate field
The EU-US cooperation should focus be on renewable energies and energy efficiency, new technologies (clean coal technologies) and safe development of nuclear energy

The Arctic

Nowhere is the issue of energy and climate so intertwined as in the Arctic region. Arctic has one of the most important untapped energy reserves and the climate change will make their utilisation easier, albeit the warming of the atmosphere may also create many serious problems should the permafrost melt.
At the same time climate change exposes the Arctic regions to several vulnerabilities ranging from environmental degradation to political and societal challenges
For Finland, the key point is that there can be no new Great Game over the resources in the Arctic. The national knee jerk reflexes and the scramble for the Arctic must be resisted and we must utilize the existing multilateral channels: If diligently observed, the provisions of the UNCLOS are sufficient to deal with the territorial claims. If given the proper political backing, the Arctic Council should be the intergovernmental forum to take the issues forward politically. There is no need for harsh competition nor any need to reinvent the wheel: we in fact have all the mechanisms in place already

2) We must turn energy policy a source of positive interdependence instead of rivalry

Russia is the EU´s biggest supplier of energy, and will continue to be a major supplier in the foreseeable future. The EU will continue to pursue energy relations with Russia against this backround.

What goes for the Arctic applies elsewhere as well: The discussion yesterday and today has shown that there is a huge potential for rivalry in the field of energy. In fact the excellent NIC Global Trends (NIC other main sponsor of the event!) sees energy competition as a main source of tension between key players of the global system

We should not take this negative view as granted. Instead, we should endeavour to turn the tables and make energy as a main source of co-operation and interdependence

The fact is that in no other business is the need for international cooperation so pronounced as in energy. The financial resources, technology and infrastructure needed for exploiting, refining, transporting, distributing energy are such that international co-operation is a rule, not an exception. In short: energy has a huge potential for joint projects and co-operation and energy can fuel new interdependence

The way we turn the world driven by energy competition to one driven by energy co-operation is straight forward. We need two things:

Clear rules
Working markets

Rules

Clear rules are of fundamental importance. Interdependence can only thrive when the rules of the game are transparent and well defined. But clear rules require strong actors to agree on and diligently follow them.

The Energy Charter Treaty is the most important attempt to create a level playing field for all energy actors. Other proposals have been put forward but they have so far proved not to have the same level of acceptance as the Energy Charter Treaty

Russia has concluded that it will not ratify the ECT. This is to be regretted. Yet the battle rages on and the discussions with the Russian will continue in the context of the post-PCA negotiations. Getting transparent rules for trade and transit in the field of energy is very much in the interest of both the EU and Russia and this issue will have to be settled as part of the process of arriving at a new agreement

Markets

The other assumption for positive interdependence is well functioning markets. Energy prices need to reflect supply and demand

No producers should be in a position to exercise monopolistic pricing. The need to diversify energy resources, routes and suppliers reflects a fundamental need to keep the market healthy

I feel that Finland has been successful in diversification. Oil accounts for 25 percent of our energy consumption, wood for 21 percent, nuclear energy for 17 percent, natural gas for 11 percent, and coal for 10 percent. We have four nuclear reactors, are building a fifth, and will soon decide on the need for further additional nuclear capacity. Should Finland have to do so, we are able to relatively quickly adjust our energy production to new supply conditions

3) A common energy policy is a matter of credibility to the EU

The EU has been at the forefront in the battle against climate change. The EU has agreed on the 20-20-20 goals, which are reducing green house gas emissions by 20%, increasing the share of renewables in the energy consumption to 20% and improving energy efficiency by 20%, all of it by 2020
In other areas of energy policy the EU has not done so well. In the EU, energy policy has been based on the national policies of individual member states and this has restricted the scope for joint action
There is a clear need for a more common energy policy driven by considerations of climate change to as well as energy security and the EU's competitiveness. Climate change has already been covered so just a few words about the two others
First, security of supply dictates that the EU cannot take all its energy eggs from one basket, but needs to have a diversified energy portfolio. This implies a broad range of different sources as well as transit routes. The Union's energy strategy must have a clear and proactive approach to ensuring the diversity of energy supply, in particular the supply of gas
The final driver for the EU's energy policy is the work to enhance EU's competitiveness. The EU can reap significant benefits by further liberating energy markets. This also requires creating a single energy space in Europe. For its turn this will require more European level regulation as well as a stronger external energy policy to deal with the producers and transit countries
The principles I have outlined here today mean a substantial change in Europe's energy system over the coming years. It also calls for a deeper engagement over the Atlantic.