1. Current Policies Scenario

- Upper bound of 650 ppm

- Energy demand 1,4% per year

- Temperature increase +6C degrees (!!!)

2. New Policies Scenario

- Upper bound of 550 ppm

- Energy demand 1,2% per year

- Temperature increase +3,5C degrees

3. Scenario 450

- Upper bound of 450 ppm

- Energy demand 0,7% per year

- Temperature increase +2C degrees

You may order the Outlook on the following page http://www.worldenergyoutlook.org/

Written by Ivana Letic

- 2 punti da vista:

(1)POLICY, fallimenti di mercato – i prezzi non sono sufficenti per allocare le risorse in modo più efficente;

(2)BUSINESS, comportamento stategico;

Policy è tolerata nei sequenti casi:

(1)MONOPOLIO NATURALE (negli anni ’90, ma segue la liberalizzazione), regolamento dei prezzi (ex. trasporto e distribuzione, i prezzi sono regolati dall’AEEG in Italia);

(2)ESTERNALITA (recentamente), inquinamento e la crisi energetica quanto rigarda l’importazione;

(3)SICUREZZA DI APPROVIGIONAMENTO (negli anni ‘70);

Dal punto di vista business, energia è bene essenziale. Il prezzo è inelastico in breve termine, e relativamente elatico in medio-lungo termine.

Strumenti della analisi:

(1)Cambiamento tecnologico

Energia biologica – Carbone – Petrolio – Gas Naturale – Nucleare – Rinovabili

Le fonti non sono state inventate, c’era un sviluppo tecnologico (storia dei convertori energetici);

Le fonti non si esauriscano fisicamente ma c’è scarsità economica! Se il prezzo di un fonte è troppo alto –) ‘shift’ a un altro fonte energetico più competitivo;

(2)Macroeconomia

Disponibilità delle grandi quantità dell’energia a prezzi sufficiemente bassi è un condizione fondamentale dello sviluppo economico;

C’è forte impatto ambientale – deve essere sviluppo economico sostenibile!;

(3)Microeconomia                   

Dal 2000, liberalizzazione al livello della UE – ‘UNBOUNDLING’

-Produzione, concorrenza

-Trasporto, monopolio

-Distribuzione, monopolio

-Vendita, concorrenza

(4)Strategia aziendale

Ottimizzare l’approvigionamento energetico;

Politiche nazionali e internazionali finalizzati a mitigare il ‘climate change’ potrebbe avere un impatto significativo (ex. ETS, Emission Trading System)

2. Domanda e Oferta di Energia

Energia, capacità di produrre un effeto utile (lavoro);

-Fonti Esauribili (stock), l’utilizzo provoca un esaurimento, prima economico e poi fisico; sono fonti fossili – carbone, petrolio, gas naturale, uranio;

Rinovabili, l’utilizo non provoca l’esaurimento; biomassa, geotermico, eolico, hydroelettrico, solare;

-Fonti Primarie, gia presente naturalmente; stock e rinovabili; spesso non possono essere utilizzati tali quali e in più, è spesso meno costoso utilizzare derivati;

Secondarie, con trasformazione delle fonti primarie.

Eccellenza dell’eletricittà:

(1)si può produrre quasi con tutte le fonti primarie;

(2)facilmente trasportabile;

(3)si possono soddisfare tutti i bisogni;

(4)nel luogo d’utilizzo non è inquinante;

TOE, 10 na 7 kcal

1 kg di carbone, 10000 kcal

1 kg di petrolio, 7000 kcal

Domanda dell’energia – domanda derivata

Determinanti:

(1)Prodotto Interno Lordo, PIL;

(2)Prezzi, breve vs. medio-lungo termine;

(3)Tecnologia, ‘state of the art’;

Interconessi!

Indicatori:

(1)Elasticità al reddito (della domanda al PIL);

(2)Intensità energetica, quanta energia è necessaria per produrre un’unità di ricchezza; alta – inefficente, bassa – efficente; il più importante ma imperfetto (ex. può dipendere dalla clima);

(3)Elasticità al prezzo;

Fino alle anni ’60 – NAZIONALIZZAZIONE delle compagnie petrolifere nei paesi produttori;

1.Primo shock petrolifero ‘73,

Prima di nazionalizzazione il paese che aveva le risorse riceveva solo una ROYALTY. Anni ’60, petrolio passa nei mani agli Arabi più creazione dell’OPEC. Club da Roma publicò una ricerca sulle condizioni energrtiche della terra dicendo che il petrolio sarrebbe finito in 20 anni. ’73 e Guerra di Kippur, il prezzo ha cresciuto da 2$/bl a 12$/bl a causa di fatto che i paesi Arabi interuperò le esportazioni ai paesi che sosteneronò Israel. Quando la guerra finì l’OPEC diminuì la produzione per sostenere il prezzo alto.

2.Secondo shock petrolifero ’79 – ’80,

Guerra Iraq – Iran, ma dopo disgregazione OPEC –) il prezzo si riabbassò.

3.Terzo shock petrolifero, ’08,

Cina e India crescono domanda di petrolio facendo crescere i prezzi di nuovo.

Se il prezzo sale c’è l’incentivo di essere più efficenti oppure di introdurre delle tecnologie per risparmio energia;

USA, grandi spreconi:

(1)Abbondanza, shale gas;

(2)Bassi prezzi energia;

Principi della termodinamica:

(1)In ogni transformazione energetica, l’energia si conserva;

(2)Durante una transformazione energetica, la qualità dell’energia diminuisce – exergia;

Il ciclo di Carnot, più alta è la temperaura, più alta e qualità;

Potenza, P = E / H;

(1)Ciclo a vapore semplice, rendimento 42%;

(2)Ciclo a gas, rendimento 35%;

(3)Ciclo Combinato (contiene i primi due), rendimento 58%;

Il gas combustibile viene fatto bruciare in una camera di combustione dove reagisce con l’ossigeno e dalla molecola di CH4 si otiene l’energia e la CH2. I gas di combustione escono a una temperatura di circa 1000 gradi C, e poi vengono convogliati in una TG che va ad azionare alternazione EE1. I gas di combustione escono dalla turbina a una temperatura di 700-800 gradi C e vengono coinvogliati in uno scambiatore di calore. Viene anche convogliata l’aqua – in questo modo i gas combustibili ad alta temperatura cedono il calore all’aqua che si trasforma in vapore chi viene utilizzato per alimentare un impianto a vapore. Esso viene a sua volta convogliato in una turbina ad una temperatura di 80 gradi e perciò non è più in grado di produrre energia, viene convogliato in un condensatore che lo fa ritornare sotto forma liquida. L’aqua ricomincia il ciclo e viene convogliata nello scambiatore di calore.

Vantaggi:

(1)costo d’investimento basso (costi fissi);

(2)facile da costruire;

(3)maggiore rendimento;

(4)minore impatto ambientale;

La liberalizzazione del settore energetico è stato un fattore che ha spinto l’utilizzo dei cicli combinati!

Svantaggi:

(1)L’utilizzo del gas naturale come combustibile – il costo può essere alto;

(2)Alta vulnerabilità dei paesi importatori;

(4)L’impianto nucleare, rendimento 32%.

3. Risorse e riserve

RISERVE, le quantità della risorsa che se conoscono con certezza; comprendono i giacimenti gia in produzione più i giacimenti sfruttabili economicamente ma non ancora entrati in produzione;

RISORSE, le quantità non conosciute con certezza assoluta; tuttavia comprendono anche quelle quantità di fonti fossili conosciute con certezza assoluta ma che non sono sfruttabili dal punto di vista economico con la tecnologia esistente;

La disponibilità dipende da:

(1)stato della tecnologia (la riserva cresce se tecnologia migliora, ex. il Mare del Nord negli anni ’70 e il primo shock petrolofero);

(2)prezzo della risorsa;

RP = riserve / produzione annuale – quanto durerano le attuali riserve se la produzione rimanesse costante, missure l’esauribilita;

RP carbone = 120 anni

-distribuito più o meno uniformamente ‘accros the world’;

-mercato più concorrenziale;

-alto impatto ambientale;

RP petrolio = 40 anni

-mercato globale perche i paesi che ne producano tanto ne consumano poco e viceversa – si sono sviluppati dei flussi di commercio internazionale;

-trasporto si fa via oleodotto o via nave;

-grandi centri di produzione sono – Arabia Saudita, Nord Africa, Messico, Mare del Nord, Russia, USA, Indonesia;

-il petrolio è composto da idrocarburi leggeri e pesanti; più è alta la percentuale di idrocarburi più è il petrolio di alta qualità; il petrolio migliore è Nigeriano di 40 gradi API;

RP gas naturale = 60 anni

-flussi regionali (ex. UE importa dalla Russia);

-Medio Oriente 40%, Russia 33%, molti giacimenti ancora da scoprire;

-trasporto via pipeline o GNL

-GNL, Nel paese di produzione viene costruito un impianto di liquefazione in qui la temperatura è -173°C e si fa cambiamento di stato –) liquido. Può essere trasportato dalle navi metaniere che mantengano la temperatura. Al fine c’è l’impianto di rigassificazione.

Vantaggi, diminuita vulnerabilità e aumentata concorrenza, sopratutto per le distanze molto lunge e mare molto profondo;

Svantaggi, più costosa che le pipelines;

-In Italia più importanti importatori sono Russia, Algeria e Norvegia.

bp statistical revew 2011: http://www.bp.com/liveassets/bp_internet/globalbp/globalbp_uk_english/reports_and_publications/statistical_energy_review_2011/STAGING/local_assets/pdf/statistical_review_of_world_energy_full_report_2011.pdf

4. Industria e prezzi del petrolio

Upstream

(1)Ricerca ed esplorazione;

(2)Sviluppo;

(3)Produzione;

-altissimi costi fissi ricaricati sui consumatori;

-off-shore max 6-7 km;

-profondità mare max 1,5 km;

-recupero max 40%;

Downstream

(1)Trasporto;

(2)Raffinazione (GPL, benzine, cherosine, gasoli, olicombustibili);

(3)Distribuzione, commerzializzazione;

-più leggeri – meno densi, meglio!

-legeri: benzine e gasolio; pesanti: oliocombustibile e bitume;

Markers:

(1)Arabian light – Arabia Sudita, 30° API

(2)WTI - USA; 35-40° API

(3)Brent – Mare del Nord, 40° API

Determinanti dei prezzi del petrolio

(1)Fattori politici;

(2)Fattori economici;

-domanda e offerta, shock 2008;

-rendita di rarità, shock 1973;

-rendita di struttura, shock 1979.

+speculazione e tassi del scambio

5. Il settore del gas naturale

Monopolio naturale in trasporto e distribuzione: C(q1,q2) < C(q1) + C(q2) – economia di scala; Il problema – prezzi regolamentati;

Domanda di gas è stagionale – dovrebbe fare modulazione (media);

Elasticità è bassa;

Prezzo è regolato da contratti bilaterali di lunghi periodi;

Clausula TAKE OR PAY, obliga se non si ritira abbastanza si paga lo stesso – flussi di ricavi devono essere stabiliti ex-ante;

Pgas = Pprod + Ptrans + Pdis + Pstoc + Pven(5-6%)

Domanda

In Italia, fonte d’energia più importante;

Come si può ridurre la dipendenza del gasolio?

‘Il metano ti da un mano’

(1)mettendo una tassa altissima sul gasolio e riducendo quella sul gas naturale;

(2)è meno inquinante;

Il gas è indicizzato dei concorrenti e non ai costi marginali più mark up – vuol dire che c’è potere di mercato;

MECATO SPOT, un bene futuro che viene venduto ai prezzi spot ma la sua consegna fisica si verifica in un mese o meno; crea una possibilità di entrata sul mercato; facilità i nuovi produttori più piccoli;

Il prezzo del gas segue la dinamica dei combustibili alternativi (4 mesi in ritardo);

Il prezzo del gas negli Stati Uniti è stato svincolato (disaccopiamento) dal prezzo del petrolio a causa di ‘oversupply’ (shale gas, metano introppolato nella roccia porosa, ma fino a poco fa le tecnologie non erano abbastanza mature; adesso si fa ‘fracking’ con pressione dell’acqua);

In Italia il prezzo è molto alto a causa delle tasse (35-40%);

Regolamentazione sui vettoriamento del gas;

CAP SU RICAVI

RC = ammortamento + manutezione + costi variabili + r x I

r, tasso di remunerazione del capitale (7-8%); deciso ogni 4-5 anni;

I, capitale investito;

Perchè l’autoritùà fissa direttamente il prezzo? Fissando il RC l’impresa ha un incentivio ad essere più efficente! Dopo 4 anni l’efficenza sarà distribuita ai consumatori;

MC, breve periodo –  Mc je V – ‘non full capacity’;

, lungo periodo – Mc je V + F – ‘full capacity’;

PEAK LOAD PRICING mechanism, discriminazione tra i consumatori secondo delle caratteristice di prelievo;

Industriale-termo cliente < domestico:

(1)Non c’è accisa per i grandi consumatori;

(2)Gas è trasportato direttamente ai grandi, non c’è il costo del distribuzione;

(3)Componente fissa è più alta mentre componente variabile è molto bassa;

(4)Più potere contrattuale.

6. Il mercato elettrico

Il fonte secondaria;

Non esiste stocaggio, D = S altrimenti ‘black out’;

Eletricittà, flusso di elettroni che genera un corrente elettrica;

Domanda dipende da:

(1)PIL

Più forte che quella tra PIL e l’energia in generale – attività industriali hanno bisogno assolutamente di eletricittà;

Dipende dalla struttura industriale;

(2)Prezzi

Non ha sostituti e quindi, elasticità al prezzo è bassisima;

2 tariffe nel giorno, peak – Mc di lungo periodo;

low – Mc di breve periodo;

(3)Progresso tecnologico;

Il costo contiene

(1)Costo del capitale, ammortamento e costo oportunità del capitale;

(2)Manutezione;

(3)Combustibile;

Formazione del prezzo

Operatore di mercato (GME);

Mercato del girno prima, generatori presentano le loro offerte il giorno prima per ogni ora del giorno successivo. Il gestore del mercato raccogle le offerte e gli ordini per prezzo cresciente.

Asta uniforme, tutti ricevano P4 che è l’offerta del’ultimo impianto (System Marginal Price). Impianti poco efficenti servono a fare il prezzo;

Mercato di primo prezzo;

Distibuzione&Trasporto, alta tensione – industriali;

media – commerciali;

bassa – domestici .

Scritto da Elisa Balbo e Ivana Letic

Legal framework for development of the sector is Renewable Energy Law passed in 2005 offering numerous financial incentives – national fund fostering renewable energy development, financial and tax policies as well as requirement that resources have to be bought by registered renewable energy producers. With respect to solar energy, even though it accounts for less than 0.01%, China is the major player internationally, both in terms of production and consumption. In fact, in 2010 it produced more solar panels than any other country! One of driving forces here was the Golden Sun Program announced in 2009 introducing subsidies of 50% for grid-connected investments as well as 70% for off-grid photovoltaic power investments. What should be emphasized is the fact that China, with nearly two thirds of global capacity is the world’s largest market for solar hot water. Collector area in total is 160 million squared meters! On the other hand, there is wind energy. Again, in 2010 every second wind turbine installed at global level was installed in China. With power capacity of 44,5 GWh it is the largest wind energy producer across the world. Among other incentives, the most important here is an immediate VAT rebate of 50%.

However, solving its environmental as well as energy security problems, China has caused serious disruption at the international level. Namely, economies of scale, cheep labor force as well as price of raw material make it difficult for companies from other countries to compete with it. For instance, in the past years solar panel prices have fallen for about 40%, where as the cost of wind turbine today is around one third of what it was five years ago! What complicate the situation further in some countries, such as Spain, Italy, Germany and the UK, are subsidy cuts brought by austerity measures in the wake of the crisis.

Global Competitiveness Index 2011-2012………Rank 26 (out of 142 countries member of WEF); Score 4.9 (1-7)

Population (millions)………1,354.1

GDP (US$ billions)………5,878.3

GDP per capita (US$)………4,382

Written by Ivana Letic

Hydro potential in total has been estimated to be 31.000 GWh with a possibility of constructing several large–scale power plants as well as numerous small (below 10 MW). Namely, according to Cadastre written in late ’80s, 869 locations across the country are suitable for those small power plants (survey excluded KiM). This number might grow though, but, even with this being realized, the Government would save $52 million due to the fact that 1 KWh of electricity produced by hydro power plant is equal to 1.6 – 2.2 kg of coal, or 0.25 kg of crude oil! Therefore, Regulation enhancing incentives for those who would love to invest in the field has been brought in 2006. Numerous problems, however, are encountered. First of all, unreasonably low price of electricity, precisely bottom purchase price, has direct influence onto investments. Uncertain regulation is another issue having for its consequence situation which is not transparent. Namely, more than 30 licenses had to be obtained. Furthermore, coordination among institutions which give those permissions is poor making it more complicated. Lastly, access to the power grid might be rather difficult either because transmission line cannot receive so much energy or they are far away from a power plant.

Climate change and oil uncertainty are facts that should influence further development of renewable energy sources. Also, one fourth of energy required in the Republic might be covered this way!  The Government, therefore, has to reduce intensity of legal hoops as well as to give subventions to those interested on our way to sustainable future.

Written by Ivana Letic

Global Competitiveness Index 2011-2012………Rank 59 (out of 142 countries member of WEF); Score 4.3 (1-7)

Population (millions)………75.7

GDP (US$ billions)………741.9

GDP per capita (US$)………10,399

Growth rate 2010 – grew by 8.9% vis-à-vis 2009

Main driving force – private sector, in particular the industrial one

3 most problematic factors for doing business:

1. Tax rates

2. Inefficient government bureaucracy

3. Tax regulations

          Energy facts:

• Situated in the vicinity of 72.7% of oil reserves and 71.8% of the world’s proven gas, and therefore, being indispensible country with respect to energy security through diversification of supply sources and routes!
• Desire to exploit available national resources – 30% of demand met
• High growth rate of demand – 222 toe (tons of oil equivalent) predicted by 2020
• Due to the fact that it is dependent on energy imports, the priority is to diversify it further, both, in type as well as origin
• Increase of natural gas share in electricity generation by 50% in last 25 years
• Greenfield opportunities for hydro, wind as well as thermal power plants, whereas support mechanisms with respect to solar energy are limited
• Ongoing plans to develop nuclear potentials
• Substantial progress has been achieved in restructuring and liberalizing the turkish electricity and gas markets in pursuance with the EU Directives for the purpose of integration with the EU Internal Energy Market. With the Petroleum and LPG Market Laws, competition oriented mechanisms has been put into place, (Turkey’s Energy Strategy 2007)
• Privatisation within the sector has started and it is expected that the government will retain only 25%
• Take-or-pay obligations make it hard for government to further liberalize gas sector
• Although regulatory authority (EMRA) has been founded, energy prices are set by the government placing private sector participants as well as importers at a disadvantage
• Unbundling requirements have not been met – non-transparent situation with respect to factors influencing price setting
• Transaction stamp tax the greatest obstacle
• Joint goal: strengthening its ties with the EU, as it is essential energy hub and corridor, as well as increasing its competitiveness at global level.

Carbon capture and storage (CCS) involves CO2 capture, its compression and transport, as well as injection into deep geological formations. Not only that each stage of CCS is technically available, but also it has already been used commercially. Weyburn, Canada, in 2000 was the first example. Three methods are currently available for CO2 capture, namely, pre-combustion, post-combustion and oxy-fuel. High-pressure pipeline networks are predominantly used for transport. However, trucks, trains and ships have been used as well where infrastructure does not exist. With respect to its injection, possible solutions are saline formations, oil and gas reservoirs, as well as deep unminable coal seams. The greatest quantities of CO2 are expected to be stored in saline formations. Depth of 1000 m under the earth’s surface converts CO2 into liquefied state due to 9 bars pressure and therefore, reducing possible leakage. The question of safety has been rather controversial recently. Essential to be said here is that effective monitoring during the entire period of CO2 injection an beyond is provided. First, each storage site is examined thoroughly with the aim to ensure that it could store CO2 safely as well as to calculate its capacity. One of precondition is presence of, at least one, impermeable seal which would prevent CO2 from rising to the surface or reaching usable groundwater. Any possibility of triggering seismic activity is to be taken into account as well as particular physical and chemical processes which might take place during and after injection. These facts might be predicted with high degree of confidence using different seismic techniques. For instance, long-wavelength sound waves that travel through the earth might be generated. They are reflected by changes in layers, and then recorded as they return to detectors.

Under the BLUE Map scenario, 10 Gt of CO2 emissions is projected to be captured by global deployment of CCS in 2050 requiring around 3400 projects across the world! Capture from power generation would be 5.5 Gt CO2, from industry 1,7 Gt CO2 and upstream capture (during fuel and vehicle production) would account for 2.9 Gt CO2 of the total in 2050. The fact that costs involved must be reduced is the main priority for development of CCS. Furthermore,  current issue is to prove that any loss would be insignificant so, it is important to demonstrate its credibility as a reliable and long-term store. Not only that developed world must lead in the field of CCS, but also the technology must be spread rapidly to the developing countries. It must be adopted by emissions-intensive industry, fuel transformation as well as gas processing sectors etc.,  having in mind that it is more than a strategy for ‘clean coal’.

Developing incentives for CO2 transport hubs and initiating regional planning cannot be done from other level but from the level of governments. What should kept in mind is the fact that possible leakage from CO2 storage sites into the atmosphere certainly would not cause worse climatic conditions than the case of direct emission!

 Written by Ivana Letic

-Unbundling of transmission system operators (Art. 9), ‘Where the transmission system operator is part of a vertically integrated undertaking, it shall be independent at least in terms of its legal form, organization and decision making from other activities not relating to transmission’, as well as for unbundling of bank accounts (Art. 17), ‘Natural gas undertakings shall, in their internal accounting, keep separate accounts for each of their transmission, distribution, LNG and storage activities as they would be required to do if the activities in question were carried out by separate undertakings, with a view to avoiding discrimination, cross-subsidization and distortion of competition’.

-Third party access (Art. 18), ‘Member States shall ensure the implementation of a system of third party access to the transmission and distribution system, and LNG facilities based on published tariffs, applicable to all eligible customers, including supply undertakings, and applied objectively and without discrimination between system users’.

-Regulatory authorities (Art. 25), ‘Member States shall designate one or more competent bodies with the function of regulatory authorities. These authorities shall be wholly independent of the interests of the gas industry’.

Energy law of the Republic of Serbia was brought into force in 2004., after the Memorandum of Understanding on the Regional Energy Market in South East Europe and its Integration into the European Community Internal Energy Market had been signed in Athens in 2003. It was expected to mark the beginning of market deregulation with the aim, among others, to facilitate monopoly control and competition in the field of transportation, distribution and trade of natural gas. The law was required as precondition to join Energy Community of South East Europe founded in 2005. According to the Agreement signed then, the directive was supposed to be implemented in following 12 months. However, the goal was not achieved. And, what is worse, nothing has been done so far. For instance, in state-owned company Srbijagas, organizational units do not exist due to the incomplete process of restructuration. Foreign operators do not have free access to the market, and, even though, Energy Agency (AERS) was founded according to the law, it does not have effective powers. For instance, the Government is still the one that decides upon energy prices as they are social category.

On July 28^th, 2011. the Parliament passed new law which would gradually liberalize the market as well as it would harmonize legislation with the European Union law implementing fully the Second Package as well as the part of the Third. It is emphasized that the law strengths the role of the Agency due to the fact that, according to its provisions, Agency should set prices of electricity as well as of natural gas instead of the Government from October 1^st, 2012. What I find rather interesting, is the fact that numerous media in Serbia emphasize third party access as the most important innovation brought by law, thus bringing into question its credibility. Be it as it may, those who criticize the law argue that the speed of the procedure during which the law was adopted did not reflect its importance and scope, that there is a potential risk of corruption, that the provisions on the organization of public tenders are imprecise, as well as that legal status of the Agency in the constitutional system of Serbia is unclear.

Written by Ivana Letic

However, scenarios vary from country to country. For instance in France, Francois Hollande, socialist candidate for presidential elections, has promised to cut reliance of France on nuclear energy sources vastly by 2025. which would directly endanger EDF (Électricité de France S.A.). Namely, 75% of electricity in France is produced out of nuclear power plants! With 58 reactors across the country, it counts together with the USA and Japan for more than 50% of nuclear energy produced at the world level. However, the fact is that those reactors cannot be halted over night. Political game is essential here, especially when one knows that the major part of company is owned by the state as well as that 2/3 out of its’ profit is made at home – it would have deep consequences. Cost of €60 billion and 1 million jobs I peril, non-sense in the wake of economic crisis.  However, Germany, Switzerland, Italy, Spain, and probably Belgium are among those countries that have more serious approach towards halting their nuclear industry. On the other hand, across the Atlantic we have Exelon, the largest nuclear generator in the US, trying to handle the situation throughout increased output of a plant by means of ‘uprates’. Namely, they install new equipment in old plants improving the effectiveness and making it more attractive to investors. Fortunately, this source is exhaustible – there are limits to which plant potentials can be boosted. Among countries which plan to continue with their nuclear programs are, first and foremost, China, then Russia and FSU countries. Challenges associated might be underestimated though. For instance, only China has 27 reactors under construction increasing its’ capacity by factor of 7 or 8 rushing towards 2020 goals which might emerge numerous unexpected construction and operating problems. Also, there are countries such as Saudi Arabia, Turkey, the UAE and Vietnam willing to involve themselves in order to advance their economies by gaining technical expertise and some industrial infrastructure.

Apart from Y4,700bl of estimated cost for TEPCO, there are far-reaching consequences that are being hide. And the fact is that it could have been prevented. It could have been said that the reactors had been built on fault line where tectonic movements might cause serious damage! It could have been said that according to TEPCO’s 2008 studies, tsunami exciding 10 meters might smash the plant!

It is the matter of time, I believe. One country, however, had to pay high price. At the end, they are our heroes.

Written by Ivana Letic

1. The European Union and Russia: A Dependency Relationship?

Dr Parmentier, a lecturer at Sciences Po and Co-founder of the think tank Euro-Power, explains that energy dependency is a symbiotic relationship where the gas producer country is as dependent as its customer country. However, he posits that as long as you have trust between the two ‘dependent’ countries, speaking about dependency as a negative relationship makes no sense. He goes on to point out the paradox facing Russia, namely, that while Moscow seeks to regain its superpower status through the means of energy politics, generally however, energy supplier countries are not big powers on the international arena. Dr Parmentier explains that it’s better to talk about ‘rationalized interdependence’ where interdependence refers to the economic side of the equation and ‘dependence’ describing the political aspect.

An interesting point brought up by Dr Tayiana Romanova, an associate professor at the Department of European Studies of the School of International Relations of St Petersburg State University, and echoed by Mr. Kovacs (See below) is that the EU is unable to speak with one voice when it comes to energy. In fact, Ms Romanova argues that the individual Member States of the EU are more credible that the EU as a whole in the eyes of Russia. The reasoning for this is that the individual Member States ‘can bring life to their promises’ while the European Commission, from time to time, responds to Russia by stating that their request does not lie within their competencies. As such, it is not clear whether there exists a unitary EU energy policy or rather a composition of policies of Member States.

1.1 The Politics of the South-Stream Project

You cannot talk about energy dependency between the EU and Russia without discussing the South Stream project. Explaining the politics of the project, Ferenc Kovacs, counsellor to the Prime Minister of Hungary, candidly explained Russia’s politics behind the building of the pipeline as well as Hungary’s role in the construction. While Mr Kovacs asserts that Europe is Russia’s largest trade partner in gas, he speculates that there is a high likelihood that Russia will change course and focus more on Asia. This being said, Dr Romanov explains that China is not willing to pay the high prices Russia demands, thus Asia is not as lucrative as the European market.

Turning to the South Stream project, it is owned equally by Russia’s GAZPROM and Italy’s ENI. Mr Kovacs mentions that Mr Putin and Mr Berlusconi have been friends for many years and this collaboration is as much political as it is based on economics. However, Russia quickly realised that Italy was not strong enough financially to deliver on its own and consequently Putin decided to change the scheduled route, involving more and more countries. Additionally, Russia quickly discovered that the project, originally budgeted at 15 billion euro, was going to come to around 20-35 billion euro given its re-routing requirements as a result of the Ukraine. Mr Kovacs recalls Ukraine denying Russia access to pass through the Black Sea, pointing out that Russia may not be as political omnipotent as it once was. The exact building of the pipeline seems to be firmly in the hands of Russia, according to Jasna Petrovik a journalist from Belgrade working for Politka. According to her sources, the Russians will not allow the EU to dictate the conditions of business and will not relinquish the building of the pipeline to any third party.

1.2 An alternative to Russia: The Nabucco Project

Briefly mentioned above, the Nabucco project is an attempt to diversify gas suppliers and delivery routes in Europe. The Nabucco line is to run from Turkey to Austria and is hoped to lessen Europe’s dependence on Russian energy. Dr Romanova explained the Russian reaction to the pipeline saying that initially Russia was not pleased with the project as no country enjoys being sidelined, however today the Russian rhetoric runs along the lines of saying ‘of course you can construct pipelines, but what will you transport through it? You have no natural gas to put in it’. Dr Romanova argues that Nabucco makes little commercial sense for a number of reasons. While there is a small amount of gas coming from Azerbaijan, supply coming from Iran is politically sensitive and with Turkmenistan’s commitment to Russia, the Russian argument of ‘what gas?’ are you transporting begins to ring true.

2. Europe’s Focus on Gas

Having thus far analysed the relationship between the EU and Russia as well as the rival South-Stream and Nabucco projects, what remains to be answered is why has Europe focused on gas to such a large extent. Mr Marco Mergheri from Edison goes a far way in explaining this. Founded in 1884, Edison is said to be Europe’s oldest energy company dealing with the procurement of electric power, natural gas and crude oil. Mr Margheri emphasized the importance of gas as one of the sources of thermo power generation. He goes as far as to say that gas is more or less as important as coal and nuclear energy. His reasoning for this is that, firstly, we are unlikely to witness an expansion of the current nuclear supply and, secondly, if we wish to continue using coal then the emission reduction targets go out the window. Thus, the importance of gas in Europe is acute according to Mr Margheri.

The question naturally arises as to whether, in say 20 years time,  the EU will be able to significantly reduce its dependency on the Russian Market? Unfortunately, no one has a straight cut answer as the number of variables to be taken into account are immense.  Dr Romanova, however, looks at the other side of the coin in explaining how Russia stands to benefit from a decoupling of EU energy dependency on Russia. She speculates that if the EU were to stop importing Russian gas this may in fact be a favourable development for Russia in the long term as it would prompt a restructuring of its economy.

3. Alternative and Nuclear Energy

While alternative energy spans a breadth of topics from wind to hydro to solar, the interviews seemed to focus mainly on solar energy. When the interview took place with Mr Stefan Roest from Delft University in the Netherlands he had not yet won the Benelux Be.Project competition for his and Mr Chokri Mousaoui’s idea.  The largest obstacle facing solar energy is the cost which is substantially higher compared to conventional fuels. Mr Roest and Mousaoui’s project, entitled Eternal Sun, seeks to reduce these costs by developing a type of simulator to test solar panels. Looking at the component costs of solar energy, it is the solar panels which contribute the most to the costs. Thus the Eternal Sun project hopes that by being able to accurately determine the efficiency of certain solar panels this will contribute to the planning and, hopefully, subsequent success of solar energy projects. However, as Mr Roest explained, the greatest hurdle is investment in Research and Development in these areas.

4. Conclusion

Thus what does Europe’s energy future look like? Can we even speak of ‘Europe’s’ energy future or is it more accurate to refer to individual member states? In addressing the nature of Europe’s energy dependency various experts from academics to Journalists to individuals working in the private sector have explained that this notion of ‘dependency’ is a two-way street and thus the picture is not as gloomy as originally conceived. Projects such as the South-Stream, Nabucco or ITGI are not merely about economics but are highly political. This politicization of energy adds an additional layer of complexity to the energy dependency of Europe. If anything, this investigation has illustrated how sensitive the topic of energy is. Many individuals and companies refused to discuss the issue or when interviews were granted they were reluctant to answer politically sensitive questions such as those regarding nuclear energy. The way forward for Europe should follow the logic of ‘plan for the worst but hope for the best’. In other words, investment in research and development of alternative energy should continue, not only because its beneficial to the environment but, in the worst case scenario, in the event that Europe is no longer able or willing to import from elsewhere.

Written by Ivana Letic, Samantha Mantel, Ségolène Toadec